The risk for identity fraud has never been greater. Tools like AI and deep fakes make it easier for criminals to impersonate you and steal your information.
Although both individuals and businesses should be concerned about these risks, businesses have a responsiblity to protect customers’ sensitive information. In fact, failing to comply can often result in hefty fines, damage to the company’s reputation, or a loss of customer trust.
One of the best ways for businesses to protect their data is with a in-depth identity verification and authentication program. Using the latest digital identity verification tools lower the risk of data breaches.
However, when it comes to verification vs authentication, know that these two terms are similar, but have distinct differences. Understanding these differences can help you build a ID verification program that’s safe and reliable.
Identity Verification vs. Authentication: A Quick Summary
These two terms get used interchangably, but authentication is much different than verification. Some of the key differences include:
- Definition: Identity verification is the process of confirming that a person is who they claim to be, often by comparing their provided information against public or private records. Authentication, on the other hand, is the process of verifying that an individual is the rightful owner of the account they are trying to access.
- Process: Verification typically happens once, often during account creation or when resetting account details, and involves checking the user’s identity against external sources. Authentication is a recurring process that happens every time a user tries to access their account, and it involves validating the user’s credentials (like a password or biometric data).
- Methods: Common methods of identity verification include knowledge-based verification (like answering security questions), document verification (like uploading a photo ID), and biometric verification (like facial recognition). Authentication methods include something the user knows (like a password), something the user has (like a physical token or a smartphone), and something the user is (like a fingerprint or other biometric data).
- Purpose: The purpose of identity verification is to ensure that the person creating an account or making a transaction is not impersonating someone else. The purpose of authentication is to ensure that the person trying to access an account is the legitimate account holder.
- Security: Both processes are crucial for security. Identity verification helps prevent identity theft and fraud, while authentication helps protect against unauthorized access to accounts and data breaches.
How Businesses Use Identity Authentication & Verification
The latest authentication and identity verification methods utilize technology and AI for better, more secure verificaiton. Businesses use both types of identity checking in their operations for customers, access control, and employee verification.
Authentication Methods
- Access Control: Businesses use identity authentication to control access to sensitive data and systems. Employees are given unique login credentials, and sometimes additional authentication factors, to ensure that only authorized individuals can access certain information.
- Financial Transactions: Banks and other financial institutions use identity authentication to verify the identity of users making transactions. This can involve multiple factors of authentication, such as a password, a one-time code sent to a registered phone number, or a fingerprint scan on a mobile banking app.
- Regulatory Compliance: Many industries have regulations requiring certain levels of identity authentication. For example, healthcare providers must authenticate the identities of users accessing electronic health records to comply with HIPAA regulations.
Verification Methods
- Customer Onboarding: Financial institutions like banks and insurance companies use identity verification during the customer onboarding process. They verify the identity of new customers against government-issued IDs and other documents to comply with Know Your Customer (KYC) and Anti-Money Laundering (AML) regulations. This process helps prevent fraud and illegal activities.
- Online Marketplaces: Online platforms such as e-commerce sites, ride-sharing services, and home-sharing services use identity verification to build trust and safety. For instance, a home-sharing platform may require hosts to verify their identity by uploading a government-issued ID or taking a selfie. This helps ensure that the person listing the property is who they claim to be, creating a safer environment for guests.
- Telecommunications Companies: Telecom companies use identity verification when issuing SIM cards to customers. They verify the customer’s identity against a government-issued ID to ensure the SIM card is not being issued for fraudulent purposes. This is particularly important in countries where regulations require telecom companies to verify the identity of their customers.
Businesses and customers could be at risk because of the confusion between verification and authentication. Instead of giving two separate services, some solution suppliers combine the two, which furthers the misconception.
Identity-verification tools can’t always guarantee that the person providing the identifying information is the true owner of it. A business becomes exposed to account takeover fraud and fake identities if it treats a verified identity (“the identity exists”) as authenticated or proofed (“the user is who they say they are”).
How to Ensure Good Customer Experiences
Ultimately, these safeguards shouldn’t ruin a good user experience. Customers will experience negative effects as a result of overly intrusive verification procedures, which could eventually result in customer churn.
Authentication procedures must be smooth in order to allow businesses to compete without suffering the negative effects of a bad customer authentication experience.
According to a CMO Council study, 61% of customers indicate that their frustration with authentication has led them to abandon transactions that they otherwise would have finished. To add to that, two-thirds of customers said they would switch businesses for a better digital experience, according to TransUnion’s 2022 Global Digital Fraud Trends Report.
Building Trust with Verification Technology
Identity verification and authentication are essential for businesses to maintain regulatory compliance, but they also contribute to trust building, which in turn creates the foundation for long-term customer relationships.
Customers are more inclined to trust your business with their personal, financial, legal, or medical information if they have confidence in your verification and authentication procedures. People are more inclined to continue the onboarding process and collaborate with you in the future if you use technologies that can quickly and accurately validate user data.
It is the obligation of the business to make sure that customers interact safely and in a way that promotes trust without compromising the customer experience. For the best protection of customers, to prevent large fraud losses, and to guarantee a frictionless customer experience, businesses must implement both identity verification and authentication processes.
The Future of Digital Verification and Authentication
Digital identity verification is what the future holds.
Customers are now eager to exchange digital identification documents with businesses that can protect their data efficiently, and many governments are experimenting with IDs like digital licenses and ID cards. As a result, how websites verify age is becoming more sophisticated, and age checking tools online are now commonplace.
However, it doesn’t come to a halt there. The next generation of digital ID verification and authentication technologies will also make use of extra information like the user’s location and normal behaviors in order to confirm ID more successfully and combine cutting-edge algorithms in order to give real-time verification results.
Demo FTx Identity Today
A unified login authentication and authorization system, identity management, and seamless age verification are all provided by FTx Identity.
Our user-friendly platform is suitable for businesses of different shapes and sizes and industries of all kinds—everything from grocery stores and gyms to tattoo parlors and nightclubs. At FTx Identity, we understand that the safety and security of your business and customers are paramount.
That’s why you can count on us to provide reliable support throughout every stage! Ready to learn more about us? Get in touch with one of our specialists today to set up a consultation and demo!
Keep learning. See our guide to Identity Theft vs Identity Fraud to learn more about identity security.