Customer verification is the act of ensuring that the information the customer provides is associated with their identity. It is important in preventing fraud and money-laundering but it is also used to improve customer experience and offer personalised offers. Customer verification is done, for example, by financial institutions, government entities, merchants, e-commerce platforms, and social media sites.
Customer verification can be done both in person and online. With in-person verification, the customer usually has to show a physical identity document to a staff member. The staff member then verifies the authenticity of the document by sight or with the help of a device. The required identity document could be a driving licence, passport, ID card, or birth certificate. In some countries, it is also common to ask for a recent utility bill in addition to the identity document.
Online customer verification is becoming more and more popular. The easiest way to verify customers online is to use 2-factor authentication where the customer enters a code sent to their email address or phone number. It is used by many webpages when signing in. For more secure identity verification, the customer needs to fill in personal information and send photos of their identity document (or several documents) which are then usually checked against a database. Some verification processes also require a selfie, a live video call, or a handwritten consent.
In some countries, customer verification is done using services like smart ID-card, Smart-ID application, or mobile signature. To use these services, the customer needs to verify their identity to the service provider (e.g., a government official, SIM card provider) and then they receive PIN codes. They can use these codes to verify their identity on all websites that allow this kind of sign-in. In Estonia, the users of these services can open bank accounts, check their medical data, do taxes, and even vote. All of that online without any additional verification.