New user verification is an integral part of security for e-commerce, entertainment, and technology companies alike. Data from the Federal Trade Commission shows that total fraud and identity theft cases have nearly tripled over the last decade. New user verification solutions aim to combat these crimes by confirming the identity of a new user during the registration or onboarding phase of a service or platform.
The decision to build or buy a user verification system isn’t always straightforward. Technical resources, cost, and scalability are just a few factors that can help your business choose to buy an out-of-the-box verification API or create a custom solution in-house. Keep these pros and cons in mind as you weigh your options.
Build vs. buy: understanding your options
Before we discuss the pros and cons of each path forward, let’s first understand what the new user verification process entails.
New user verification is when a customer registers for a new account or service, and the business requests personal information such as the customer’s name, birthdate, and address. The company then verifies the accuracy of this information, which might involve simple steps like confirming the customer’s email or phone number through a one-time passcode.
For more sensitive transactions, such as opening a bank account, applying for a loan, or transferring large amounts of money, businesses might cross-check the provided details against various databases to ensure they align with existing records. Some companies use biometric verification in addition to one-time passcodes, such as fingerprints or facial features.
Throughout the identity verification process, companies must balance robust fraud prevention with minimizing customer disruptions. Your business must verify new users efficiently so the customer experience is not interrupted. It’s a tricky balance, but it's an important one to get right.
With this in mind, let’s examine some of the key factors that can influence your customer experience and fraud protection results, whether you build or buy your new user verification solution.
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Fraud protection
Of course, fraud protection is the number one reason for implementing new user verification. Building an in-house solution means you have full control over your system’s fraud protection features. However, it takes significant resources to combat the new and growing threat of SMS pumping fraud.
An API like Plivo’s Verify includes built-in fraud protection for free. Fraud Shield is an AI-driven model that automatically detects and blocks fraudulent messages. Automatic message thresholds and geo permissions make it easy to customize your company’s fraud defense with little to no developer resources.
“Plivo’s no-cost, built-in Fraud Shield solution has lowered costs and boosted ROI, all while allowing us to focus on growth instead of constantly monitoring for signs of SMS pumping fraud,” said a prominent global technology platform, one of Plivo’s clients.
Assess your readiness to build your own fraud protection features by answering these questions:
- Does your team have the expertise required to build a robust system? Do your developers have specialized knowledge in security and authentication protocols?
- Are you prepared to stay current with changing security regulations and specific industry standards?
- Is your company equipped to handle sensitive user data in-house? What are the risks of trusting a third-party provider?
Cost per verification and ROI
The next biggest factor to consider is your budget. The budget for building an in-house verification solution will vary significantly based on the complexity of the system, the size of your user base, and the level of security required.
There is a wide range of costs to consider when building a solution in-house: personnel costs, such as salaries; infrastructure costs; development and testing costs; and maintenance and compliance ongoing expenses. Ultimately, it helps to calculate two metrics in order to compare the upfront investment of building your own solution to the ongoing cost of an off-the-shelf solution. Calculate your Total Cost of Ownership (TCO) and your cost per verification.
TCO is the full cost of building and maintaining an in-house solution versus purchasing from a vendor. Cost per verification considers the total price of verifying new users.
Plivo offers the lowest cost per verification among turnkey solutions on the market today. Plivo Verify charges nothing for both Fraud Shield and OTP verification services. Plivo users only pay SMS, voice, or WhatsApp charges. Plus, Verify API uses Plivo’s pre-approved phone numbers, meaning customers do not pay monthly phone number rental fees.
Verification methods
There are many ways to verify new users, some more complicated than others. Even within categories, there are multiple channels to consider. For instance, Plivo offers one-time passcodes delivered via voice, SMS, and WhatsApp - with RCS and email coming soon.
New user verification needs to be lightweight, functional, and user-friendly for your customers. Bugs or downtime can frustrate new users and prevent them from completing account sign-ups. When weighing your options, consider your technical needs.
Answering these questions can help:
- How well would a third-party solution integrate with your existing systems?
- What verification methods do potential new users prefer?
- Do you need a highly customized solution to meet specific industry requirements?
- Is your solution scalable and capable of handling increasing volumes of users without compromising performance?
Scalability
Do you need a solution that can grow with your business? Plivo’s turnkey solution is designed to verify users in 220+ countries and territories within five minutes. That type of global reach is tough to match with an in-house solution. Plus, there are development costs that hit your bottom line each time you need to scale your system to reach new users.
Ease-of-use
Plivo’s Verify API is designed to “go live in one sprint.” Developer-first APIs and sample code can slash implementation time by 90%.
This ease of use provides a great experience for your team—and your customers, too. Plivo Verify boasts a 95% conversion rate across multiple authentication channels. This high rate demonstrates that customers are reliably receiving and sending one-time passcodes to verify their identities.
Consider how the verification process will impact your user onboarding and retention. Determine if you need the ability to quickly adapt the verification process to user preferences or new technologies. A third-party solution is often more flexible and frictionless than an in-house solution.
Compliance
Finally, determine what compliance hurdles your new user verification solution needs to overcome to go to market. Depending on your industry, your user verification solution may need to be HIPAA, PCI DSS, or GDPR compliant. This adds a layer of complexity to the development process as well as a new level of risk for your company to consider.
Plivo is ISO 27001:2022, SOC 2 Type 2, and PCI DSS certification, as well as HIPAA compliant. We help our customers bypass regulatory paperwork and go live instantly using pre-registered sender IDs (e.g., PLVRFY, PLVSMS). Plus, Plivo Verify users can access pre-vetted templates to ensure messages are not filtered out by spam blockers.
Which option is right for your business?
There’s no single best new user verification solution for every business. Some companies will choose to invest the time and resources to develop and maintain an in-house platform. Others can turn to Plivo to get best-in-class fraud protection, easy implementation, and low-cost verification in one seamless API. Learn more about Plivo Verify and request a free trial to get started.
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