Merchant Identity Proofing: Building Strong B2B Relations

Identity Proofing: The success of e-commerce has been very remarkable. It is expected that global e-commerce sales will reach $632 billion by 2020. There was a time when only a few huge names were present on online platforms securing a huge customer base. The evolution of global markets and the integration of the customers and markets from around the globe have raised the competition in the market. When a consumer or a business search online for its need there are plenty of solutions provided by plenty of businesses from every corner of the world. The times are long gone when only a few market makers were present online and were considered trustworthy. Nowadays the businesses are building global B2B relations. The world has evolved into a global village and it has generated numerous opportunities for legitimate businesses and fake merchants. The businesses are keen on acquiring global merchants while controlling their costs and increasing their revenues.
Often the merchants oversee the threat of acquiring fake merchants due to the low prices and fake promises made by those fake merchants. It is a common belief that the businesses only need to perform KYC and AML screening on their customers and only the customers are posing threat towards the businesses operating online. The scenario is quite different the businesses are also exposed to a global merchant base. The merchants from every part of the world are pitching in a very attractive way for their businesses and many of them are fake. Many are using stolen merchant identities to build credibility and many are using marketing techniques to trap businesses into their fake merchant portfolio. It is necessary for businesses to know their partners and their merchants.
The merchant of a business is not only providing services or goods it becomes a part of the organization. And the organizational credibility is most likely to be affected if the business builds B2B relation with fake merchants, whose aim behind the business relation is monetary gain, money laundering or even worse, i.e. terrorist financing.

How fake merchant fraud can affect your business?

Fake merchant fraud works in two ways. Either the criminal steals the business identity proofing of a merchant or builds a fake identity using the stolen credentials of a person. The fake merchants pose huge threats to the businesses. The fake merchant fraud could cause revenue loss, loss of credibility, unhappy customers and regulatory penalties.

Fake merchant and hidden beneficiaries:

The money launderers and criminals build fake businesses and use the platforms to wash their laundered money. These businesses perform normal business operations and build B2B relations with other businesses. Do not fall prey to their trap of attractive and promising marketing techniques.
The businesses around the world are bound by corporate social responsibilities. Raising charity for orphans and giving shelter to the needy are still very worthy acts that add a lot to the value of the company and enhance the company profile. But imagine how much of bad fame a business would get if it is found to have B2B relations with a business owned by terrorist financer or a money launderer. Running an in-depth identity verification and AML screening on a merchant can eliminate such a huge setback. Performing AML screening on a merchant takes a few seconds while building a market value and credibility takes years, hence it is vital for businesses to exercise due diligence on their merchants as well as customers to build a strong and trustworthy relationship with all the stakeholders.

Data breaches by your vendors:

Often the fake merchants build a relationship with some business and extract the confidential data of the customers. Once the data have been extracted it is used to commit an array of frauds and crimes.
The most common frauds that are performed using the stolen confidential data are excessive chargebacks, illegal funds transfer and use of customer’s stolen identity for making purchases and much more. These frauds are committed using the data attained from the platform of a legitimate business and the ultimate loss is born by the business whose platform has been used for conducting the frauds. Once the data has been stolen it is sold on the black web and is further used for crimes like money laundering, human trafficking, drug trafficking, and terrorist financing.
The criminals are carving more enhanced and advanced ways of crimes using the loopholes in the e-commerce sector, hence it is necessary to perform complete identity proofing and AML verification of the merchants of an organization. In online relations, where orders are placed and proceeds are confirmed online, the risk of acquiring a fake merchant is high, hence this risk can be completely eliminated by performing in-depth identity verification of the merchant.

Perks of performing identity verification of merchants:

Identity verification of the merchants is necessary because it not only help the businesses to identify their merchants and prevent fraud but it brings many more advantages for the business.

• Identity proofing of the merchant helps the business in the prevention of loss that the fraud may bring in. In case the merchant of business has used the confidential customer data for illegal purposes the ultimate loss comes to the business. The loss is not only monetary but also the business loses its reputation among the customers and in the industry. The loss of customer value means the loss of revenue. Such loss can be prevented with the help of AML screening and identity verification of the prospective merchants.
• Often the businesses have unique requirements for choosing a vendor. The businesses often do not want to connect with merchants from some specific regions of the world, hence the geolocation and identity verification service of Shufti helps the businesses to identify their merchant’s location and his true nationality by screening the ID proof that the merchant may provide. The OCR feature of Shufti’s document verification solution screens all the information on the ID document provided and also provides the proof if the document is original or fake. Hence the businesses can easily scrutinize the prospective clients making it easier for them to select a trustworthy and credible merchant based on their specific needs and requirements.
• The identity proofing of the vendors and merchants of the business will add another star to the portfolio of the company as it will be a form of regulatory compliance. Although the regulations are rigid only for performing due diligence on customers, the organizations found in connection with the terrorist organizations and PEPs (Politically Exposed People) comes under the strict scrutiny radar of the regulatory authorities.

Hence the businesses should consider the identity proofing of the vendor as an investment that will reap longterm gains for the organizations. Businesses of all types and all sizes are exposed to the risk of cybercrime and fake vendors, hence it is necessary to think in new dimensions. Shufti’s AML and KYC verification solution is the advanced solution which helps the businesses to stay one step ahead of criminals and fake merchants.