Onboarding And Authenticating A Global User Base

In many parts of the world, cash is no longer the king of currency. Fewer consumers use physical currency when making purchases, and are instead turning to more modern, digital methods of payment, particularly when making purchases online with debit cards.

These cards are especially growing in popularity in Australia, Europe, the Middle East, Latin America and New Zealand, where online shopping online is quickly catching up. But for consumers to be able to shop online, they need access to debit cards that are not just accepted by merchants in their country, but also by those in the U.S. and around the globe.

This is the demand that companies like New York-based Tern Commerce, which helps international card issuers offer debit cards and stored-value cards to consumers in more than 100 countries, are looking to serve. In a recent interview with PYMNTS, Tern Commerce CEO Brion Bonkowski explained that onboarding international customers and protecting the payments is a complicated process.

“Fraud is a huge consideration for us,” Bonkowski said. “It’s really one of the biggest hurdles we need to jump over.”

For Tern Commerce, clearing those hurdles previously meant manually reviewing identity documents and other credentials, which is both expensive and time-consuming. This pushed Bonkowski and his team to explore digital authentication solutions to protect its global user base.

Onboarding Global Consumers

With the recent increase in demand for debit and prepaid card offerings, Tern Commerce found itself reviewing and validating a seemingly endless list of new customers. The manual review process was no longer efficient and could not keep up with the growing demand. During periods of particularly high adoption volume, manual reviews prevented them from vetting and onboarding new customers as quickly as they wanted to sign up, and expenses associated with the onboarding process quickly became a problem.

“We’re onboarding companies from 100 different countries … and for all our reloadable accounts, we require document uploads,” Bonkowski said. “From an operational standpoint, a big part of it was about trying to drill down on the cost.”

As a result, the company decided to look for a solution that could help them review identity documents quickly and authenticate new customers as they were added to the service. But Tern’s wide-ranging user base created further issues. Many countries have their own know-your-customer (KYC) and anti-money laundering (AML) regulations, and there was no consistent formula for regulatory and commercial success.

To comply with all KYC and AML regulations, while still offering customers a fast and simple onboarding process, the company partnered with a range of identification solution providers with regional expertise, such as Jumio.

“We use Jumio, along with a number of other providers, including Experian and IDology, depending on the use case and the location. Our platform allows both our programs and the programs that we’re managing to use AML of different authentications and KYC providers,” Bonkowski said. “Customers in specific [locations] will go through one KYC provider, while customers from [other locations] will go [through] another.”

Protecting Purchases

Verifying the identities of new users during onboarding is only part of Tern’s authentication challenge. Many consumers, particularly those who are younger and tech-savvy, are eager to access mobile and connected financial management offerings that provide simple and convenient experiences. These offerings, unfortunately, can make companies and their customers vulnerable to fraud, particularly as more fraudsters have been targeting financial services firms.

To strike this balance between simplicity and security, Tern relies on data about its customers’ habits and patterns — the behaviors that separate legitimate consumers from cybercriminals. This data is constantly evaluated for behavioral changes, new trends or other emerging factors that could help the company identify fraudsters.

“It’s about having the right workflows in place to track transaction histories and data effectively,” Bonkowski noted. “We have an evolving rules engine, which is dynamic, so if one element starts to trigger fraud more often, our system has the ability to add an additional rule to check a new variable.”

The Future of Fraud Protection

Going forward, Bonkowski predicts that these trends will continue to become popular. Financial fraudsters are likely to continue developing increasingly sophisticated cyberattacks, pushing more consumers to adopt modern forms of payment. This will force companies like Tern to anticipate this demand and adopt new solutions that can help them onboard customers seamlessly, though a universal solution that can address a wide range of identity verification use cases is still fairly far off.

“Monitoring those data sources, aggregating them, managing them and having live feeds into various countries to verify those data points is hard,” he said. “There’s definitely an opportunity, but it’s hard to get a silver bullet for this.”

As consumers in many countries around the globe make the switch from cash to card, companies need to be prepared for that influx of users by increasing both their efficiency and security.