The Sharing Economy is transforming how we interact and conduct business, commerce, healthcare, and more. As the sharing economy is built on interactions between partners and consumers, lack of trust is the most important hurdle. The absence of a standardized, fully reliable method of verifying the identity of participants and equipping them to prove the authenticity of their credentials could pose a real challenge to the success of sharing economy participants.
The maturation of the sharing economy depends on frictionless identification of participants and their qualifications to secure transactions, even before they happen. While most companies understand the need for online identity verification, they lack the resources and capital required to organically establish checks that are effective, efficient, and secure for everyone involved.
There are seven major hurdles to effective, efficient, and consistent online identity verification. Along with each of these issues, there are actionable steps to secure your business and demonstrate that your marketplace is a safe, transparent place for people to engage in peer-to-peer interactions.
The Online Identity Verification Process Creates Friction
A good online identity verification system should be nearly invisible. The sharing economy is continuing to grow and diversify, and customers are going to pick the businesses that offer simplicity and an assurance of security. Conversely, if onboarding is too lengthy, rigid or intrusive, a would-be participant experience ends before it ever started.
The verification process has to be low-anxiety yet thorough – and clearly worthwhile. By implementing an approach that is focused but flexible, you can remove some of the stress and risk of trying to understand which processes can accurately identify each individual in your growing and changing peer-to-peer user base in a rapid and cost-effective manner.
There is no Single Definition of Online Identity Verification
Traditional identity verification is a relatively standard process. Most people are compliant with (even comforted by) requests for ID in offline environments like banks or airports. But in this digital world, despite of billions of online interactions (personal, enterprise, government), there is a lack of understanding of what identity verification means. Even the terminology varies widely by source and channel.
The onus falls on the sharing economy companies to decide what components to include in the identity verification process. Additionally, separate components will contribute different levels of security and verification. Hence it is up to the companies to figure out which components of the identity verification system need to be outsourced or can be developed internally.
Identity Verification Processes Change by the Moment
The sharing economy is young and growing. Fresh players and segments are continuing to come online almost daily. With the introduction of new marketplaces, new opportunities and new risks comes the challenge of practices and compliance required to build the trust needed to keep these marketplaces growing safely. At the moment, there are no standard verification requirements because guidelines and privacy regulations change frequently and inconsistently across industries and geographies.
Until a common and shared set of identification measures can be reached, companies that manage their own online ID verification must be hyper-vigilant in order to protect their community of users and to mitigate compliance risks. You need to have a partner that is focused on market and regulatory changes and knowledgeable about the necessary steps to stay ahead of dynamic requirements.
Online Identity Requires a lot of PII
Personally identifiable information (PII) is very prevalent in processes that distinguish or trace individual identity. It can include someone’s full name, Social Security Number or credit information, and is linked to a secondary source of personal information like date and place of birth, or mother’s maiden name.
Online identity verification measures require PII. As wary as many consumers are about providing this information online, many organizations are reticent about holding onto it. Even as online identity gathering and security measures become more sophisticated, there remains widespread concern about how to secure personal data from a hacker capable of serious harm upon acquiring an SSN, home address or date of birth.
The concerns are valid. Companies that choose to house PII face a host of unnecessary risks and potential liabilities. But in the same way that many companies have moved away from housing customer credit card data, you do have the option to minimize the required amount of PII internally. Outsourcing this function to an online identity verification specialist assures the security of your users’ information and keeps your risk to a minimum.
Current Methods Reveal Very Little “Real” Information
The challenges around PII are compounded by the fact that PII may actually reveal very little about a person’s qualifications. PII does not reveal much that is useful for creating security and comfort between participants in a sharing marketplace. Knowing someone’s name, birthday, or Social Security number tells you nothing of the qualifications that make them a valuable partner – and even less about personal qualities that will impact the transaction’s nature.
Sharing economy companies need a way to understand the real qualities of participants to clarify what they can and cannot do for others in the marketplace. Of course, the importance of knowing specific qualifications can vary by the sensitivity of the marketplace itself. For example, it’s important to know that if you order an Uber or Lyft driver, the name and face of the person who arrives to drive you matches the one on the screen.
You Must Verify (and Re-Verify) Constantly
Online identity verification is complex and successful verification is vital to the health of your brand. Companies working to grow a vibrant user base have to keep up with the changes within it. These efforts may require large amounts of time and financial resources than are available. Keeping up with constant verification needs should not be a challenge for your developers. It costs time and money, and ignoring it leaves you vulnerable to events that could seriously impact your brand.
Whether it’s verifying new users’ profiles or keeping user credentials up to date, a dynamic online identity verification solution will help you to make good on the all-important promise that legitimate individuals are engaged in your secure marketplace.
Regulatory Requirements Add Complexity
With the sharing economy positioned to double in size every year, it’s not surprising that online security and privacy regulations are becoming more complex and thorough, particularly in industries that require large amounts of PII.
While legal compliance with HIPAA, FCRA, FDIC is mandatory, those standards are the minimum required and do not always significantly benefit your security posture to data breaches which can have adverse impact to your brand. Going above and beyond these requirements is essential so your partners and customers feel confident whether or not you are providing a secure business environment.
Online identity verification is complex and dynamic. From making sure your customer identification process is intuitive and thorough, to minimizing the risks of managing PII, the effort requires an incredible level of diligence.
With that in mind, ensuring that every participant in the collaborative space has a simple, third-party verified online identity is vital to the success of your brand. You need an experienced partner who understands these points and can assure they are managed effectively.
Put the security of your company into the hands of a partner that can keep the identity of your users up-to-date, keep you compliant, and separate you from the risks of holding and managing highly sensitive data.
- Ensure that you are able to verify the identities of all users involved in a transaction
- Give people ownership of their own online ID, eliminating the need to house private information inside your system.
- Thwart potential threat actors from stealing the PII of those participating in your marketplace
Confirm (and automatically re-confirm) the credentials of your user base
- Protect individual identities, reducing your risk because only the owner can store, keep, and employ the data