Identity Verification For Businesses: A Complete Guide

Every year, millions of complaints are registered around identity thefts. Of these, most of them involve fake account creations, credit/debit card frauds, making unauthorised purchases, and even obtaining loans.  According to statistics, in 2021 alone, identity theft resulted in the loss of USD 52 billion worldwide. 

To reduce such activities and constant loss, businesses have started taking identity verification seriously. Every customer or vendor  needs to undergo an identity verification (or KYC) procedure almost all financial institutions.

In this blog, we’ll help you understand 

• The concept behind identity verification
• its benefits
• Identity verification procedures
• and how Cashfree Payments makes the entire process easy and efficient

We’ll start with the very basic question first.

What Does Identity Verification Mean?

In a layman’s language, identity verification is a process undertaken to confirm a person or an entity’s identity and validate their details. This typically involves checking or cross-verifying their details mentioned on government issued identity documents such as Aadhaar card, PAN card, passport, driving licence, birth certificate and so on.

Identity verification is used across multiple industries, especially the banking and payments industry, to ensure smooth payment transfers to the correct person. In fact, it is instrumental for avoiding financial crimes or money laundering activities. Ideally identity verification process is also known as the KYC (know your customer) process. This can be done offline, at an office or bank branch, or online using third-party identification verification service providers.

Customer identity verification,

• Eliminates the risk of fraudulent activities, money laundering, failures and thereafter, payment reversals, 
• ensures proper risk assessment and management
• Is one of the faster, and more efficient ways to onboard customers

What Is Identity Verification As A Service?

With everything going digital, including opening bank accounts or sending money to a person or entity via online payment mediums, the need for customer identity verification has become paramount. 

However, taking up this activity in-house and ensuring identity validation for every single onboarding is a very time and resource consuming task. To solve this issue, many organisations help businesses with quick identity verification suites. For instance, with Cashfree Payments’ Verification Suite, you can easily verify a person or entity’s bank account, aadhaar, UPI ID, PAN, GST details and more with government’s updated database in real-time, 24*7. Such a service is known as Identity Verification as a Service.

This service also addresses many customer pain points and ensures that they complete their identity verification effortlessly. For instance, a customer can simply verify identity within 2-3 steps complete the entire process. They no longer need to visit an office or branch and go through the otherwise complicated and cumbersome ID verification process. 

Interestingly, a research report by McKinsey projects that Identity Verification as a Service is expected to touch USD 20 billion mark by the end of FY 2022, with Total Addressable Market growth of approximately 9% to 15%.

What Are The Challenges And Benefits Of Identity Verification

Listed below are some reasons why we need identity verification. 

Challenges Of Identity Verification

Many challenges pertain to verifying a person or entity’s identity. These include, 

• Issues during a user’s KYC onboarding process due lack of authentic document presentation, manipulations, etc. 
• Payment failures and resulting reversals due to incorrect account details provided by the user  
• Dependency on beneficiaries to provide correct details and lack of ways to verify the information in advance to avoid resulting issues
• Limits on verification capacity, especially in case of offline verification process

Benefits Of Identity Verification Using Cashfree Payments’ Verification Suite

Via its Verification Suite, Cashfree Payments enables businesses to solve or even eliminate the above-mentioned challenges. 

• Verify a customer’s bank account, UPI ID, PAN Card, aadhaar, GSTIN details with updated government database in real time, 24X7 without any third-party intervention
• Do customer KYC verification in real-time and onboard users in a matter of minutes
• Ensure payments are sent to the right person at once with instant bank account verification service and eliminate the risk of payment failures and resulting reversals
• Take advantage of bulk verification, and save time and efforts 

What Documents Can Be Used To Verify Identity?

Hundred plus documents can be used to verify an identity. However, the banking and payments industry of India asks for the following documents to verify a person or entity’s identity. 

• Valid Passport 
• Driving licence
• Voter ID card 
• PAN card 
• Aadhaar card
• Bank passbook
• Ration card
• GSTIN number or registernation certification
• Bank passbook 
• Any other identity proof issued by the central or state government

You can use one or more of the above-mentioned identity proofs to verify and authenticate a user’s ID at the time of onboarding. 

How To Verify Identity?

Cashfree Payments’ Verification Suite equips you with different identity verification tools such as Bank Account Verification, PAN Verification, and UPI Verification to verify a user’s bank account, UPI VPA, IFSC, PAN, Aadhaar, and even GSTIN details instantly. 

You can use these tools to authenticate a beneficiary’s details at the time of their onboarding to ensure correct customer details are available at the time of payments or payouts and eliminate the risk of failures.

Verify Beneficiary Bank Account Details 

This tool helps verify if a bank account exists based on the information furnished by a user. Easily match the name provided with the name mentioned in the bank records and authenticate the details. You can also verify up to 10,000 bank accounts at once in real time using Cashfree Paymen’s bulk upload or advanced APIs.

To verify a bank account,

• Go to Verification Suite Dashboard, click on Bank Account, and then select Verify Bank Account.
• Enter the following details in the verification form
  • Account Holder Name
  • Account Number 
  • IFSC 
  • Phone Number

• Click on Verify. 
• In case of valid bank details, you will see a success message. Alternatively you’ll receive an invalid bank detail message in case of mismatch.  

Beneficiary Bank Account Verification is especially beneficial for, 

• Businesses and individuals for payment verification
• Marketplaces
• Insurance providers
• Payments and fintech companies
• Security and equity investment platforms
• Wallet service providers 
• Lending Platforms
• Recruitment and identification verification companies

Verify UPI VPA 

Instantly verify a user’s UPI VPA using Chashfree Payments’ UPI verification feature. It helps make successful transfers to beneficiary accounts and eliminate the risk of failures. 

To verify a user’s UPI VPA,

• Go to the Verification Suite Dashboard and click on UPI VPA. Then, select Verify UPI VPA
• Enter the user’s VPA and account holder name you wish to verify
• Click on Verify. 
• In the case of a valid UPI ID, you’ll see the following message. 

• In the case of an invalid UPI ID, you’ll see a message stating otherwise

Verify Bank IFSC 

Next, verify a user’s bank details using their IFSC code. Besides validation, you also get to know other details such as bank and branch name, address, and supported payment methods. Such details are helpful in making successful transfers to the users.

To verify IFSC,

• Go to the Verification Suite Dashboard and click on IFSC.
• Enter the IFSC that you wish to verify.

• Click on Verify. 
• In the case of a valid IFSC, you’ll see the following message.

• In the case of an invalid IFSC, you’ll see a message stating otherwise.

Verify PAN 

PAN verification is especially beneficial while onboarding a customer or entity, or making any financial transactions to them. The tool helps you to validate whether or not a particular PAN is valid and also check if it belongs to an individual or a business.

With Cashfree Payments Verification Suite, you can verify a single PAN or up to 10,000 PANs at a time via our advanced APIs. 

You can also view other details like, 

• PAN type – individual or business
• Name of the PAN holder
• Verification status

To verify PAN,

• Go to the Verification Suite Dashboard and click on PAN. Then, select Verify PAN.
• Enter the PAN number and name of the holder (if known) in the form.

• Click on verify. 
• In the case of a valid PAN, the following message will appear on your scene.

The tool also notifies you in the case the PAN is invalid, has been rejected, or its verification failed along with other PAN details as visible in the image above.

PAN Verification is especially beneficial for,

• Loan providers – to check the authenticity of the customer
• Insurance and Investment Portals – to ensure successful KYC verifications during onboarding and while making payouts
• Wallets – to enable quick refunds and wallet payment acceptances
• Payments or Fintech Industry – to verify whether a PAN belongs to a business or an individual before making fund transfers or processing any payment

Verify Aadhaar details 

Aadhaar has become one of the primary documents serving as an individual’s identification proof. And, it’s required during any customer onboarding process, be it to open a bank account, a wallet account, apply for loan or even an insurance. 

With Cashfree Payments’ Verification Suite you can easily and quickly verify a customer’s Aadhaar details.

To verify an Aadhaar number,

• Go to the Verification Suite Dashboard and click on Aadhaar. Then, click on Verify Aadhaar.
• Enter the Aadhaar number you wish to verify.

• Click on verify. 
• You will then see a window stating whether the aadhaar number is valid or invalid. It also provides other details such as,
  • State
  • Mobile number 
  • Age band of the aadhaar holder

Offline- Aadhaar Verification

With Cashfree Payments, latest addtion to the Verification Suite you can now verify customers and stay complaint with government regulations from governing bodies like SEBI, RBI and IRDAI. 

Offline Aadhaar Card can be verified:

• Go to the Verification Suite Dashboard and click on Aadhaar. Then, click on OKYC.
• Enter the Aadhaar number you wish to verify.
• Click on verify and send OTP

• The system will generate an OTP, that will be sent to the users registered mobile number for a consent-based verification flow
• You will have to enter the OTP recaived by user, to get the verification results

• Get complete results like:
• Registered name
• Gender
• Address
• State
• Date of birth
• Phone number
• Email ID
• UIDAI registered user’s image, and
• Father’s name

Verify GSTIN 

Last but not least, Cashfree Payments also gives you the ability to verify GSTINs easily and swiftly. You can use this verification tool at the time of vendor onboarding, financing loans to businesses or for insurance purposes.

GSTIN or Goods and Services Tax Identification Number is a unique 15 digit identification number that is assigned to every entity registered under GST. 

To verify GSTIN,

• Go to the Verification Suite Dashboard and click on GSTIN. Then, click on Verify GSTIN.
• Enter the GSTIN number and name of business (optional) you want to verify.

• Click on Verify.
• In the case of a valid GSTIN number, you will see the following message appear on your screen.

Meanwhile, the tool also shares additional details including,

• Taxpayer type, 
• GSTIN registration date, 
• Legal name of the business, 
• GSTIN status

The All-in-one Verification Suite For Tomorrow

Verifying a person or an entity’s identity is a hassle in itself. This is especially true when you need to verify hundreds and thousands of identities at the same time. A one-stop Verification Suite allows you to do this with utmost ease and comfort. Be it an individual identity verification or that of about 10,000 people or businesses, the tool helps ease your work to a great extent. 

If you have been manually verifying customer identities so far, now is the time to switch. Get in touch with Cashfree Payments to understand how our Verification Suite can uncomplicate your work. 

Frequently Asked Questions On Identity Verification

What Is The Difference Between Identification Vs Verification?

Identification means identifying a person based on the information they furnish. For instance, their name, number, address, etc. Identification helps build a person’s identity which they can then use to open bank accounts, get insurance, sign up for loans, passports, and so on. aadhaar, PAN, Passport, etc. are some examples of identification. 

Verification, on the other hand, focuses more on verifying a user’s furnished information. This is especially important to eliminate the risk of fraudulent activities such as setting up accounts using stolen identities, etc. 

Besides identity cards, modern verification method uses fingerprint scan and facial scan among others to cross-verify a user’s identity with the data saved in government records. This helps verify IDs faster and detect suspicious activities, if any.  

What Is The Difference Between Identity vs Authentication?

Identification is ideally a way to identify a user based on their name, surname, address, phone number, and other critical parameters. In other words, identity represents a person’s individuality.

Authentication, on the other hand, is the proof that a user furnishes to certify that the information they have furnished is correct and valid. 

To give you an example, an aadhaar card represents a person’s identity. However, documents such as ration cards or birth certificates serve as authentication proofs.

How Long Does Identity Verification Take?

Different tools take different amounts of time to validate an identity. For instance, a bank may take about 2 hours to 24 hours to verify an identity. Meanwhile, Cashfree Payments’ Verification Suit enables identity verification within seconds. 

How Do Employers Verify Identity Online?

One of the most common ways to verify employee identity is by partnering with a third-party identity verification service provider. However, if you want to do it in-house then employers can use Cashfree Payments’ Verification Suite to verify employee identities. Cashfree enables you to validate up to 10,000 customer IDs at the same time, saving you time, money, and efforts.