RegTech’s Critical Role In ID Verification

Verifying that customers are who they say they are is crucial, but that authentication takes on an even bigger role in the cross-border payments space. Phil Davies, managing director at PSI-Pay, joined PYMNTS to discuss how RegTech solutions are enabling ID verification to take place for transactions happening around the world and across various regulatory frameworks.

One of the biggest hurdles for any company working in different countries around the globe is ensuring compliance across all of the different regulatory frameworks. It’s not always possible to operate in Australia in the same way operations are done in China.

The more borders that a business crosses, the more complex adhering to regulatory standards can become.

Add to this the challenge of authenticating the identities of customers, and it’s easy to see how the creation of a scalable verification process that works worldwide can seem like an impossible feat.

But Phil Davies, managing director at PSI-Pay, explained how the integration of RegTech — the idea of using new technologies and solutions to tackle high-density problems — has enabled the company to connect the dots between global regulatory standards and identity verification services as a core part of the strategy.

PSI-Pay is a U.K.-based financial services company that provides payment solutions to individuals and businesses around the world. Since the company is authorized by the Financial Conduct Authority (FCA) to issue electronic money throughout the EU and is certified to offer Mastercard services directly, Davies said it takes zero chances when it comes to developing partners and choosing technologies.

“It’s extremely important to us that we verify as best we can, and if in doubt, we will probably decline,” Davies noted.

The U.K.’s FCA and EU regulations require that customers prove who they are and where they live, in addition to other checks, he explained. In addition to confirming that the information customers provide is authentic, PSI-Pay is also required to conduct checks on politically exposed persons and the Office of Foreign Assets Control because of its relationship with Mastercard.

Davies said that PSI-Pay has to check against these lists on an ongoing basis so that, if a person’s status has changed for whatever reason, the company can act accordingly.


Verification On Autopilot

With legal obligations to regulators in terms of customer ID verification, PSI-Pay must take risk mitigation very seriously, but at the same time, the company was facing difficulties in keeping match rates up, especially in Canada.

Though the company was experiencing a very low match rate in this particular market, it was unable to determine the root cause. This prompted PSI-Pay to begin looking for a verification solution that would not only introduce a more streamlined and efficient process but also help to reduce the company’s cost of acquisition, as well as its operating costs.

Davies and his team chose Trulioo’s Normalized RESTful (Representational State Transfer) API, which met PSI-Pay’s criteria of technical capabilities, operational stability, commercial advantages and geographic coverage.

The RegTech solution enabled automatic electronic identity verification at scale, while increasing the company’s acquisition rates and lowering its costs.

”We’re making more money from the same efforts because we’re actually accepting more people using the same parameters,” Davies explained.

He confirmed that the solution has helped to increase PSI-Pay’s match rate by as much as 40–50 percent, allowing it to maximize income without having to increase effort.

“It started with basic verification, which involved applicants needing to submit a passport and official document, such as a utility bill,” Davies said. “If that passed initial scrutiny, we would pass it on to a third-party agency, such as a data broker or ID verification bureau. It was not as effective and efficient as it has been with Trulioo.”

Today, Davies said the improved verification process has enabled the company to have faster onboarding and increased operational efficiency, both of which have helped it to continue its expansion into new markets.


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