Pity regulators. They move at the speed of law and politics while the cyber world moves at the speed of imagination and light.
During the 2015 Lunar New Year, WeChat and AliPay moved a record number of virtual red envelopes, the traditional method of Chinese wrapping cash for holiday presents, through mobile networks.
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Tencent’s WeChat users sent each other more than one billion red envelopes, although the company didn’t say how much money changed hands; Alibaba said that its Alipay Wallet app exchanged $642 million in cash among friends on the holiday.
“Nobody would have thought a billion dollars could be moved so fast, and none was AML or KYC compliant,” said Stephen Ufford, CEO and founder of Trulioo, which he describes as "a nifty little tool to verify users on both sides” of a transaction. “Regulators can’t keep up. It’s amazing that you can send a little red envelope to nieces and nephews across China in the blink of an eye.”
The red envelopers are among a number of new entrants into international payments, Ufford, added.
“Money movement is extremely important. While technological innovations like WeChat can move billions over a weekend, we need to provide them the right tools to make the process safe.”
He thinks regulators will look at that red envelope money movement over mobile networks, which was many times larger this year than last.
Trulioo can help; its business is to verify personal identifications in more than 40 countries. Trulioo's GlobalGateway enables organizations to verify people online regardless of location, starting with verification of that person’s existence and then authenticating they are the person who is transacting online.
Ufford said it will help solve a problem no one really anticipated.
Regulators probably never thought this would happen — individuals wanting to transact with other individuals they don’t know who live in distant countries, he said. Whether it is Stripe, Square, Alibaba, WeChat, Align Commerce using blockchain, or big banks with online customers in different jurisdictions, global identity verification is going to become a necessity in transactions.
“All these new tech companies still have to be AML compliant, you have to know who sent the money and who received it," he added, so terrorists aren’t moving millions through the blockchain or other technologies. We help all the new tech companies that do chat and move money.”
Trulioo builds a big data platform in the cloud that allows governments, social networks, utilities and telecoms to make their data available. Trulioo can ping their data and see if Stephen Ufford at 1010 Main Street actually exists. A government replies with MATCH or NO MATCH response without his data ever moving.
The company started with ad networks’ social data, credit bureaus and then reached reciprocal agreements with governments and companies like telecoms. Trulioo now has 140 data partners, said Ufford, which he puts down to “a little bit of luck and a lot of market forces.”
In G20 countries, it is generally pretty easy to establish identities because everyone is on a database or two, but in emerging markets the matches can be slower.
Ufford said that Trulioo can help bridge the digital divide by combining traditional and cyber identity data to expand coverage in emerging markets and advance financial inclusion.
“By verifying identities of the most challenging demographics --- those who do not possess traditional forms of identity documentation such as birth certificates, passports and driving licenses or financial footprints like bank accounts, we intend to lift the world's poor out of poverty by helping them gain access to funds by opening an account.”
Incorporating Cyber ID data into GlobalGateway will provide an alternative source for identity verification.
GlobalGateway customers include financial service providers, payment solutions, peer-to-peer marketplaces, and online communities - industries where trust and secure online transactions are a high priority.
“Sometimes in the race for technology we forget convenience is great but it can also be great for the bad guys,” added Ufford. “They could move billions, and it might be through little startups; it won’t be through HSBC.”
Trulioo has also partnered with an ID document verification startup called IDChecker.com to develop a mobile technology to replace the traditional student ID card. They have received a nearly $500,000 grant from EUREKA, an international organization seeking to raise the productivity and competitiveness of European businesses through technology. Its mobile application will permit automated enrollment of students and support on-campus payments with a smartphone.
“We are extremely excited to be working with IDchecker.com on this cutting edge technology,” said Ufford. “This technology will not only make paying for things around campus easier, but will enable remote learning and graduation from leading universities for students in over 200 countries.”
The app can support distance learning, payment of tuition for distance courses and authentication of the student taking an examination after finishing the course work for distance learning from a traditional university or a MOOC (Massive Open Online Course).
Michael Hagen, CEO of IDchecker.com said: “The app will verify identity by asking students to sign into their social networking account, as well as snapping a photo of their government issued ID card with their smartphone camera. The combination of social verification with automated document verification is powerful and global.”
