Remote Verification: How Payment Firms Can Protect Themselves & Thrive During Tough Times

During this exceptional time, where freedom of physical movement in the UK has been restricted, online payments have increased exponentially, accelerating the drive for many organisations to invest in online channels.

Posted on February 1, 2020
Written by Adam Holden

Payment AML

The demand for real-time payments has taken on a new urgency and the COVID-19 pandemic has placed enormous pressure on businesses who have not adopted digital solutions and rely on face-to-face meetings.

However, along with increase payment transactions, there is also an increase in online fraud. Online fraud trends are rapidly emerging as bad actors look to turn a quick profit on the global pandemic.

For payment firms to protect themselves and their clients, they will need to step up in the security of providing fast identity verification efforts fully enter the digital realm. COVID-19 has raised the stakes in a battle that has been ongoing for some time – verifying that people are who they say they are and managing good transactions through to completion reducing false positives.

In this blog, we will address the verification challenges that payment firms face when they onboard business clients and how they can make the most of the opportunity that remote onboarding creates.

The challenge of regulatory compliance

In today’s regulatory environment payment firms are obliged to perform an increasing number of compliance checks on their prospects, however, the challenge is compounded when onboarding companies.

Payment firms not only have to verify the corporate entity, but they also need to perform identity verification on significant directors and beneficial owner of an organisation which can become a very complex and time-consuming process. Once a company has been onboarded, they must be continually monitored to ensure ongoing compliance with Anti-Money Laundering (AML) compliance. Firms need to balance delivering a straightforward onboarding experience to their clients, whilst meeting stringent compliance requirements.

Company onboarding timeframe for software companies like Square, Stripe, and PayPal are at around 5 minutes, while for traditional acquirers, it takes 3-5 days. The gaps are so large because software companies have automated the merchant boarding process. Taking this amount of time can lead to low customer satisfaction and even the abandonment of the sale.

To reduce the time it takes to onboard corporate entities, facial or biometric recognition software is some of the latest technology to be applied to the client onboarding toolkit, making it easier for businesses to perform essential Know Your Customer (KYC) and Know Your Business (KYB) procedures, but remotely and in real-time.

How facial recognition can help

Facial recognition technology (or Selfie-based authentication) is becoming more widely used in regulated industries, as it allows for robust KYC checks to be done remotely. This can be done at a time convenient to the client, without the need for them to be physically present at a branch, whilst still preventing false or fraudulent accounts being set up. 

The technology has developed further to scan an individual’s facial features (captured during the selfie-taking process) and compare them against images used in formal identity documents such as Passports, ID cards and drivers’ licenses.

How Liveness Checks Can Combat Fraud

“Liveness” detection is a vital feature for modern biometric-based recognition solutions because it verifies that the person attempting to confirm their identity is a living subject and not a copy or imitation. Cybercriminals are increasingly trying to spoof these remote processes by using photos or videos of an individual’s authorised face, but “Liveness” is designed to prevent these spoofing attacks.

Due to the threat of identity fraud, most of the leading remote KYC onboarding players have embedded some form of liveness detection as part of the verification process. “Liveness” detection combines biometric facial recognition, identity verification and lip-syncing authentication to reduce the chances of a spoofing attempt being successful.

client-onboarding

Making Remote a Reality

In these unusual times, asking your clients to come into an office just to verify their identity before using your product or service is a massive barrier to your business. Not only do today’s clients desire the convenience of signing up to a product or service in minutes from a mobile phone, but with “social distancing” imperatives, it has become key and property firms need to efficiently respond to this increasingly preferred and socially-acceptable demand for remote onboarding.

We work with multiple payments firms to deliver remote digital onboarding solutions to our clients. We automate Know Your Customer (KYC) client classification, suitability, appropriateness and cross-border assessments.

For more information about how we can help your property firm in these trying times, email sales@northrow.com.

Client Stories

Modulr Finance

Ensuring FCA regulatory compliance is vital for Modulr. Modulr partnered with NorthRow because they needed a technology-led system that could execute KYC and KYB verification, whilst integrating with its own API to deliver its mission to stop payments being a barrier to growth.