Blockchain ID checks: How this startup is now verifying identities online

Veriff, Estonia´s fastest-growing startup, is partnering with Blockchain and also targeting small businesses.
Written by Kalev Aasmae, Contributor

A year ago, online-based ID verification startup Veriff was a company of 18 people. Today, the headcount is over 300, and it helps verify the identities of individuals ranging from Berlin public transportation passengers to Blockchain users.

It has been a busy year for Kaarel Kotkas, the now 25-year-old co-founder and CEO of online ID verification startup Veriff.

Last summer, the company raised $7.7m in Series A funding led by Mosaic Ventures. TransferWise co-founder Taavet Hinrikus and Hollywood actor and tech investor Ashton Kutcher were also among the backers.

SEE: How blockchain will disrupt business (ZDNet special report) | Download the report as a PDF (TechRepublic)

This funding has helped Veriff grow rapidly and hire hundreds of new employees, making it one of the most international companies in Estonia.

"About 40% of our team of 300-plus people comes from abroad. We have people from over 40 different citizenships. The largest communities are from Brazil, the US, Georgia, Turkey, Niger, and Russia," Kotkas tells ZDNet, adding that one in 10 employees working for the startup has relocated to Estonia.

This summer the company landed its first big international client, Berlin public transportation company BVG.

BVG is using Veriff to verify people's identities in its mobility app Jelbi. The app covers Berlin's entire public transportation system, scooters, bikes, ride-hailing, and car sharing, as well as traditional taxis.

"Veriff comes in when a person wants to use a Jelbi service that requires identity verification and driver's license validation," he said.

At the end of August, Veriff had another big announcement to make. Blockchain, which had been quietly testing different ID-verification services for some time, decided to start using Veriff to verify identities online.

The verification process is built in Blockchain's product and according to Kotkas is very simple. The user needs to have a valid government-issued document, internet connection, and a device – a computer, smartphone or tablet.

"First, you have to take a selfie, take a photo of your ID and finally submit the information. In the background Veriff records a video of the verification process," Kotkas explains.

"We match the face, check the validity of the document and analyze the network and device data that you use for the verification process."

Veriff then crosslinks all the datapoints to ensure the individual is who he or she claims to be and have not been involved in any fraudulent activity.

Veriff charges Blockchain per verification and, according to Kotkas, all the collected data is used for identity verification purposes only.

Three years ago when Veriff had just launched its service in Estonia and Kotkas gave his first interview to ZDNet, he viewed sharing economy and tourism as the biggest sectors where the ID-based verification services would be needed.

Now the focus has shifted to fintech, mobility, marketplaces and cryptocurrencies.

"Most of our clients also come from these sectors. We can verify over 3,000 different document types from 190-plus countries across the globe," says Kotkas.

In addition to the big companies and organizations, Veriff is now targeting small and medium-sized businesses. In the beginning of September the company launched a new subscription based online verification service for smaller businesses called Veriff Station.

This new product is aimed at companies with verification volumes below 2,000 per month. They will pay based on the number of verifications, rather than a fixed fee regardless of the number of verifications.

Veriff is launching the beta version of Veriff Station and recruiting 500 test clients, which will receive 500 free verifications for three months.

"In return, we get valuable feedback to improve our product. We see a great potential with smaller companies and would like to provide them with a secure solution to help to scale their businesses," says Kotkas.

He believes that as businesses move online, the demand for verification services is growing rapidly.

"The market's hot and a lot of customers are popping up. In fact, competition is great because it is pushing [rival] companies to work hard, and improve the service."

SEE: Microsoft: Forget Google, Facebook – log in with our new blockchain ID

In his opinion, Veriff stands out from the competition because of its thoroughness and attention to the smallest of details.

"Most of our competitors offer mere compliance verification, to provide KYC [know your customer] or anti-money-laundering compliance, whereas Veriff goes one step further and helps companies to prevent online identity fraud and abuse," he says.

Usually, competitors treat each verification session as independent, whereas Veriff crosslinks the data from different sessions to detect systematic fraud, according to Kotkas.

"We record verification sessions to make sure they're done voluntarily and in real time rather than prerecorded. We also check the document validity, face comparison and crosslink the information with the device and network metadata."

He adds that another thing that makes Veriff distinctive, is device and network fingerprinting to ensure the devices or networks have not been used for any fraudulent activity.

"All these datapoints help us to be fast and accurate with our verification process and keep the conversion rates high."

Kotkas' ambitions are bold. He hopes that Veriff is going to be the first fraud-proof identity provider and reputation platform for every connected human.

 "We're on track for Veriff to issue passports by 2025 rather than by governments."

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