Identity verification service guide: how to choose the right IDV software

Important criteria to keep in mind when choosing the right identity software for your business

Knowing your customers (KYC) well enough to protect them from identity theft is the new standard of quality service for online businesses. Besides ensuring that KYC compliance requirements are met an identity verifcation solution, take the time to choose the right one with easy-to-activate features to improve your conversion rates, operational efficiency, and customer satisfaction. The reputational damage to growing companies in FinTech, crypto, and other online services cannot be overstated, such as when a friendly hacker stole $600 million crypto to prove a point about the platform’s security vulnerabilities.

Given the the rise in fraud and data breach cases, companies need to address the concerns of potential customers that are wary of divulging personal and sensitive data. Incorporating a KYC verification solution that is more than just an onboarding check, and instead a security feature, will help add a layer of security. By strategically deploying KYC, you are keeping hackers at bay and protecting your customer’s accounts from being drained through in the flash of an eye. Here is a framework for deciding how to implement your KYC program.

Step 1: Decide whether to buy or or build your own KYC solution

All product teams considering features should be looking at getting this done. Building in-house allows you to have full control over your data and product. In reality, you will be using third parties for your KYC / AML compliance program. It just depends on how much you want to assemble your own solutions stack. Whether you are choosing a KYC service provider or assembling your own solutions stack, there are some key factors you need to consider before you begin:

  • Know what AML regulations you need to comply with
  • Know what features you need to meet those regulations
  • Think about the cost-benefit ratio of building regulatory compliance in-house if it is not a core focus area for your business

Until recently, companies with AML compliance obligations had to build or compile a suite of solutions for a complete KYC program, such as facial recognition, document verification and database checks. Teams that want to create a custom in-house solution will need to use a third-party provider at some point, which means they will be giving up some form of control. Ultimately, it is a question of whether they would rather have one third-party that enables them to quickly integrate or need specialized solutions providers to enable different departments to do their jobs more effectively.

Step 2: Outline how you intend to know your customer

Have a clear idea of what you want before you start comparing KYC solutions providers. This helps you focus your questions and collect comparable answers between third-party providers. Crafting the right identity verification workflow for your industry, market and product is key to creating a smooth user experience and winning customer loyalty.

Each industry will have particular details they would like to extract from an identity verification. Alcohol, tobacco, vape and cannabis retailers need a strong age verification solution in place for online purchases that meet requirements such as the PACT Act in the US. In the EU, built-in fraud protection for online verification will help meet some PSD2 regulatory requirements for payment processing. Crypto companies in the EU now have the same requirements as banks according to the 6th AMLD. Online gaming and eSports platforms are using identity verification for user verification to build trust, as well as for payment processing and age checks.

As new technologies which intersect with asset-handling and finance are implemented by companies, their KYC / AML procedures can help build trust by acting as a differentiating business strategy.

Step 3: Evaluate KYC solutions providers

When speaking to providers, ensure you make a list of comparison points so that you have a good sense of how each performs as well as its value. For example, you want to know how an identity verification provider integrates into your product, the features that are available, and the true cost based on your feature requirements and verification volume. You can frame your comparisons along the following themes:

Performance, security, compliance

  • Speed and accuracy: Testing the performance live for face matching, false positives and false negatives. This can be done when you sign up with Passbase.
  • Industry certifications and benchmarks: For example, whether they have SOC 2 Type II certification or other certifications.
  • Compatibility: Does it support your tech stack?
  • Secure data storage: How is the data stored and is there encryption in transit and at rest?

Market and industry coverage

User experience (for your team)

User Experience (for Your Customers)

  • Accessible across web and mobile devices
  • Easy to follow instructions for tasks, such as the selfie video challenge
  • Embedded in the existing service or app for a better brand experience

You need to think of your KYC solutions provider as a partner. This can help you determine if they think with you through issues such as optimizing the user experience or identifying key activities where an ID verification service can increase trust and safety. In addition to implementation, work with your customer success teams to effectively communicate the benefits of KYC for their own account security.

You can explore how Passbase works with a quick sign up here or book a demo with us today to learn more about how you can design a tailored identity verification solution for your needs

Get the latest news from Passbase

Passbase © 2023


Passbase is an identity verification solution that makes facial recognition, liveness detection, ID verification and KYC and AML compliance accessible through a suite of flexible developer tools. A zero-knowledge architecture ensures that companies using Passbase can securely verify users from over 190 countries without having to store their data. Built for developers, it can be integrated with just a few lines of code on iOS, Android, and Web.