What-is-identity-verification-and-how-is-it-done-blog-image1

What is identity verification, and how is it done?

Identity verification is paramount in ensuring risk mitigation and reliability in the long term. Given the rise in fraudulent activities and increasing emphasis on data security, businesses must choose robust identity verification solutions to assess individual/business 360 degree while supporting consent-based data management, access control, and data minimisation, ensuring compliance with stringent data protection policies.


What are the benefits of identity verification?

Identity verification is a process to confirm that an individual’s claimed identity matches their identity. The reason why identity verification is conducted is due to the following reasons:

  • Enhanced Security

Identity verification ensures only authorised individuals can access systems, data, or physical locations. It minimises risks associated with identity theft, account takeovers, and other fraudulent activities, safeguarding individuals and organisations.


  • Compliance and Regulations

Many industries, such as banking, finance and healthcare, have specific requirements for identity verification to meet Anti-Money Laundering (AML) and Know Your Customer (KYC) regulations. Robust identity verification solutions enable comprehensive screening of individuals and business partners, ensuring compliance with these regulatory mandates and shielding businesses from potential legal consequences and fines for non-compliance.


  • Data Protection

In today’s environment, stringent data security policies are a top priority. It is a legal and ethical imperative to select robust identity solutions that align with evolving regulations. Identity verification solutions designed for consent-based data management, access control, data encryption/masking, and data minimisation ensure that only necessary information is verified, reducing the exposure of unnecessary data.


  • Streamless onboarding, Faster TAT

Identity verification can simplify user onboarding processes and reduce administrative overhead. Biometric, liveness detection, OCR, and verification APIs for different use cases can make end-to-end onboarding more convenient. It is also helpful in offering customisable experiences and services based on user preferences and behaviour.


  • Trust and Reputation

Users and customers gain a heightened sense of security when they know their identities are being rigorously verified. This fosters trust that their personal information is protected, reducing the risk of data breaches and strengthening an organisation’s reputation.


While identity verification offers many benefits, it’s essential to balance security and user convenience to avoid creating barriers for legitimate users. Additionally, the level of verification required may vary depending on the specific use case and the associated risks.


This is where identity verification APIs play a crucial role in verifying different aspects of the individual, be it identity, age, address, criminal records, etc. The primary role of identity verification APIs is to confirm the identity of individuals, providing an extra layer of security and trust for businesses and customers and expediting onboarding and transaction processes in the fast-paced digital world.


What are the Benefits of Identity Verification APIs?

Real-time Verification: ID verification API enables near real-time verification of individuals and businesses to prevent impersonation or identity theft. 

  • Faster Onboarding TAT: Identity verification API facilitates fast and accurate identity validation by cross-checking sourced and government databases for a seamless onboarding experience. 
  • High Accuracy: Depending on the quality and the size of the proprietary database, API can verify the information quickly and in a secure environment. 

What are the Different Types of Identity Verification

Identity verification can be different based on the entity to be verified. Broadly, there are two ways to conduct identity verification:

  • Individual Identity Verification: ID verification APIs are a fast and accurate way for the verification of the identity of an individual based on their NID documents such as Aadhar card, PAN card, Voter ID card, Driving license and Passport. One of the biggest benefits of the verification API is the ability to verify individuals in bulk rather than doing them individually.
  • Business Verification: Business verification API helps with establishing the identity of a business, such as distributors, vendors, third parties, LLP, and private limited companies. Commonly used business verification documents are GST number, CIN/DIN, and Udyam Aadhaar Verification.


Types of Individual Identity Verification

  • PAN Card Verification: The Permanent Account Number (PAN) card is one of the most important documents that helps prevent tax evasion and illicit fund transfers by individuals and entities as it links all financial transactions made by a particular individual or entity. The Securities and Exchange Board of India (SEBI) has made it mandatory for investors to provide their PAN details for all business transactions. The PAN card verification process involves matching the card details provided by the user with the database maintained by the Income Tax Department and ensuring that the identity is authentic and not fabricated. PAN verification is crucial for companies to comply with anti-money laundering (AML) regulations and identify suspicious or fraudulent activities. Businesses can leverage PAN Card verification API to fastrack the verification process and ensure whoever they are onboarding or associating their business with is reliable.

  • Aadhaar Card Verification: It is conducted as a part of the KYC to prevent identity fraud and filter out duplicates, fake, and ghost identities. Aadhaar verification is required in various sectors for identity verification, including banking, telecom, government services, e-commerce, logistics, FMCG, etc., when onboarding white-collar or blue-collar employees, third parties, or customers. With Aadhaar Card Verification APIs, businesses can ease their compliance journey by validating the Aadhaar in bulk, eliminating duplicate and fake identities, and ensuring speed and scalability to the onboarding process. 

Types of Aadhaar Verification APIs

  1. Aadhaar Paperless: Fetch POI and POA data with Aadhaar Virtual ID (VID) Number
  2. Aadhaar Paperless Offline eKYC: Upload Aadhaar Number XML file to fetch e-Aadhaar details easily
  3. Aadhaar Verification via Digilocker: Conduct Aadhaar e-KYC online by fetching e-Adhaar based on Digilocker data
  4. Aadhaar QR Search: Pull Aadhaar POA and POI data using the Aadhaar QR code

  • Voter ID Verification: The Voter ID Card, also known as the Elector’s Photo Identity Card (EPIC), is issued by the Election Commission of India to adult citizens above the age of 18 years. Voter ID often verifies individuals’ identities, ages, and addresses. Voter ID Card Verification API extracts personal information provided in the ID card, such as name, father’s name, address, DoB, and EPIC number. It verifies against the election commissions’ government database. 

  • Address Verification: Address verification helps verify an individual’s claim of living at a particular address. These verifications are particularly needed by companies hiring employees, banks onboarding a new customer, or universities granting scholarships. Address Verification API uses PoA documents such as Voter ID Cards, utility bills (electricity, gas, water, etc.) or rent agreements signed by the landlord to fetch the details and verify against government databases to verify an individual’s identity. 

  • UPI Verification: The Unified Payment Interface (UPI) requires every bank account holder who registers for UPI to receive a unique virtual payment address (VPA). The National Payment Corporation Of India (NPCI) introduced this system to encourage digital payments. The UPI Verification API is used to verify the VPA of the user. Valid UPI ID (or VPA) instantly gives you the bank account holder’s name as registered in the bank. Accessing the updated data allows comparing the identity (KYC) details provided in the application form against the beneficiary name returned from the UPI API to validate the customers.

  • Driving License Verification: Fake or duplicate driving licenses can substantially increase identity fraud, causing an imminent threat to a business’s reputation and financial assets – especially in industries such as shared mobility, delivery and logistics, transportation, and much more. Identifying spurious and falsified driving licenses with the naked eye is difficult. Driving license verification not only helps validate that the individual is authorised to drive on public roads legally but is also used as proof of identity, age, and address in non-driving contexts. It is equivalent to other personal identification documents like Aadhaar cards, passports, PANs, Voter IDs, etc. 

  • Passport Verification: Conducting passport verification is most beneficial for companies conducting business with overseas customers or those partnering with cross-border businesses. Passport verification API uses the OCR technology to extract personal details like name, DoB, address, and the individual’s photo to verify against the government database. Doing this assures the companies that the individual holds a legitimate passport.

  • Bank Account Verification: Bank account verification is done to check the authenticity of the user and account status (active or dormant account) using the bank account number and the IFSC code. Bank Account Verification API uses the penny drop verification method to authenticate the beneficiary. The process calls for a transaction of Rs.1 to the user’s account and verifies the account information in real-time to ensure no transaction failures or reversals and to prevent identity fraud and thefts.


Types of Business Verification

Like individual verifications, business verification validates the business identification documents to establish legitimacy.

  • GSTIN Verification: GST is a unique 15-digit identification number assigned to every taxpayer (primarily dealer, supplier or business entity) registered under the GST regime. GST verification API enables KYB (know your business) verification by cross-checking the business’s GST number against the pre-validated database to verify the legitimacy of a business.

  • Udyam Aadhaar Verification: With Udyam Aadhaar verification API, one can validate the enterprise name, type, commencement date, full address & universal account number (UAN). Running this verification check confirms that small or medium business or enterprise is legal and operational via their Udyam Registration, also known as an MSME Registration issued by the Ministry of MSMEs.

  • MCA Verification: The Ministry of Corporate Affairs (MCA) maintains data related to companies/LLPs, easily accessed by regulatory authorities, directors, partners, professionals, companies, LLPs, and the public. MCA verification API validates company ID, company name, type & category, registration number, address, date of incorporation, and director details with just an input of the Company Identification Number (CIN) or Director Identification Number (DIN).

To explore all checks, click here.


What is the Process of Identity Verification via API

Step 1: Request initiation for verification

Step 2: Sending the request to start the identity verification process

Step 3: Entering ID proof details relevant to the individual or business

Step 4: Uploading the documents in real-time

Step 5: OCR-based data extraction 

Step 6: Instant verification check via API against various source databases to validate details 

Step 7: Based on the data received from databases, verification is completed, and the missing data is highlighted


How Identity Verification is Useful Across Industries

In the digital era, various industries have embraced identity verification using API integrations to have streamlined processes and improved customer experiences. For instance, the BFSI industry, being a highly regulated sector, needs robust and sophisticated identity verification APIs to streamline customer onboarding and KYC – making services more accessible. In insurance, agent and policyholder verification enables the insurers with risk assessment by extracting, verifying and validating any document/photo at any stage of the policy purchase or underwriting process.

E-commerce and retail benefit from identity verification to prevent shipping frauds, payment card frauds, account takeovers, and phishing attacks. Whether it is customer verification, seller verification or delivery partner verification, integrating identity verification API goes a long way in the shopping experience, ensuring AML compliance and improving digital identity management for both online and brick-and-mortar stores.

Real-money gaming platforms have often been the target of identity and financial fraud due to the large volume of transactions. Verification of a player’s PAN, Aadhaar, and address is a must to authenticate the identity, age, and location to adhere to stringent regulations and compliance mandates.

The travel and hospitality industry relies heavily on person-to-person interaction, trust and safety. Hence, identity verification of guests and employees, encompassing restaurant managers, kitchen staff, vendors, travel agents, contractors, and franchise partners, is indispensable to building a safe ecosystem for everyone. 

The IT sector relies heavily on API-based verification for vendor onboarding and recruitment agencies to expedite background checks. 


Conclusion 

In a rapidly evolving digital landscape, identity verification has become the linchpin across diverse industries, whether BFSI, e-commerce, manufacturing, gaming, or hospitality. It’s the foundation for secure, efficient operations and enhanced customer trust. At AuthBridge, we offer a comprehensive suite of identity verification APIs tailored to different sectors and needs. 

Get Started Today!

Connect with our solution experts today at sales@authbridge.com, and let us guide you towards a safer, more streamlined future. Get started today by booking a free consultation, and let us understand your unique requirements in depth.

Want to Check More Udyam Registration/Reference Numbers?

Want to Verify More GST Numbers?