Authentication

Taking The Future Of Digital ID Verification Back To The Phone

The rise of the digital economy has resulted in growing concerns about identification, not the least of which is making sure that people who try to open financial accounts, or complete a variety of online or mobile transactions, are who they say they are.

However, if data is vital to the digital economy, so is identity (ID) verification. If anything has become clear within the last few years, it’s that electronic ID verification — using digital methods and data to confirm and authenticate identities — is increasingly taking on crucial importance. That point was made clear during a recent PYMNTS discussion with Alain Meier, CEO of Cognito, an ID verification and online fraud prevention service.

Sure, most consumers either carry or are within reach of government-issued ID documents, but it is cumbersome, to say the least, to scan or take a picture of a driver’s license photo, send it in, then wait for someone to review it. The name of the game in 2019 and beyond is frictionless transactions — and that applies to ID verification as well.

Evolving ID

The evolving capabilities of electronic ID verification do not necessarily have to involve new tools such as biometrics, at least from the point of view of Meier. The boring, mundane phone number can do the trick.

As it turns out, phone numbers can provide a treasure trove of information about a consumer who is trying to sign up for a new banking account, onboard to an online service or open an account with an online merchant. A person’s phone number, according to Meier, can serve as a reliable path toward frictionless, secure interactions between consumers and banks, payment service providers and other organizations.

In fact, more than 95 percent of people in the U.S. possess phone numbers. Not only have people demonstrated little or no reluctance to share their phone numbers in public (a trait not enjoyed by many other identifying credentials), but the ubiquitous phone number ties into many other types of personal data that can be used for electronic ID verification — including, but not limited to, addresses, dates of birth and Social Security numbers.

Going beyond the use of phone numbers by a company such as Cognito, electronic ID verification in general can help alleviate customer impatience, a problem that can be an issue for any people or organizations trying to do business online. Google has said that 53 percent of website visitors will leave if a web page doesn’t load within three seconds, underscoring one of the main challenges that online financial service providers and merchants face on a daily basis.

“There is a huge increase in retention when people are able to verify in seconds, rather than minutes,” Meier told PYMNTS.

Beyond Speed

Speed is not the only increasing concern that online payment and commerce providers will deal with in the near future. As Meier pointed out, more consumers are waking up to the fact that all the “free” services they’ve used online — email and social media, especially – come at a high price. That includes the sale and analysis of their personal data, and the potential security and fraud risks stemming from that. There is a good argument to be made that consumers are relatively numb to the parade of data breaches that define life in the early 21st century, but it can also be argued that privacy and security concerns are, nevertheless, taking center stage, given all the recent political activity surrounding that issue.

That means quick, but reliable, electronic ID verification services will command more of the spotlight, as digitally minded businesses seek to please those consumers, and stay a step ahead of the PR and regulatory response to data privacy and fraud.

“ID verification solutions are becoming more significant and sophisticated than they used to be,” Meier said.

Yes, businesses seeking such solutions still have significant concerns, but they center more around getting, say, higher match rates than the costs and hassle of installing better ID verification technology. That holds especially true when it comes to the increasing sale of age-restricted products, such as eCigarettes, via online and mobile channels.

The world is changing — and with the ongoing spread of the global digital economy, electronic ID verification is poised to play a bigger role in that growth, and could become an important part of what separates the winners from the losers.

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Our data and analytics team has developed a number of creative methodologies and frameworks that measure and benchmark the innovation that’s reshaping the payments and commerce ecosystem. The July 2019 Pay Advances: The Gig Economy’s New Normal, a PYMNTS and Mastercard collaboration, examines pay advances – full or partial payments received before an ad hoc job is completed – including how gig workers currently use them and their potential for future adoption.

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