April 27, 2020
Summary
- Rampant identity theft is costing America billions per year and countless hours of lost time and productivity
- The COVID-19 Pandemic has only accelerated the trend of identity theft and fraud online
- IDN, a rapidly growing leader and innovator in near-instant identity verification, is now selling at half price despite huge customer wins and strong secular tailwinds.
- IDN just announced a deal with “a world-renowned global payments provider”- a little research leads us to the identity of this partner, which could hugely increase this tiny company’s revenues.
IDN is selling its services to banks, credit card issuers and online and offline retailers that virtually eliminates fraud. Key to IDN’s sales pitch — these services require no added machines or devices, little or no time to integrate, and enable a frictionless process that determines whether a transaction is fraudulent almost instantly.
IDN has recently made its services available as Software-as-a-Service (SAAS) on a per-transaction basis. This move by new management with new focus and drive has allowed IDN’s customer wins and revenues to soar and, until recently, its stock price to rise to a 5 year high of over $10 per share in February 2020. All that changed with the market crash, though IDN’s services are more valuable than ever, and any slack in demand from brick-and-mortar retailers during the stay-at-home period is being offset to a degree by a boom in online identity check transactions performed by IDN for its clients. Furthermore, once the shelter-in-place orders lift, IDN’s solutions will ramp up again in brick and mortar retail while having accelerated adoption online.
IDN’s Services and How they Work
IDN sells multiple services to verify a person’s identity, which we can put in three general categories:
Retail Point-of-Sale Transactions
A person goes to a store and applies for store credit card, or wants to make a purchase but doesn’t have their card with them (“Card Not Present”).
- A person goes to a bank to open a bank account or withdraw money from an account.
In this use case, the cashier or teller simply scans that person’s driver’s license or ID card using the standard credit card reader or a mobile app, and almost instantly knows if the ID is valid.
[Intellicheck Retail ID Solutions Brief]
Online “Person-Not-Present” Transactions
IDN’s Retail ID Web solution is a standalone web application that doesn’t require point of sale system integration. For example, a person wants to buy a pair of shoes that they find on a retailer’s website.
- During online checkout, IDN’s Retail ID Web solution simply asks the shopper to take a picture of the back of their driver’s license with their mobile phone, computer camera or attached camera. IDN’s solution matches the customer’s ID with IDN’s proprietary ID database instantly.
- Alternatively, if the customer calls the retailer to place their order with a credit card, the card issuer’s call center is engaged and uses Retail ID Web to have the person capture an image of their driver’s license with their mobile phone. IDN verifies the ID with their patented verification technology against the credit card information and the transaction is completed. [Intellicheck Retail ID Web Brief]
Detecting Fake IDs
Federal and Local Law enforcement, transportation hubs, liquor stores, markets, and restaurants use IDN’s Age ID technology, either integrated in their POS systems or as a mobile app to authenticate the customer’s Driver’s License or State ID. The establishment simply scans the customer’s ID barcode located on the back of the ID, and can verify in seconds whether the ID is real or fake. [Intellicheck Age ID Brief]
IDN also markets specific solutions for Defense (Defense ID), Hospitality (Guest ID) and Ports (Port ID).
Key to IDN’s fraud prevention system is this patented ID verification technology and system architecture, which is constantly being updated to keep it current. IDN possesses multiple patents behind its technology.
The various solution verticals that IDN operates in allow the customer to add databases to search against. In the case of Law Enforcement, IDN can integrate with state and FBI criminal records databases, access control records, or whatever the client wants.
Why own IDN now?
As world markets experience extreme volatility due to the global pandemic and what I view as an inevitable recession to follow, investors have rightfully been looking for companies that will survive due to their defensive elements, or possibly even thrive due to their industry and products that could be in demand at this time. Further, I’m looking for companies whose stocks have been sold indiscriminately despite indications that the underlying businesses are still solid or even more in demand. My most recent Seeking Alpha article about the home exercise equipment company Nautilus (NLS) exemplifies the type of companies for which I’ve been searching. I identified NLS as a buy candidate at about $1.50 per share, because the market crashed just as they were showing signs of a turnaround mainly due to their increased focus on the long-term trend of digitally connected home fitness machines. Their Bluetooth-enabled Bowflex and Schwinn spin bikes are fitness app agnostic, allowing people to use competitor Peloton (PTON) or other popular fitness apps at a fraction of the cost. The stay-at-home orders have resulted in what appear to be record purchases of NLS equipment unseen in 5 years or even longer. I expect the trend toward digitally connected home exercise continuing into the future, especially during the upcoming recessionary period when people cancel their expensive in-person spin class memberships and opt for the more convenient yet still interactive home exercise options. NLS is currently trading above $5 per share.
Click here for the full article: INTELLICHECK RESEARCH
