Address Verification System in Banks and Other Sectors | An Overview

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Chargebacks and other fraudulent activities have led the banks and other sectors to develop identity and address verification solutions. These solutions, when in place, not only ensure a safe customer onboarding but also reduce the chances of criminal activities. 


Address verification is a measure to validate the address of a client before they make any transactions. This ensures that the user is legitimate and all the transactions are safely performed. Checking that a particular address exists, in reality, is really important to prove the authenticity of the client. 

How to Verify Address?

The address verification process is simple in which the end-user is asked to provide a picture of the identity document that can be cross-matched with the one present on the ID document. After that, they are required to provide a secondary document that has their business or residential address on it so that it can be verified. After verifying an address, the results are displayed which could also be checked in the back office. 

Documents Required for Address Verification

Before looking at what documents the address verification system supports, it must be noted that it supports the latest documents not older than three months. If provided, they would be declined by the system automatically. Address verification system supports:


  • Passport 
  • ID card
  • Envelope 
  • Driver’s license 
  • Employer letter 
  • CPR smart 
  • Insurance agreement
  • Bank statement
  • Utility bill 
  • Rent agreement 
  • Tax bill 

All these documents are used as proof of online address verification but they must be up-to-date. Once the type and authenticity of the document are checked, the name, insurance date, and address mentioned on the document are extracted using Optical Character Recognition. During verification, the system extracts as well as authenticates the full name of the user present on the document. The system quickly informs if it finds the document photoshopped or forged. To check the authenticity effectively, the AI-based system also checks the folded edges of a document. 

Why Do Banks and Other Sectors Need Address Verification Systems?


The need to address verification is increasing with the increase in fraudulent activities. Here is why banks or any other sector needs address verification. 

  1. Fraud Prevention

One of the significant reasons why banks and other sectors need the verification of address is to prevent fraud. Whether it is an e-commerce industry or a financial sector, verifying addresses is a dire need of the hour. Online businesses face chargebacks quite often which increases by 41% every two years. This means that the businesses are at stake and must take precautions if they want to stay away from fraudsters. Thus, address verification not only helps the financial institutes mitigate online identity fraud but also manages the company’s reputation in a better way. 

  1. Reduce Returned Shipments

One of the greatest losses of any business is the returned shipments which cost them a huge sum. And when the addresses are not valid, the company faces this loss repeatedly. The CNBC report says that from 123.9 billion dollars online sales, 30% are returned. And these returned shipments cost  37 billion dollars to the company. So, these rising returned shipments can be controlled through address verification solutions.  

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  1. Enhance Customer Experience

Every business wants to provide a better customer experience as the customers are the assets of the companies. And the responsibility to provide a great customer experience is high in online businesses. So, with the online address verification services, the companies can have a record of their customers, and that is up-to-date. This, as a result, helps them to have efficient communication with the clients so that faster delivery service can be provided. 

  1. Better Comply with FATF Recommendations

FATF recommends all the entities to run identity verification procedures. They would not only ensure the customer’s security but also maintain the integrity of the platform. Employing address verification not only helps the companies to validate the identities but also ensures that they comply with the KYC/AML regulations. 

Final Thoughts

The fraudulent activities are rising with time and all the sectors need to validate the address, especially the e-commerce and financial institutions. Where businesses are moving towards advanced solutions to combat criminal activities, the fraudsters are not coming slowly as they have developed sophisticated strategies to fulfill their malicious intentions. Conventional ways to verify an address are not functional anymore. So, address verification is the best choice to make the KYC (Know Your Customer) process even more robust by reducing the chargebacks as well as criminal transactions.


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