The retailer’s guide to customer identity

customer identity retail digital ID

As the development of customer digital identity solutions accelerates, what is the opportunity for retailers? Forward-thinking retailers who embraced e-commerce early have seen this choice pay off massively. According to an Insider Intelligence report, global e-commerce sales are forecast to exceed $7 trillion by 2025, after growing by over 26% last year.

Thanks to a combination of pandemic-related lockdowns driving online sales in recent years and the convenience of shopping online, e-commerce is going from strength to strength. Unfortunately, fraudsters have taken advantage of this skyrocketing growth and renewed their efforts to target the e-commerce sector.

From account takeover to card fraud and phishing attacks, cyber criminals are finding innovative ways to compromise consumer accounts. Research from UK Finance found that the value of e-commerce fraud in the UK increased from just £28 million in 2002 to £376.5 million in 2020.

One of the most powerful ways to improve the customer experience and safeguard their sensitive details could be the creation of a secure digital customer identity solution. Over the past decade, online retailers have significantly evolved in their approach to digital identity and age verification.

In the past, physical ID documents were required to open a credit account, but retailers have been working to make providing customer identity online easier. Through a combination of contextual data, including IP addresses and device information, and confirming a purchase by receiving a unique code to a confirmed mobile phone number, retailers are working hard to reduce fraud.

Authentication measures

Advanced anti-fraud technologies have the power to combat illegal activity. But e-commerce customers of today don’t want to deal with any friction on their online shopping journeys, with even a relatively small barrier to purchase risking a lost sale. The most effective digital identity solutions won’t just protect the consumer, but also ensure that their experience is seamless.

For example, the deployment of tools that use machine learning and artificial intelligence to enable the real-time verification of customer identity is becoming increasingly popular. In practice, everything from biometric smartphone verification to live image or video verification can be useful. The automated nature of these solutions is a game-changer for many retailers as no additional friction needs to be added to the customer experience and the latest online watchlists can be checked in real-time for fraud.

As creating seamless omnichannel experiences is of the utmost important in the retail world, any digital identity solution also needs to work between devices and between online and physical stores. Smartphone devices can be used for facial recognition and biometric scanning for customers both in-person and online.

These technologies are very accurate, secure and help to join up the experience for customers, so no matter what channel they first engage with a retailer through, if they switch channels they do not have to deal with high levels of friction. By relying on tried-and-tested digital identity solutions, retailers can be sure that regulations are met and their customers are kept as safe as possible.


Written by Finbarr Toesland, Editorial Contributor, VC Innovations

The conversation continues at the Future Identity Festival 2022, taking place on the 14th & 15th November, at The Brewery, London.