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Document verification: Understanding the whole process

See how document verification works and how it can benefit your business.

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⚡ Key takeaways
  • Document verification is the process of verifying whether a document — such as a bank statement, employment record, business document, etc. — is authentic or not.
  • The document verification process can usually be broken down into four steps: document collection, data extraction, document validation, and manual verification.
  • Digital document verification can help you meet regulatory requirements, mitigate fraud, build trust, and onboard customers faster.

If you're looking to implement identity verification solutions for your business, you’ve got a lot of options to choose from, ranging from the relatively simple to the extremely complex; from the tried-and-true to the cutting-edge.  

While it may not be the most exciting option, document verification — really, the OG verification solution — still has an important role to play when paired with other verification techniques. 

Below, we take a closer look at document verification and outline how it works. We also review the industries most likely to benefit by incorporating it into their identity verification processes and answer other commonly asked questions about document verification. 

What is document verification?

Document verification is simply the process of verifying whether a document — such as a bank statement, employment record, business document, etc. — is authentic or not. Many businesses leverage document verification as a part of their broader identity verification processes alongside other verification methods. 

While document verification can occur in both physical and digital spaces, the term is most often used to refer to online or digital document verification. In either case, document verification typically looks something like this:

  • The user supplies information about themselves as part of the account creation process. This information can vary from business to business but may include the individual’s name, address, date of birth, SSN, etc. 
  • Where necessary, the user is then asked to provide one (or multiple) documents that can verify the information provided. For example, a piece of mail may be requested to verify the individual’s address, and a birth certificate may be requested to verify the individual’s age and date of birth.
  • The provided document is verified to ensure that it is authentic and not forged. 
  • If the document is successfully verified, it can act as evidence that the information provided by the individual is truthful.

How does online document verification work?

How exactly online document verification works depends on a number of factors, including the industry you operate within and the types of documents that you are dealing with. That being said, the online document verification process can be broken down into four discrete steps:

  • Document collection
  • Data extraction
  • Document validation
  • Manual verification

1. Document collection

The first step in verifying a document is, naturally, to collect it. While this can be achieved in a number of ways, it typically involves asking the user to capture and upload one or multiple photos of the document. 

Once the individual submits the document, it’s pre-processed and analyzed to ensure that it meets whatever requirements the business has set. Is it actually a picture of the required document and not of a cat? Is the photo clear and of high enough quality? Does the photo capture the document in its entirety, or is it a partial photo? Are there any obvious signs that the document (or photo) has been tampered with? Does the document contain the necessary information for verification?

Documents that don’t meet these requirements, for whatever reason, will be rejected. Those that meet the requirements will move on to the next step. 

2. Data extraction

When a user uploads a document for verification, they do so by providing a photo of said document. In order to access the information stored within the document, the data must be extracted. This extraction can be accomplished in a number of ways, including the use of optical character recognition (OCR), pattern recognition, and other methods.  

Once all relevant data has been extracted, it is then compared against any data that has been provided by the user. For example, if the user has uploaded a utility bill as proof of address, the address contained within the document will be compared against the address initially provided by the user.

Discrepancies between user-supplied data and the data contained within the document should raise a red flag. While these discrepancies may be indicative of an input error, they may also be a sign of fraud. 

3. Document validation

The next step in the process is to actually validate that the provided document is authentic. This involves a variety of different validation checks — potentially hundreds of different checks — depending on the type of document being verified. 

Common validation checks include:

  • Document completion: If the document consists of multiple pages, are all required pages uploaded?
  • Edge detection and cropping: Does the edge of the document appear to be cropped or tampered with in any way?
  • Special feature identification: Many official documents, such as government-issued IDs, are designed with special features that are meant to be difficult to forge. This can include watermarks, holograms, stamps, foils, fonts, textures, and more. 
  • Colorspace analysis: A photo’s color, lighting, and shadow all provide additional context that can signal whether a document is legitimate, forged, or tampered with. 

Depending on the document being validated, this step in the process may also include an issuing database verification

4. Manual verification 

In cases where a document is flagged as being suspect, businesses have two options. They can err on the side of caution and simply reject the document, or they can move the document into a manual review process wherein a human being reviews the case. While less efficient and secure, manual review can be an effective means of reducing the incidence of false negatives. This manual review may include the collection of additional, alternate documents. 

Industries that use online document verification

Document verification is heavily used by financial institutions, which are required to verify the identity of all new customers as a part of anti-money laundering (AML) and Know Your Customer (KYC) regulations. Businesses considered financial institutions include:

Because they often deal with large sums of money and may be leveraged for money laundering, travel agencies, casinos, and vehicle dealerships are also considered to be financial institutions under the Bank Secrecy Act.

Of course, other many other industries also incorporate online document verification into their processes, including those operating in:

Really, any business that operates online can leverage document verification and realize the benefits that it offers.

Benefits of online document verification

Online document verification can bring a number of powerful benefits to your business. By leveraging online document verification, you can:

  • Meet regulatory requirements: Depending on the industry your business operates within, you may be required by law to verify the identity of new users. Document verification is a widely accepted and highly effective means of meeting regulatory requirements. 
  • Mitigate fraud on your platform: Even if you are not legally required to verify user identity, doing so can help you mitigate incidences of identity theft and other forms of fraud (such as account creation fraud) on your platform. 
  • Build customer trust: When identity verification (in its various forms) is incorporated into your onboarding process, it can go a long way in building customer trust in your business or platform. Because all users have undergone the same verification, the implication is that it is much harder for bad actors to slip through and potentially cause harm.
  • Onboard new customers faster: When paired with automation, online document verification can be completed very quickly — in just seconds in many cases. This is much quicker than is typically possible with manual review, which can take anywhere from minutes to days, depending on the specific processes used. 

A deceptively simple verification option

However basic it might appear to be at first glance, document verification is still an effective means of verifying the identity of your users and customers. With this in mind, it likely deserves a place in your verifications toolkit. 

Here at Persona, we know that there is no one-size-fits-all approach to identity verification that will work for all businesses. That’s why we’ve developed our Verifications solution to be hyper-customizable. 

Leverage document verifications alongside other methods like government ID verifications, database verifications, selfie verifications, biometric verifications, automated reports, and more. Build the verification process that makes sense for your business and your customer — not everyone else’s.

Interested in learning more? Start for free or get a demo today.

Frequently asked questions

What are the types of document verification?

Document verification can take many different forms, depending on the needs of your business. The most common forms of document verification include:

  • Address verification 
  • Employment verification 
  • Education verification 
  • Certification verification 
  • Citizenship verification 

Other forms of document verification also exist. 

While some businesses consider driver’s licenses, passports, and other forms of government-issued IDs to be documents, which then fall under the purview of document verification, here at Persona we classify them as a different category of verification altogether — government ID verification.

What is digital document verification?

Because most business in the past was conducted in person, document verification has likewise traditionally been done in person. As business has increasingly moved online, so has verification. Digital document verification is simply the process of verifying documents remotely and digitally.

What are the most common document verification use cases?

Document verification has many use cases. Some of the most common include:

  • KYC and AML compliance: For businesses subject to KYC/AML regulations, document verification often forms an essential piece of the verifications puzzle.
  • Vendor verification: When a business begins working with a new vendor, document verification is a way to ensure that the vendor is legitimate. It can also play a role in meeting Know Your Business (KYB) regulations.
  • Account opening: Many businesses leverage document verification as a part of their account opening and client onboarding processes. Financial institutions, digital health companies, e-learning services, and social media/online dating websites are some examples of businesses that often require document verification as a part of the account opening process.
  • Age verification: Businesses that deal in the sale of age-restricted goods or services (for example, alcohol, tobacco, prescription drugs, online gambling, and adult entertainment) often leverage document verification to verify the age of new users. 
  • Fraud detection: Document verification can help your business identify and mitigate different types of fraud, such as account creation fraud, phishing attempts, identity theft, and more.

What documents are needed to complete the verification process?

The exact documents that you choose to collect and verify will depend on the unique needs of your business and the industry that you operate within. Examples include an individual’s:

  • Birth certificate
  • Social Security card
  • US military card
  • Permanent resident card
  • Certificate of citizenship/naturalization
  • Bank statements
  • Tax returns
  • Educational certificate (such as a degree or transcript)
  • Employment records (such as a pay stub or W-2)
  • Proof of address (such as a utility bill or other mail)
  • Proof of insurance
  • Proof of ownership (e.g., a car title)
  • Business documents
  • and more

How long does it take to verify documents online?

While it will vary from business to business depending on the specific verification solution you leverage, online document verification can be completed rapidly — often in seconds. This speed has the potential to greatly reduce friction and increase conversions compared to slower methods which might cause users to drop off before completing the sign-up process.

Why is document validation important?

Document validation is the process specifically of authenticating the documents that have been uploaded by users. It's a crucial step in identifying forgeries and stopping fraud. Without validation, it would be very easy for fraudsters to potentially open an account using stolen or fabricated information.

Why might documents not be accepted during verification?

Documents can be rejected during verification for a number of reasons, including when:

  • The document is not legible: If a document cannot be read, it will be rejected. This can be caused by a dirty camera lens, low-light conditions, a blurry photo, or generally poor photo quality. 
  • The document is incomplete: If the user uploads only a partial scan of a document then the document may be rejected. Examples can include uploading just one side of an insurance card instead of both faces.
  • The document is expired or out of date: Expired documents are generally not accepted for verification purposes. 
  • The document does not match user-supplied information: If the information provided by the user does not match the information contained within the uploaded document, the document will be rejected. 
  • The document is deemed to be falsified: If for whatever reason a document is deemed to be fake or falsified, it will be rejected.

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