As environmental and financial reckoning rise, consumers are pivoting towards the car rental industry, with millions of new users each year. In 2023, the global car rental market is projected to reach US$99.27 billion. But every rose has its thorn – as the relationship between renters and customers becomes less personal, autonomous identity verification is essential to prevent fraud and comply with the regulatory requirements.
Needless to add, the market has become highly competitive and price-sensitive. As more rental startups emerge, rental businesses are competing with lower prices to get ahead.
Luckily many roads lead to Rome. While price certainly matters when choosing the service provider, it’s essential to remember it’s not the only thing that counts. Automatic identity verification brings a cluster of perks beyond just saving you money. It improves security, adds convenience, and makes service more enjoyable, driving it as vital as the price tag when deciding what to go for.
In this blog post, we’ll discuss why you need a secure identity verification solution, take you through the process involved, highlight the benefits, and show how it helps to comply with regulations.
Why Verifying Drivers Needs to Be Easy and Safe
While service digitalization improves customer experience, it swells the service provider’s agony of fraud and theft. Without a secure automated identity verification solution in effect, organizations are living on borrowed time.
To understand why it’s so important to make sure driver verification is both safe and easy, let’s explore the reasons behind it:
- Keeping away fraudulent drivers
- Regulatory compliance and safety
- Reduced time constraints
Keeping away fraudulent drivers
According to Point Predictive, identity fraud in US car lending increased by 35% in 2022. This has caused major concerns for any service provider that trusts their customers with their assets. It’s challenging to place the liability of a damaged property on a person that doesn’t exist. Fraudulent drivers are most commonly associated with four types of activities:
- Credit card fraud. Using stolen credit cards to pay for rentals;
- Vehicle theft. Criminals steal rental cars, either for personal use or to sell on the black market;
- Identity theft. Criminals use stolen or counterfeit IDs to rent cars;
- Crime. Using rental vehicles to commit crimes;
Therefore, increasing amounts of car rental companies are committing to a secure and foolproof identity verification process. It also helps them with the following point: compliance with regulatory requirements.
Regulatory compliance and safety
Every European country requires a foolproof driver’s license verification. Regulatory compliance is essential to prevent unlicensed driving and ensure the safety of users and others. For example, the General Data Protection Regulation (GDPR) guides rental businesses on how to verify driver’s licenses. The GDPR also includes a variety of other requirements, such as encrypting and storing sensitive data. Businesses that violate the GDPR can face expensive fines.
The violations of regulatory requirements are usually caused by human errors associated with manual verification. Employees may not be adequately trained to identify counterfeit IDs. They might be rushed or distracted, which can lead to government fines and penalties.
Reduced time constraints
Time is of the essence in customer decision-making, allowing competing rivals to differentiate themselves. In the highly digital marketplace, the verification time can have the same influence on business evaluation as price does. Automated identity verification can reduce the time to complete a car rental transaction from several minutes to just a few seconds.
A mere delay of a few minutes in the verification process can lead to a change in plans for a prospective customer. Bound by constraints, the customer is compelled to rethink their choices, possibly leading to a cancellation. Fast and automated identity verification can cost the user only a few seconds, ceasing the problem in the first place.
Now that we know the benefits of a secure identity verification process, let’s see how it works in practice.
How to Automatically Verify Qualified Drivers
As we’ve seen above, rental companies have to pursue a set of rules to avoid fraud and identity theft. These are often grouped under the heading of Know Your Customer (KYC). To comply with the regulatory requirements, driver’s license verification is required.
Let’s see how you could automate such a process with intelligent software:
- To start, a customer has to capture or upload their identity document(s)to the rental company’s website/application. Depending on the country of residence, the required documents can be a driving license, passport, or a combination of both.
- Next, Optical Character Recognition (OCR) software will extract the requested information from the document(s) and compare it to the booking information.
- Optionally, the user proceeds to a Biometric Verification. With the use of AI Algorithms, an individual’s unique characteristics can be compared to the input (the ID card).
- After successful verification, the driver gets access to the rental vehicle.
The accuracy of identity verification is vital for any car rental company, where biometric verification adds protection against identity spoofing and allows only authorized individuals to rent cars.
Automated identity verification allows you to onboard multiple users in seconds. That means shorter turnaround times and higher user satisfaction.
Register & Verify Drivers with Klippa
Klippa’s identity verification system is a revolutionary solution that can help car rental businesses of all sizes streamline their operations and improve efficiency. With its ability to automate the customer onboarding and driver ID verification process, companies can save time and money while enhancing security and compliance. Our software uses AI to automatically extract, verify, organize, and anonymize data from ID documents from over 150 countries.
We’re committed to data security and anonymization, and our GDPR-compliant solution uses the latest techniques to protect your sensitive information. We’re also ISO 27001 and ISO 9001 certified, so you can be confident that your data is safe with us.
We don’t store customer data on our servers, so it’s completely inaccessible to unauthorized users. That’s peace of mind for you and your customers.
Klippa’s software can be coherently integrated with your rental service onboarding website or mobile application with the use of our SDKs and APIs.
Additionally, Klippa can also:
- Flag fraudulent activity by scanning the Machine Readable Zone (MRZ);
- Eliminate the risk of identity spoofing through liveness checks;
- Accurately verify the authenticity of ID documents;
- Use data masking to add an extra layer of security and be GDPR-compliant;
- Provide NFC verification and let your customers simply move their identity documents to a near distance from their smartphone and see the magic happen.
In a highly competitive market, a price war is the poison of every company’s existence. Stand out between the rivals with a seamless and frictionless rental process.
Interested to know more about our solution? Feel free to contact us or book a demo below!