Voice of the Industry

Striking the right balance: Navigating age verification challenges in age restricted commerce

Monday 12 February 2024 09:09 CET | Editor: Alin Popa | Voice of the industry

Age-restricted retail adapts to global regulations with advanced tech. Paul Smith from Allyiz emphasizes innovation for widespread adoption.


Age-restricted retail, for products like alcohol, tobacco, vapes, e-cigarettes, and some entertainment products and services, operates within a regulatory framework designed to protect minors from accessing potentially harmful goods and services. This area is facing increased regulatory attention with significant developments in the EU, the UK, the US, Australia, and many other countries globally. However, age verification is riddled with challenges for retailers. Traditional methods, including manual face-to-face checks and reliance on physical IDs, are time-consuming, cumbersome, and prone to human error – leading to inefficient and inaccurate controls. As regulations evolve and become more stringent, particularly as retailers move online, there is a growing need for more advanced age and identity verification processes and technologies to meet these new challenges.

Balancing compliance with customer engagement

Robust age and identity verification are key not only for regulatory adherence but also for successful customer engagement, balancing effective performance with better user experience. As the retail landscape evolves, not only with the growth in ecommerce, but with the evolution of self-checkout, increase in self-collection and distribution, and the advent of ‘checkout-free’ stores, finding innovative ways to verify age and identity is a key strategic imperative for businesses operating in age-restricted sectors.

The digital landscape presents both opportunities and hurdles, as retailers grapple with creating a seamless and secure shopping experience. Finding effective and user-friendly solutions for age and identity verification is crucial for the sustainable growth and success of age-restricted online retail.

It’s all about the technology, or is it not?

A range of new technologies has emerged to address the inherent challenges with traditional age and identity verification methods. These solutions, including apps, wallets, digital IDs, and other electronic ID services, leverage the growth in smartphone usage, an increasingly interconnected mobile environment, machine learning, artificial intelligence (AI), and biometrics. They offer privacy- preserving, accurate age and identity verification, enhanced security, speed, and frictionless customer experience.

However, these new solutions are not a silver bullet. The regulating entities face challenges ensuring that policies evolve to keep pace with these technological advancements, balancing privacy, equity, intrusion, effective solution performance, security, and broader societal and consumer requirements. Moreover, retailers, especially those operating globally, face challenges as they attempt to align age verification processes and solutions with a complex landscape of diverse and evolving legal requirements. In the absence of global standards and approaches, adapting to the nuances of laws in different countries or regions requires a flexible approach and support for a broad range of solutions.

Bringing customers on the journey

Inevitably, the collection, transfer, processing, and storage of sensitive personal information come with attendant risks. Because they are wary of potential data breaches, identity theft, or misuse of their personal details, users can be hesitant to share personal data. There is a delicate balance between obtaining the necessary information for age verification and respecting individuals’ privacy. Achieving success will require adapting to varying levels of acceptance in different geographic regions, customer segments, and channels, all the while ensuring that policies and procedures remain consistent and coherent.

Whilst regulatory approval is a crucial part of driving consumer adoption, the deployment of new innovative solutions needs to be accompanied by consumer education, transparency, clear instructions and messaging, and user centric design. Offering consumers’ a choice, in itself, is a key driver of adoption rates, creating a virtuous circle, and contributing to a positive user experience. When the verification process is quick, intuitive, and non-intrusive, customers are more likely to have a favourable perception of the brand or platform, leading to higher adoption and participation, trust, and engagement.

Solutions that address data security risks, minimising the collection and transfer of consumers’ personal information, anonymising data, and implementing privacy by design principles or on-device processing, play a vital role in the development of industry-wide standards and best practices. These have also been the approaches that demonstrate the highest rates of consumer adoption and associated high levels of confidence. These include eID/bank ID type solutions across the Nordics, Baltic States, and Eastern Europe in particular, as well as national or self-sovereign decentralised digital identity solutions.

The high levels of regulatory testing and control, security and design standards, integration standardisation, and user education, as well as sponsorship and promotion of service development across government and industry sectors, together with support for different use cases, led to widespread adoption.

Looking towards the future

The integration of AI, machine learning, and biometric authentication (including fingerprint, voice, face – or other unique biological markers) is becoming a common feature of market-leading solutions. AI-powered systems enhance the verification processes by increasing automatic document verification and fraud detection rates, significantly improving efficiency, whilst reducing manual efforts.

AI can continuously learn and adapt to new challenges and threats by identifying emerging trends, providing a dynamic defence against sophisticated fraud, staying ahead of evolving threats and helping to enhance the resilience of age verification systems. At the same time, the growing support for biometric authentication facilitates the secure and trusted sharing of data, attributes, or tokens via wallets, and other digital ID solutions for ecommerce, or other digital transactions, reducing the need for extensive data transfers.

In a highly dynamic ecommerce environment and especially in sectors with strict age restrictions and regulatory attention, such as alcohol, tobacco, e-cigarettes and vapes, we see high rates of adoption for this advanced technology, providing enhanced security, better privacy, improved accuracy, and effectiveness, as well as a frictionless consumer experience.

However, the landscape for age and identity verification in retail continues to face new challenges. Further regulatory changes – which focus on even stricter requirements, national and global standardisation, omnichannel equivalence in process and assurance, and global interoperability – are needed. Together with further technological development from even more advanced biometric authentication methods, such as palm recognition or behavioural biometrics, the development of decentralised identity solutions using blockchain or zero-knowledge proofs will ensure that businesses remain agile in their approach to age verification.

About Paul Smith

Paul is a pragmatic and performance-focused product professional who has worked with clients and partners across the UK, Asia Pacific, India, Europe, the Middle East, and Africa to grow their business. With over 20 years of proven success, he works in diverse, dynamic, and challenging international markets to launch new cloud services and information solutions. He has a background in credit risk, decisioning, ID verification, fraud prevention, and business information – aimed at driving customer adoption and supporting clients’ digital transformation agendas.

About Allyiz

Allyiz is the go-to company to source expertise in the field of payments. We specialise in providing strategic and operational services in payments, risk management, marketing, education, and leadership domains. Leveraging the insights of seasoned professionals who’ve excelled in the industry, we promise swift and actionable outcomes. Discover more at our website.

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Keywords: regulation, compliance, customer experience, identity verification
Categories: Fraud & Financial Crime
Companies: Allyiz
Countries: World
This article is part of category

Fraud & Financial Crime


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