The online retail industry is booming in the fast-paced internet environment. The risk of fraud and scams also increases with business revenue. To combat various frauds, it is a must for e-commerce to meet rigid regulations. Know-your-customer (KYC) verification is ideal for complying with multiple rules. KYC procedure discloses the customer’s original identity and protects a business from illegal scammers. E-commerce websites can legitimize the customers before onboarding. Digital technology enhances the KYC verification process.
Utilizing the AI system enables remote onboarding without physical contact. The e-KYC checklists are more authentic than the traditional KYC process. It reaps accurate results and enhances customer trust in the company. It identifies those risks which can not be detected by manual verification. Financial institutions must comply with rigid regulations. To comply with anti-money laundering (AML) and counter-terrorism financing (CFT), robust KYC verification is base of all these regulations.
KYC Verification Strengthen the E-commerce Market
The digital village has changed how people shop, and consumers rely on various online platforms for different products and services. Latest innovations have revolutionized traditional shopping with the convenience of cash on delivery, and all products are a few clicks away. With this rapid growth, there are significant flaws in the idyllic landscape.
The number of cyber attractors and identity theft increase with the growth of the online marketplace. Various degital tools for designing counterfeit documents and easily data breach increasing fraudsters. They can easily design counterfeit documents for identity theft. It is estimated that 60% of fake transactions are happening in the online marketplace. The high KYC standards protect companies from these scams. With the help of this, online retailers can detect third-party sellers and, after attestation, confidently onboard them.
For transparency and legibility in e-commerce platforms, the regulatory authorities are making various laws to set the verification bar high for scammers. Non-compliance merchants can not sell counterfeit items on the forum. Online retailers need to verify the sellers and buyers on their platforms. According to these regulations, sellers will have KYC verified by the attestation of the government IDs, financial statements, and tax fillings.
E-KYC Verification Curbing Identity Theft in Online Retail
According to the report most common e-commerce scam is identity theft. It causes 71% of threats among merchants and platform owners. The online KYC solution authenticates customers’ identities by verifying their proof documents, such as driver’s licenses, national IDs, or passports. Moreover, online KYC verification services have numerous benefits, such as fast onboarding with accurate results at lower costs. It reaps a hundred percent genuine results by eliminating human error and meticulously attesting all documents. Overall, KYC regulations improve various prospects of online businesses, including reduced money laundering and terrorism financing risk. Given below are the KYC checklists and how e-commerce businesses can take leverage from this:
Step 1: Documents Assortment
To verify the merchants online, retailers must attest to the various identity proof documents. These papers can be national IDs, passports, driver’s licenses, or depending on the website policies. Automatic KYC verification software accept all these documents whenever and wherever. It streamlines this time-consuming task and optimizes the whole document submitting procedure. Customers only have to register on the KYC verification online platforms, and after registration, they can upload the required documents. These platforms assort the documents according to format and proceed for further verification.
Step:2 Documents Attestation
After collecting documents, online KYC verification software examines machine learning and AI technology. The latest technological innovation can check these documents from various databases with only one click. For the attestation, KYC software extracts the data from the papers into computer language. It will operate with the help of Optical Character Recognition (OCR). This technology is used to pull out written data from scanned papers. It is used to store physical documents in a secure database. By using this technology, KYC software enhances KYC standards and provides efficient identity verification by extracting detailed data and cross-referencing it with watchdog lists like AML, politically exposed persons (PEPs), and criminal databases.
Step:3 Enhance Customer Due Diligence
When the document is attested, KYC verification software ensures the customer is legitimate and not involved in illicit activities. For this, they dig into the client’s history and check the previous source of funds. They collect personal financial statements to ensure customers’ money comes from legal funds. It also provides online retailers with in-depth information about them. This will help ecommerce store platform representatives check merchants or the customer they are onboarding, not disguising any illegal activities. Enhance Due Diligence (EDD) is not compulsory for all customers, online retailers can do this for all those customers who are joining platform from countries or a state with inadequate security regulations.
Bottom Line of KYC Verification
The online retail marketplace is constantly onboarding customers. To compete with that speed, they need a fast-paced onboarding system. Digital KYC verification is an ideal tool for all e-commerce platforms to enhance security, including customer experience and company reputation. Automated KYC procedures make the verification straightforward, which ensures online vendors stay safe and grow their businesses in a secure environment.
