Many companies needing to verify their clients’ identities have difficulty choosing а KYC (know your customer) provider. There are a lot of identity verification solutions on the market, but which one is better: the most expensive one? The most complicated one? In this article, we will take a look at price formation in KYC providers and offer some actionable advice on what to consider when choosing identity verification solutions.
So, how is the price of KYC determined and is it true that the most expensive KYC providers are the best on the market?
Secondly, some clients choose to use an automated identity verification solution, whereas others might need human assistance for additional documents and data verification. This, in turn, will affect the verification price as KYC solutions with human checks are more expensive.
The cost might affect the presence of certifications held by the chosen KYC provider (e.g. ISO 27001, NIST Standards).
In case the vendor holds an absolutely unique method of checking the identities, the cost of a patent might be included in the price.
Moreover, the majority of KYC providers need to pay third-party providers to have the ability to check users in the PEP and Sanctions Watchlists. It gives additional costs to the price as well.
The price per verification can decrease if a client signs a long term contract (for example, if a KYC provider service is hired for one year instead of six months). Some companies offer tiered pricing packages – the more verifications you buy, the less you pay per one verification.
What else can be included in the price? Service implementation. Of course, if there is only API integration that might not affect the price, but that is not the case with every KYC provider.
Are the most expensive KYC providers better? Not necessarily. It depends on exactly what you need from your identity verification solution. One simple example: Do you need human verification? Of course, the clients might be double-checked by AI and humans, but it would slow down the onboarding process and increase the churn rate. Do you need to only check the documents or do your industry regulations require more, such as face-matching checks, liveness detection, watchlists verifications, etc? All of the KYC components stated above might increase the price.
The size of the company might also affect the price. It is different if you need to check the identity of 1,000 people or 50,000 people weekly. The price per verification will be lower if your company has a large volume of identity checks.
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What Do Clients Need from a KYC Provider?
First, what might draw the attention of the potential client to the KYC provider is the percentage of fraud that has been previously identified. Of course, nobody wants to work with the identity verification solution which is unable to recognize fraudsters.
Second, it might be the number and type of documents, scripts (like Cyrillic, Latin, hieroglyphs), and special symbols (e.g. diacritics) that a particular KYC provider is able to process. Usually, they are ID (ID card, passport, driver’s licence, residence permit), proof of address (the lease contract, or utility bill), proof of income (hiring contract), etc.
Third, it is crucial to consider how much time it takes to complete KYC verification for the provider. Companies need to be certain that this amount of time is acceptable for the customers, while still performing valuable identity and security checks to prevent money laundering and other fraud.
What is also worth looking at? Well, the technical side of the process. How easy is it to implement a KYC provider in the client’s user interface? Do the KYC provider’s API libraries update regularly? Is the KYC provider’s software development kit compatible with the client’s software and programming languages?
And one of the other important things is the legal status of the identity verification solution as well as its reputation. It is better if a KYC provider would be licensed in the country of incorporation and obtain all the necessary documents that comply with industry standards. Of course, it is important to know that KYC providers have a good reputation and have never failed identity checks for any company or have never been involved in any AML scandal.
What about Regulations?
When choosing a KYC provider, it is also important to understand which regional regulations you will need to comply with. For example, crypto industry regulations are different for Malta, Japan, and Estonia. Thus, crypto services looking for KYC providers need to find one that perfectly meets the regulatory requirements for whatever jurisdiction they reside in.
How Can You Understand What You Are Buying Beforehand?
Although you know what is important, how can you be sure you are not buying a pig in the poke? Well, many KYC industry vendors provide a free-trial period or a demo version (by the way, GetID is one of them).
The demo can show you what the KYC process will look like for the customers. You can download your documentation and even pass identity verification. If a client has a compliance department or lawyers, they can estimate how good this works. The demo version will show what the KYC process will look like from the side of the end-user, as well as how easy it is to use an identity verification/KYC solution for a compliance team or support service (i.e. ease of data processing, reports, interface, etc.)
In general, a free trial gives users a good idea of how KYC will work for the client. Although, keep in mind that the free trial might not include the full product implementation if it is hardly made technically.
Hopefully, you now have a pretty good understanding of what goes into KYC service provider pricing, and how you can evaluate whether or not a solution meets your particular needs. The demo version of a product can help you better realize which provider meets your requirements.
Dmitri Laush is the CEO of the omnichannel identity verification solution, GetID.