How to choose an identity verification (IDV) and KYC vendor?
- Ivan Capalija
- 1 day ago
- 5 min read
TL;DR
I have spent 10 years in the identity verification industry, building IDV technology and helping companies evaluate vendors. One thing I have learned is that choosing the right provider is often more difficult than it should be and, in many cases, that's by design.
Before committing, make sure to understand these:
Data ownership and sub-processors - Verify whether the vendor owns its verification technology or silently routes sensitive user PII through third-party providers. Ask who processes your data, where it's stored, and how long it's retained.
Security vs. friction - Ensure the system offers real-time UX feedback and adjustable flow to be able to balance between friction for users and your security.
Global coverage and new types of fraud - Verify document support by testing real documents and checking if they support your planned expansion. Ask directly how they defend against new types of fraud like deepfakes.
Transparent unit economics - Avoid paying for features you do not need, minimum volume commitments, and paying for not finished sessions. Push to pay only for value that you get.
Developer support and integration - Choose providers with in-house tech stack ownership who grant direct access to engineers, ensuring days (not months) to go live.
Before building Veridil, I spent eight years building identity verification tools and another two years sitting on your side of the desk, helping companies pick the right vendor.
Here is how it usually goes:
Compliance wants max security and all the features available.
Product wants zero friction so users can sign up in max 5 seconds.
Finance comparing the lifetime value of a client and cost of verification .
Engineering (if you even ask them at this point :D) is dreading a three-month integration nightmare.
So what do you do? You naturally search for the biggest, most famous brand names in the industry. You assume that going with a huge logo means buying peace of mind.
Unfortunately, many buyers learn the hard way that the biggest players often deliver the worst experiences. If you are big enough of an opportunity for them, you end up trapped in multi-year contracts, broken code updates, and customer support that completely ghosts you the moment you sign.
Picking a verification partner shouldn't be that complicated. So here is my short list of things to think about and check with your potential partner before committing to a long-term partnership.
1. What is happening with my data?
When I evaluated some of the most "trusted" names on the market, I discovered a dirty little secret. Many of them don't actually own the technology they sell you.
Instead, they act like middleman brokers. When your user uploads a driver’s license, that big-name vendor silently routes the image to three or four other third-party companies or third world country behind the scenes to do the actual work.
Every extra middleman adds lag, increases the chance of something breaking, and exposes your users' sensitive personal data to companies you have never even heard of. Worse yet, some vendors quietly use your customers' private data to train their own AI models without ever asking or compensating you.
When a vendor promises "enterprise security," ask them directly and check Terms who actually processes this data, and how long are they keeping after the check is done?
2. Finding a balance between security and friction?
Have you ever tried signing up for an app, only for the selfie scanner to fail four times in a row because the lighting was slightly off? What did you do? You probably closed the app and forgot about it.
That is conversion death, and it happens more than you think.
Legacy platforms often assume every single customer is a tech expert with a pristine camera phone sitting in a perfectly lit studio. If your vendor forces every user through a rigid, ten-step process, you are throwing away real revenue.
Look for a system that is robust to the common issues and give users real-time feedback ("Move closer" or "Glare/Blur present"). More importantly, make sure you can adjust the strictness of the flow to find the right balance between user friction and security.
A low-risk user signing up for a basic feature shouldn't have to jump through the same intense security hoops as someone transferring thousands of dollars. In most cases this can only be offered by vendors who own their tech in-house.
3. What about current and future coverage?
It is easy for vendors to claim "global document coverage," but raw quantity does not equal functional quality.
Geographic realities: Verify that the provider natively supports the specific document types (passports, national IDs, driver's licenses, residence permits) in your core markets today, including localized security features and non-Latin character sets.
Future expansion: If your business expands into LATAM, APAC, or Europe next year, will your vendor force you to bolt on another third-party tool for regional databases, localized PEP/Sanctions checks, or ongoing AML monitoring?
New types of fraud: Are they keeping up with major shifts in fraud? Look at deepfakes, it's a huge issue in identity right now and you need to know if your vendor is actually innovating or lagging behind.
4. Watch out for sneaky pricing tactics
Pricing in the IDV world is notoriously confusing and usually on purpose. Vendors love to make direct comparisons almost impossible so you can't tell if you are paying too much.
Four major traps to watch for:
The bloated package: They bundle core ID checks with a bunch of extra add-ons you will never use, then charge you a high flat fee.
Paying for their mistakes: Some vendors charge you every single time a user attempts a check, even if the app crashed or failed due to unsupported documents or bad instructions. You end up paying the vendor even tough you do not get value!
Delayed quotes: Vendors that stall on early pricing estimates are often hiding high minimum commitments or complex implementation fees. Demand early, transparent unit economics to avoid wasting engineering time on non-viable options.
Minimum volume: Bigger vendors often enforce minimum deal sizes, so if you have smaller volumes, they won't even serve you. Modern vendors balance this by serving everyone, though they may not offer the same level of support to smaller accounts.
Always demand itemized pricing if possible, and push to pay only for completed verifications.
5. The integration nightmare nobody talks about at first
The biggest disconnect in this industry is between what the sales rep promises ("You'll be live by Friday!") and what your developers actually experience (three months of debugging outdated, broken code). Getting live should really take days!
When a bug inevitably pops up at 10 PM on a Tuesday, who answers your ticket? With legacy providers, you are usually stuck submitting a ticket to an automated bot or waiting three days for a generic response from someone who doesn't even know how the API works.
Look for providers that develop and own their technology in-house and give you direct access to the engineers who build it. This means they have full control over their platform, can resolve issues faster, and aren't dependent on third-party vendors to fix bugs or deliver new features.
That’s all from me. I hope you found this helpful!
I will likely revisit and update this list as I learn more.
But if there is one takeaway to leave you with, it’s this:
Choose your identity verification or KYC/AML vendor with extreme care. Don't look at it as just buying another software tool, you are actually looking for a long-term strategic partner who will directly impact your user conversion, compliance safety, and bottom line.
