ID verification for sharing-economy products

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Kalle Marsal
Kalle Marsal

The explosive growth of the sharing economy and its impact on the travel industry have been undeniable in recent years. For example, with more than 2 million listings in 190 countries and more than 60 million guests, Airbnb has become the world's largest accommodations provider. Uber operates in more than 580 cities, spanning 81 countries around the globe.

Every day, more and more travelers are relying on these and other sharing economy services to plan and book travel, find accommodations and secure ground transportation at their destination. Even with this rapid growth in the past few years, many people have yet to use the sharing economy for their travel needs. A 2016 report about global travel industry trends revealed that only 12% of holiday travelers surveyed in the U.K. had used Airbnb.

One of the main concerns that dissuade consumers from using such services is trust. How can you be sure the person you're dealing with is who they say they are and not a scammer, fraudster or criminal?

There have been several examples in the news of people on sharing-economy travel sites using fake identities or posing as someone they're not in order to defraud users. These negative headlines can make consumers wary. In fact, in a consumer survey by PricewaterhouseCoopers, 89% of respondents stated that trust was the basis of all transactions between providers and users in the sharing economy.

The key to establishing trust in this market lies in identity verification. But the challenge many of these companies struggle with is how to verify a person's identity through digital channels in a way that will not create so much friction that it turns away users.

To date, identity verification for these types of services has mostly relied on linking to users' social media profiles, asking them to verify with a second account, such as an email address or SMS text message, or having the user answer knowledge-based authentication questions using their personally identifiable information (PII).

Unfortunately, these methods are no longer secure. In an era when massive data breaches leak the email addresses, passwords, phone numbers, dates of birth and other PII of millions of consumers almost daily, it is easy for a fraudster to obtain all the information needed to pose as someone else online and open up a fraudulent account or take over a legitimate one.

Fortunately, thanks to the mobile revolution and the widespread prevalence of smartphones and tablets today, verifying a person's identity through digital channels is now much the same method people traditionally use during in-person interactions: checking an ID. With digital identity verification technology, consumers can use the camera on their smartphone or tablet to scan the driver's license, passport or other government-issued identity document to instantly verify the authenticity of the ID.

A person can also be identified using facial comparison technology that matches a selfie to the photo on the ID.

Rather than relying on PII (which could potentially be compromised) or simply tying users' accounts to their online persona on other digital platforms, digital identity verification enables businesses and users of the sharing economy to tie a person's online identity to a verified, government-issued ID and thus their identity in the real world.

Travel companies operating in the sharing economy can leverage digital identity verification to establish trust and combat fraud in a variety of use cases, throughout the many steps of the traveler's journey. Here are a few examples:

Enrollment

Sharing-economy services in the travel industry can leverage digital identity technology to verify all new users upon enrollment. This will give all stakeholders, whether host or guest, driver or passenger, assurance that the people they are communicating with are who they say they are.

Currently, the majority of profiles on most sharing-economy sites are unverified, meaning that users rely solely on peer reviews to determine if the person they're dealing with seems trustworthy.

Booking

Digital identity verification can again be used to verify a traveler's identity at the time he or she is booking travel arrangements or accommodations online.

Whether a sharing-economy service or a more traditional travel site, businesses in the travel industry can mitigate the risk of card fraud and reduce chargebacks by requiring proof of identity at the time of booking. That's because fraudsters using stolen credit card information prefer online channels where they can remain faceless in order to perpetrate their scams.

By having customers prove they have physical possession of the driver's license or other ID associated with the credit card being used to make the booking, travel companies can have a high level of confidence that the customer is legitimate.  

Arrival and check-in

Last and perhaps most important when it comes to the sharing economy, digital identity verification can be used to check the IDs of lodging hosts and guests (or drivers and passengers, in the case of ride-sharing). With a fast and easy way to verify each other's identities, both parties in a transaction can feel comfortable trusting each other, and many of the common scams involving fake IDs or fraudulent listings and bookings could be prevented.

Creating trust is essential to the continued growth of the sharing economy in the travel industry. The best way for online services and mobile apps to do that is to leverage consumers' mobile phones for fast and easy identity verification.

By implementing this technology at several steps throughout the process -- including first enrollment, booking and arrival -- businesses can not only reduce fraud and chargebacks but also increase safety and security for their users.

That will ultimately attract more new and repeat business, further improving the bottom line.

Kalle Marsal is the chief marketing officer at Mitek, a mobile capture and identity verification company. He has more than 20 years of marketing, technology entrepreneurship, venture capital and management experience in digital imaging, telecommunications, mobility, printing and other high-tech industries. He holds an MBA and two undergraduate degrees from Stanford.

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