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Online Identity Verification Services for Digital Wallets

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In old times there was a barter system where goods are exchanged. For instance, if someone wants to buy a knife, he has to give some other thing to the shopkeeper. This system didn’t sustain and paper-based cash replaced it. Paper-based money uses the medium of exchanging goods. People gave an equal amount of paper money instead of goods. This system also has some limitations like carrying huge cash for heavy payments.

Digital Wallets for Payments

Digital wallets or e-wallets were introduced where people can store and transfer money through software. Digital wallets software are not limited to a single platform, they can be used through mobile phones, computers, or other electronic devices. Through e-wallets, users can transfer payments without cheques or cards. More and more organizations are opting for e-wallets because of their easy checkout process. It is predicted that by 2022 only 17% of worldwide payments will be conducted through cash.

Mobile phones are mostly used for e-wallet transactions because of their large number of users. Mobile phone applications serve as a channel for payments. Statista reports that 58 percent of e-commerce transactions are carried through digital wallets in the Asia Pacific.

The service that attracted most people towards digital wallets is transaction history. Contrary to that, cash transactions do not have any transaction history, plus it also does not have any security measures like identity verification service. The person who holds the cash is said to be the owner, there is no check that the money is stolen or illegal. While digital wallets perform identity verification service or Know You're the customer before customer onboarding or completing transactions.

 

Identity Verification in e-Wallets

Initially, e-wallets were secured by password-based authentication. The user has to provide his username and passwords for login and a pin for funds transfer. Upon successful matching with the stored information, the user is allowed to log and complete the transaction respectively. Passwords or pins are not secure because they can be accessed by social engineering tactics. If somehow accessed users can lose their accounts and money also. E-wallets need a solid security protocol to protect user’s money.

Here are some identity verification services to protect e-wallets:

Know Your Customer (KYC)

I know your customer the customer is verified through his government-issued identity documents. KYC is a wider process that includes document verification, address verification, and age verification. Organizations choose the plan according to their need.

The process of KYC is concisely explained below:

        Customer onboards on e-wallet website or mobile app

        Give his personal credentials (name, dob, and address)

        Uploads the image of himself holding an identity document

        KYC software completes the document authenticity check

        User’s given data is verified with the information on the document

        The image on the document and face of the user is cross-matched

 

Upon successful verification, the user is allowed on the e-wallet platform. KYC software uses OCR technology for information extraction from documents. Most businesses also require address verification of the user. The address of a user is verified through his updated address documents like utility bills, employee letters, bank statements. These documents are accepted for proof of address if they are issued within three months.

Customer Identity Verification through Video KYC

This process is also known as video verification. The KYC verification which was done through software is carried through a video call in the video identity verification. This process is more frictionless and speedy than the usual identity verification. It has very few drop-off rates and a higher customer verification level.

There are modes of video verification:

     AI-based Software Verification

The process of identity verification is done by using online software. It verifies the customer’s identity, documents, and address in real-time.

     KYC Expert Verification

This mode incubates an expert who performs all the verification checks by himself.

The process of video identity verification is explained below:

        The user connects on a video call

        Presents his documents

        Liveness detection is done against deep fakes, 3D masks, and pre-recorded videos

        Software/Expert chats with the user or asks some questions

Concluding the Above

Not only e-wallets but all financial institutions need identity verification services for secure customer onboarding. This will enhance customer trust in online payments, accelerating the trend towards digital wallets. Also, all financial institutions can comply with the regulatory authorities’ KYC and AML directives. The extended id verification services are robust and quick, verifying a customer in seconds. The identity verification services are user-friendly and low-cost as compared to traditional/manual verification methods.

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