Digital Identity Verification: 7 Ways to Verify Users Online

Digital identity verification is vital for maintaining the security of online accounts and transactions. With criminals constantly developing more sophisticated ways to perpetrate identity theft and impersonate victims online, investing in identity verification solutions has become critical for protecting digital identities.

Here we'll cover the essentials of digital identity verification. First, we'll take a look at digital ID verification, why it's essential, and its benefits. Then we'll review how the process of verifying online identity works. Finally, we'll review the seven most effective methods for verifying digital identities.

What Is Digital Identity Verification? ID Verification Meaning in an Online Context

What does identity verification mean in a digital context? When we talk about confirming digital identity online, we're talking about two related but distinct procedures:

  • Identity verification: confirming that new customers are who they claim to be by checking their ID and other proof of identity they present when opening an account
  • Identity authentication: confirming that customer accounts only are being accessed by legitimate account holders and not impersonators

So identity verification is checking the identity of new customers when they open an account, while authentication is confirming the identity of parties using customer accounts.

To better understand this, let's consider what we mean by digital identity. A person or company's digital identity consists of the unique identifying characteristics which make one individual or company distinct from another when conducting online transactions. Elements of digital identity may include:

  • An individual's name, address, date of birth, Social Security Number, email address, phone number, etc.
  • A company's business name, address, date of incorporation, corporate email, corporate phone number, etc.

Verifying this information online is similar to verifying it in a physical brick-and-mortar context, but there are some crucial differences. For example, if someone walks into a store to buy alcohol, the cashier may ask to see their ID card. If they're suspicious the person is too young to purchase alcohol legally, they may look more closely at the ID photo and compare it with the person's face to estimate their age.

Similarly, if someone goes into a bank asking for a loan, the loan officer may request confirmation of identity, income, and current address. This may include a valid ID card, recent pay stubs or bank statements, recent utility bills, etc.

Verifying online identity involves a similar process, but a key difference is that all identity checks are performed digitally, meaning that digital identity verification depends heavily on technology. For example, instead of visually inspecting a person's ID card or face, you need to use a scan of their ID and facial recognition.

Why Is Digital ID Verification Important?

Knowing how to verify a person's identity online is critical for businesses for multiple reasons:

  • Compliance: digital ID verification is a requirement for compliance with federal anti-money laundering (AML) and Know Your Customer (KYC) regulations
  • Fraud protection: verifying account holder IDs protects your company from being defrauded and potentially liable for identity theft
  • Customer protection: by protecting your company from fraud, you also protect your customers from identity theft
  • Brand reputation: keeping your customers safe helps protect your brand's reputation

In short, following good digital identity verification policies serves your company's and your customers' best interests.

What Are The Benefits of Digital Identity Verification?

Using digital identification technology can benefit your company in several ways. Depending on your industry, potential benefits include:

  • Having the ability to confirm online customer identity quickly, with a minimum of inconvenience
  • Enabling customers to conduct online transactions such as banking and credit card transactions safely and efficiently
  • Integrating facial recognition verification into your customer identity checking procedures
  • Delivering a frictionless experience for your customers as well as your internal team
  • Making customers feel more secure in authorizing online payments, increasing your revenue
  • Reducing loss from identity theft and returns claims

The benefits and others make digital identity verification a valuable asset for businesses.

How Does Digital Verification Work?

So how does an ID verification process work? Digital identity verification uses various technology tools to confirm the validity of ID documentation. These include:

  • Checking and validating photographs of ID documents
  • Using optical character recognition (OCR) scanning to extract and check information on ID documents
  • Confirming information such as SSNs, addresses, and driver's licenses
  • Verifying that users are live persons and not someone using a spoofing method such as holding up someone else's ID photo to the camera
  • Doing facial recognition checks of live photos against ID photos
  • Checking digital fingerprints
  • Running credit checks

After using these and other methods to check the validity of ID documentation, additional identity authentication methods can be used whenever someone tries to access an account to verify that they are an authorized user.

How Can I Verify Online Identity? Seven Digital Identification Methods

Let's look closely at seven of the most important methods to verify and authenticate digital identity.

1. ID Document Verification

ID document verification is one of the fundamental tools for confirming customer identity. The first step toward ID validation is capturing the best possible photo of the document. The photo then serves as a basis for classifying the type of ID document being presented, performing tests, and scoring how well the document passes the tests.

2. Biometric Verification

Biometric verification uses unique identifying characteristics such as facial features, fingerprints, and voice patterns to confirm identity. Artificial intelligence and machine learning allow visual and voice data patterns to be reviewed for ID confirmation. Biometrics can serve to enhance both identity verification and authentication checks.

3. Liveness Detection

Liveness detection is a method to confirm that someone presenting an ID credential is a live person. For example, a selfie of a live person can be distinguished from someone holding up a photo to the camera by running an AI algorithm that looks for distinguishing live features such as 3D features, textures, and head turns. This method is used primarily for identity authentication.

4. Knowledge-Based Authentication (KBA)

Knowledge-based authentication checks user identity by asking a question, such as a pet's name. It's used for identity authentication.

5. One-Time Passcode (OTP) Verification

One-time passcode (OTP) verification is an authentication method where a user attempting to log into an account is sent a password or code valid for one login. The OTP is sent to a device, email account, or phone number the legitimate user has specified ahead of time so that only the legitimate user can access it. This is an authentication method.

6. Trusted Identity Network

Trusted identity networks are ecosystems of secure providers such as banks and government agencies who can partner with businesses to help verify and authenticate identities using information already on record. This can help speed up verification and authentication processes to deliver a smoother user experience.

7. Database Methods

Database methods check ID information against records of known data. For example, an address might be checked against a list of known addresses, or a photo might be checked against a face match database. These methods are most useful for verification purposes.

Use Digital Identity Solutions to Protect Your Customers and Your Business

Digital identity verification methods help you confirm that account holders are who they claim to be and ensure that only legitimate parties access accounts. For businesses, this is critical to protect your customers from identity theft and shield yourself from potential liability and damage to your brand reputation.

A comprehensive approach to digital identity verification includes a full array of technology, encompassing everything from ID document checks and biometric methods to database cross-referencing. Incode's end-to-end platform unifies all the latest identity verification technology tools into a frictionless solution that supports today's most in-demand use cases across various industries. Explore Incode's solutions for contactless guest check-ins, secure and seamless travel experiences, touchless payments, age verification, and biometric transaction checks. Request a demo to see how today's most trusted digital identity verification solution can provide your company with a simple, secure way to keep your customers safe online.

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