TL;DR: Companies in high-risk, regulated industries such as fintech and crypto are increasingly concerned about ID verification cost. This makes understanding the makeup of identity check pricing crucial for realising cost efficiencies. This guide shares practical strategies for keeping identity verification cost low while maintaining a secure, scalable customer onboarding process.
What are The Risks of Non-Compliance in Identity Verification?
Skipping steps in the Identity Verification (IDV) process exposes a firm to the risk of fraud, fines, and reputational damage. Non-compliant identity verification processes raise short-term fraud risks. However, in the long-term, it can lead to regulatory investigations, operational restrictions, criminal prosecutions, and reimbursements for defrauded customers.
In addition to ensuring compliance with IDV requirements, companies also face the pressure from escalating Know Your Customer (KYC) costs. Industry reports projected that KYC and Anti-Money Laundering (AML) spending will surge to $3 billion, a 12.3% increase in 2025. To address this rising cost, it is crucial to look beyond simply cutting compliance spend aggressively. Instead, organizations should look for more innovative and efficient pricing strategies.
Understanding Total Identity Verification Cost
Businesses need to consider both direct and indirect cost factors to fully understand the overall price of identity verification solutions. Indirect costs, which include the amount of money lost due to customer drop-offs can result in significant monetary losses. Similarly, reputational damage and manual task can hinder business growth.
Therefore, looking beyond an identity verification solution’s initial pricing plan is crucial. Furthermore, additional verification steps can increase the direct and indirect identity verification cost if not properly monitored. The most common indirect or hidden costs stem from:
- Customer Friction: Customers may abandon the onboarding flow if it involves slow or complex steps. As such, resulting in drop-offs and a loss of potential revenue.
- False Positives: Poor data accuracy results in high false positives, incorrectly flagging legitimate customers as high-risk, which leads to lost potential customers.
- Add-on services: Human-in-the-loop video verification, bespoke customization, and manual reviews can lead to a price increase if initially incorporated into proposals.
- Reputational Damage: If an organization experiences poor customer service or fraudulent incidents, it can erode trust among clients and investors, ultimately leading to financial losses.
- Manual Reviews: Manual tasks increase operational overhead, as firms must train and manage review staff, which is a slower and more expensive process.
According to the Financial Action Task Force (FATF), assessing compliance risks must be done on an ongoing basis. This means businesses must conduct continuous monitoring, re-verification, and auditing as an ongoing investment. Thus, reporting and ongoing compliance systems must be factored into budget management as they support meeting full compliance obligations.
KYC Budget Optimization Strategies That Don’t Compromise Quality
Progressive companies are finding innovative ways to enhance their verification workflows and reduce compliance expenses without compromising fraud detection standards. To achieve cost savings, firms are partnering with IDV providers that can offer customization, automation, and scalability. Plug-and-play solutions are particularly growing in popularity as they enable selecting specific checks without investing in a full platform.
The market size for identity verification software is expected to reach USD 26.94 billion by 2030.
According to Research and Markets, the market for identity verification is expected to expand rapidly, fueled by the growing complexity of regulations and the increasing need for faster customer onboarding. The compound annual growth rate (CAGR) for IDV solutions is forecasted at 12.64% from 2025 to 2030. Here are some of the most effective KYC budgeting strategies for 2026 and beyond:
Focus on Automation to Replace Costly Manual Processes
Automation is one of the most efficient ways to streamline the complexity of identity verification, saving both time and cost. AI-based solutions automate identity verification, replacing slow, error-prone manual reviews. It includes advanced analysis, verifies documents, and cross-checks databases in real-time.
Additionally, Optical Character Recognition (OCR) is used to automatically extract and validate government-issued IDs and other identity documents. This ensures accuracy and efficiency during document verification. OCR creates a uniform and rapid verification process, reducing identity verification cost while enhancing fraud detection accuracy.
Reduce Redundancies with Decentralized Identity Frameworks
Redundant ID checks, such as those triggered at renewals or logins, lead to frustration, higher drop-off rates, and additional costs. Repeat verifications reduce the overall efficiency of identity verification systems. Persistent identity records offer a practical way to verify returning users without requiring full re-verification.
For example, tokenized identity attributes or decentralized ID frameworks allow companies to authenticate users securely while complying with data protection laws. This reduces fraud risk, lowers processing costs, and improves the customer experience, particularly in time-sensitive sectors such as lending or real estate, where speed and accuracy are critical for conversion.
Minimize False Positives, Added Friction and Drop-offs with Tailored Workflows
A false positive could occur when a legitimate customer is incorrectly identified as high-risk. However, while robust IDV is crucial, adding more onboarding steps to reduce false positives can backfire. This results in high drop-off rates and a potential loss of revenue.
To combat this, organizations must adopt customizable workflows tailored to each use case. For example, customers who have a higher risk score can go through a more comprehensive screening, while low-risk users can onboard through the standard KYC process. Additionally, IDV platforms with embedded analytics, A/B testing, and real-time feedback loops can help identify friction points in the journey.
Case Study: Monzo’s Identity Verification Lapses Cost £21 Million
Rapid Growth in Monzo’s Customer Acquisition Leads to IDV Deficiencies
The Financial Conduct Authority (FCA) fined Monzo over £21 million for failures in identity verification. Monzo is a leader in the fintech space, having grown from 600,000 customers in 2018 to 13 million customers by 2025. It was clear that the rapid uptick in customers outpaced Monzo’s ability to maintain compliance.
When Company Growth Outpaces Compliance
In an effort to manage the surge in customers, Monzo compromised key compliance measures. Notably, Monzo did not collect sufficient proof of address, allowing customers with unverified or falsified addresses to open accounts and conduct transactions. The company also failed to implement ongoing monitoring and comprehensive due diligence measures.
Outcome and Learning
- Monzo faced significant financial penalties and reputational damage, resulting in a major setback to its operations.
- The case underscores the importance of investing in flexible and scalable identity verification solutions.
- Firms are encouraged to plan for future compliance needs in relation to business expansion to prevent costly penalties.
What Leading Companies Are Doing to Manage Identity Verification Costs
Selecting the right identity verification solution is a critical decision for companies that need to achieve robust compliance and cost efficiency. With the growing complexity of regulations, increasing sophistication of fraudulent activity, and the importance of user access, it’s essential to choose an online identity verification solution that delivers comprehensive security without inflating monthly identity verification costs.
There are several strategies employed to determine the best identity verification solution, which extends beyond comparing prices. This includes considering how a solution can meet current and future business needs, factoring in the total cost of ownership, testing in realistic environments, and ensuring strong privacy.
Factoring Total Costs When Assessing Providers
While per-verification pricing is a starting point, businesses must account for additional costs such as ongoing monitoring, sanctions monitoring, and compliance add-ons that may be required to meet industry regulations. Prioritizing vendors that include key information, such as transparent pricing structures, enables businesses to better control monthly budgets.
Use a Sandbox Environment or Free Trial for Testing
Before purchase, organizations should explore signing up for a free trial or sandbox environment. Businesses can safely test onboarding flows, refine risk models in a safe environment, and experiment with integrations before going live. This allows firms to have a better idea of how a solution works and helps expose any gaps in the software before making decisions.
Investing in All-in-One Identity Verification Solutions
Relying on separate vendors for ID verification, biometric authentication, and watchlist screening can become complex and introduce bottlenecks for effective KYC implementation. Fragmented technology for identity verification causes duplicated ID checks, inconsistent data, and high admin costs. In comparison, trusting a single provider for these solutions simplifies processes, saves time, and reduces costs.
Focusing on Integrations for Scalability
Expanding operations and services can lead to the need for additional types of checks and an increase in monthly volumes. This can introduce unnecessary time and cost, especially if switching to another solution is required. To avoid this, companies must look for IDV solutions that can scale and adapt with their business operations. For example, SaaS-based platforms such as ComplyCube offer SDKs and APIs that enable seamless integration with existing systems.
Assessing Privacy and Security Certifications
It is crucial to evaluate how key data, including sensitive user data and credentials, is extracted, processed, and stored. Identity verification solutions that align with global security and privacy requirements, such as GDPR, CCPA, and ISO 27001, are critical. Additionally, during testing, businesses must assess whether a solution performs consistently across web and mobile devices.
Consider Advanced Fraud Prevention Features
When evaluating providers, businesses should look beyond basic ID checks and consider advanced features that enhance fraud detection and regulatory compliance. Capabilities such as liveness detection, device fingerprinting, social security number validation, and Personally Identifiable Information (PII) redaction are now essential for true global compliance and deterring bad actors. These features not only strengthen the verification flow but also provide valuable risk management controls of suspicious activity or audits.
Without secure identity verification controls, businesses risk exposing sensitive customer data to malicious actors. – Milosh Caunhye
Ultimately, the best identity verification providers offer scalable solutions that adapt to your business’s growth and evolving compliance landscape. Milosh Caunhye, AML/KYC Consultant from ComplyCube adds, “Without secure identity verification controls, businesses risk exposing sensitive customer data to malicious actors who can use these credentials to commit fraud and facilitate money laundering. By prioritizing security, comprehensive monitoring, and transparent pricing, businesses can ensure they remain compliant, effectively manage risk, and control their compliance budget as they scale.”
Key Takeaways
Total identity verification cost encompasses hidden expenses, including customer drop-offs, false positives, and ongoing monitoring.
Artificial Intelligence and Optical Character Recognition streamlines IDV through accurate and automated data extraction and validation.
All-in-One RegTech providers can provide a more secure customer onboarding process through multi-layered AML and KYC verification.
Accessing free trials and sandbox environments enables businesses to determine if a platform can meet their specific business needs.
Cutting corners in identity verification to save costs can lead to significant regulatory fines, reputational damage, and an increased risk of fraud.
How ComplyCube Enables Cost-Effective Compliance at Scale
ComplyCube is an award-winning RegTech partner that offers an accessible and scalable way for businesses to run IDV, KYC, and AML screening on a single platform. The platform supports seamless integration and alignment with international regulatory standards, including the Financial Action Task Force (FATF), the Financial Crimes Network (FinCEN), and eIDAS 2.0.
Partners and clients that utilize ComplyCube’s platform often require specific solutions to help them streamline their compliance operations while keeping identity verification costs to a minimum. Leading FinTechs, including 11:FS and Moneysmart, partner with ComplyCube for its end-to-end compliance automation capabilities, tiered pricing models, and more:
- Cost-effective automation tools: The software includes instant identity checks, biometric matching, and document validation, saving costs by eliminating the need for manual review, while also improving verification accuracy and speed.
- Low-code, rapid deployment options: ComplyCube offers no-code and low-code workflows, enabling companies to establish compliant verification workflows with minimal effort, ideal for early-stage companies and lean teams.
- Flexible, volume-based pricing model: Organizations benefit from a flexible payment structure, allowing them to align KYC spending with business growth and avoid unnecessary overhead.
- Global scalability through a single API: The platform supports IDV across 220+ countries and territories, helping businesses consolidate regional tools and streamline global operations.
- Performance analytics for continuous improvement: Businesses can track metrics, such as document failure reasons, and customer drop-off stages to optimize verification efficiency.
Optimize Identity Verification Cost Strategy with Confidence
Lowering identity verification costs doesn’t necessarily mean lowering compliance standards. Successful companies recognize that they can achieve both cost control and regulatory excellence through more intelligent workflows, modern technology, and strategic vendor relationships. Explore smarter, automated KYC compliance by unlocking a free trial with ComplyCube or speak with a member of the team to safeguard your business today.
Frequently Asked Questions
What are the hidden costs in identity verification?
Hidden identity verification costs can increase the total cost of regulatory compliance. When IDV is not implemented correctly, it results in added costs for manual reviews, re-verification, platform oversight, and lost revenue from customer drop-offs. These factors reduce overall business profitability and revenue growth.
How much does identity verification cost?
The average digital ID verification cost can range from $0.30-$1.00 per check. However, cost varies significantly according to the volume, features, and geographic coverage required. Cost can also depend on pricing structures, including pay-per-transaction, monthly, or annual subscription.
What are the cheapest identity verification solutions?
The cheapest identity verification solution depends on the type of verification and whether your provider is using third-party solutions. Document-based identity verification or electronic ID (eID) checks are typically the cheapest options available. eID’s instant verification method uses legally-certified digital identities, which streamlines processes and minimizes customer drop-offs, boosting ROI. On the other hand, multi-bureau verification, which cross-checks user data against several credit bureaus, can provide broader coverage but typically comes at a higher cost and larger variability per country.
How to reduce the price of identity verification?
To reduce the price of identity verification, organizations must adopt smarter, automated solutions. Automation streamlines verification workflows and offers high customization, enabling firms to avoid costs associated with manual reviews, redundant checks, and complex onboarding processes.
How does identity verification vary in different countries?
Identity verification requirements vary in different countries due to jurisdiction regulations, data and privacy laws, and document types. In the EU, customers can verify their identities through their European Digital Identity Wallets (EUDI Wallets) under eIDAS. In the UK or US, identity verification relies more on biometric checks and document verification.
