Notaries with their stamps and embossers as ID authenticators have been slow to embrace ID tech, despite a slew of tools at their disposal. Darcy Mayer, DocVerify EVP, calls this the industry’s “chicken or the egg” problem. Mayer explains the types of notary innovations that are slowing gaining ground — and why — in this month’s Digital Identity Tracker. In this issue, we also take a look at biometrics, border control and the Olympics — and profile the comings and goings of 147 solutions providers in the space.
Whether it’s a consumer wanting to get insurance paperwork attested or a business looking to properly process signatures, when the need for document notarization arises, it’s often urgent — a need that must be fulfilled quickly.
Despite major advancements in technology, however, the notarization process continues to be slow and outdated. It hasn’t changed for decades, if not longer, and still involves finding a local notary service provider, printing out physical copies, racing to make an in-person appearance and using a rubber stamp to seal the deal. It’s a time-consuming process, to say the least.
Slowly but surely, though, things are finally beginning to change, according to Darcy Mayer, executive vice president of electronic signature and notarization solutions provider DocVerify. In a recent interview with PYMNTS, Mayer explained that many in the industry are interested in seeing the technology take off, but there are legal and other challenges that can get in the way.
“Notaries are really eager to adopt new technologies — and the companies we deal with, a lot of them are very interested in moving forward with [it],” he said. “Adoption can be slow, even within that institution or organization, because of the scope of what it all entails.”
From Bill to Law
In the mid-2000s, roughly 25 U.S. states passed laws allowing documents to be notarized electronically if the participants were in the same room as the notary, thus opening the market for solutions like DocVerify’s.
In 2012, Virginia became the first state to legalize remote notarization and allow participants in different states — or even different countries — to have documents notarized electronically. The passing of Virginia’s law was followed by similar legislation in Texas, clearing the way for even further adoption.
But, while legislative progress has been made, there is still work to be done to get the industry up to speed, Mayer noted. That includes changing the way some companies think about electronic notarization technology.
“It’s been slow in terms of adoption, but we’ve found that is because people are already ingrained in their old habits,” he said. “Notarizations have been done using a rubber stamp for at least 100 years now, and before that it was wax. So, that’s the process people are used to, and the process they trust.”
Securing the Signatures
DocVerify offers both in-person and remote electronic notarization solutions to remain compliant with the laws passed by all 50 state legislatures, Mayer noted. Both solutions rely on knowledge-based authentication (KBA) protocols, like those used by banks or other financial players.
“If the notary doesn’t personally know the participant, which they typically don’t, they are required to perform an ID verification,” he said. “That entails a knowledge-based authentication, which is similar to what a bank does.”
As part of that KBA process, notaries collect personal information, including a participant’s driver’s license and partial or whole Social Security number. That information is then used to create a series of five questions to verify the identities of notarization participants.
To complete the process, participants must answer four of the five KBA questions correctly. If they can’t? No notarization for them – at least according to the law.
The Challenge of Changing Consumer (and Company) Habits
But clearing legal hurdles isn’t the only challenge in accelerating adoption of modern notary solutions.
While many notaries and their clients are eager for new technology, many have been slow to actually adopt it due, in large part, to legal and financial concerns. Simply put, decades-old habits die hard – even when new advances come along.
To give users incentives to change those habits, DocVerify and other software solutions are designed to provide benefits for both parties. That includes a more efficient and expedited process, as well as savings on costs and fees.
“The businesses or consumers that need documents notarized don’t usually have the manpower or know-how to deal with the individual requirements to get past the legislation,” Mayer explained. “We solve that problem by enabling [them] to provide this service to their end users or have this service as part of their workflows.”
For notaries, many of whom run small business operations without a budget for major tech overhauls, the service offers new capabilities that can be used to market to prospective clients – and at a rate that won’t break the bank.
“From the notaries’ point of view, if they had to go out and build the technology themselves, or acquire it, it would be unattainable or, at the very least, unaffordable,” Mayer said. “So, we work to provide a very affordable solution for [them]. All they have to do is quickly sign up, go through an application approval process with us and then they can market these services to their customers.”
Chicken or the Egg?
There’s also another, less obvious issue plaguing electronic notarization adoption, though, and it’s one that Mayer called the “chicken or the egg” problem.
Large companies often drive adoption in the space because they can deliver a big impact to the market based on the size of their notarization needs. But those big companies need for notaries in their local areas to use DocVerify’s solution to meet those needs – and notaries are wary of adopting and paying for a solution before they are assured they have a client to serve with it.
“So, the notary is apprehensive about doing that until they know the business is on board, and the business isn’t going to do that unless there’s the right number of notaries to serve them,” Mayer explained. “It’s a vicious cycle that most of the industry has been dealing with for over a decade.”
For its part, DocVerify is fighting back.
When it does see interest from a large company, Mayer said DocVerify will incentivize notaries to adopt the solution with waived fees or expedited application processes. This helps DocVerify to meet the needs of notaries’ largest potential clients, and also increases the number of notaries using the solution.
While that has worked on occasion, legal concerns and the “chicken and egg” problem persist. If those dual challenges can soon be solved, it likely won’t be long before even the most desperate document authentication needs can be filled in minutes.