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Why You Need To Know Your Buyer

Emily Daniel
November 12, 2019
5 minutes read
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Online payments are fast replacing cash transactions with the top payment companies harboring 1billion+ active users. By 2023, global mobile payment transactions will be worth more than £3.5 trillion, as indicated by findings from Allied Market Research. Between 2017-2013, the market is expected to grow at a compound annual growth rate of a staggering 34%.

Merchants are currently supporting various online payment channels including desktop browsers, mobile apps, POS systems, and direct purchases through social media. Support is being developed and furnished for all of these channels, along with additional innovative solutions for a growing online buyer base.

In order to safeguard themselves from online fraud, suppliers are also looking into buyer verification solutions that help you know your buyer, and more importantly to know your buyer’s customer.

Implications for E-commerce and Online Security

According to Worldpay’s 2018 Global Payment Report, the global share of cash as a payment method will decline from 32% in 2018 to a little over 15% by 2022. The same dataset reveals that the use of credit and debit cards has remained steady in this time period, while mobile payments have witnessed a steep rise since 2018. By 2022, e-wallets and other modes of cashless transactions will be just shy of 30% of the point of sale payment (POS) methods globally.

Following potent buying trends in global online payments, a number of security concerns surrounding online transactions need to be accounted for. Both consumers and service providers worry about the new mode of doing business, with privacy and data breaches emerging as the largest barriers to online payment adoption.

Thanks to mobile e-wallets, digital currencies and payment alternatives like PayPal and WePay, opportunities for mobile commerce are also proliferating. As a result, online fraud has become an imminent threat to digital transactions, with 16.7 million victims of identity fraud reported in 2017 alone. Additionally, the Online Fraud Benchmark Report by CyberSource notes a 30% increase in eCommerce fraud attacks compared to 2016.

Previously, financial crimes centered around the misuse of physical credit cards, but as merchants switch to chip-enabled cards and in-store mobile app payments, fraudsters have made the move too. Online fraud activity builds on stolen consumer information with data breaches on the rise, and millions of consumer records exposed to malicious minds.

E-commerce fraud is a double-edged sword, impacting both victims of identity fraud, and suppliers alike. While buyers lose sensitive personal information, merchants find themselves at a larger financial loss. This is because of the reimbursement process following a fraudulent transaction. The seller loses the merchandise ordered by the fraudster, refunds the original buyer, and pays credit card charge-back fees associated with the transaction.

**How Know Your Buyer Checks Can Help**

Businesses have to look deeper into foolproof methods of providing online services. This means that Know Your Buyer checks are going to be increasingly important in order to safeguard business and financial operations, as well as maintain good industry repute.

Verification providers have also caught up with malicious trends in e-commerce fraud, and tailor Know Your Buyer solutions to provide a risk cover. For a cashless world to be both efficient and safe, extra layers of security at the point of sale is just what is required right now to ensure compliance with know your customer (KYC) regulations.

Buyer Identity Verification

The security of payment networks depends largely on verification of sellers and buyers, to ensure that only genuine transactions are allowed to go through. To know you, buyer, evidence of a member’s identity is collected by verification providers using a Verification API that also provides proof of transaction.

An official ID is required to be submitted by the user, such as a driver’s license, passport, or national identity card. For liveness verification, a selfie will be taken to act as proof of presence, which must match the identity document. This completes the process and tells the seller that a buyer has actually purchased the product.

Safe marketplaces

Keep your community safe by verifying both sellers and buyers, and opt to know your buyer solutions that protect sensitive data from fraud and unauthorized access.

Know Your Buyer solution providers take into account the high volume of e-commerce being reported each year, and thrive to provide seamless buyer verifications. Before making or accepting payments, vendors and buyers are required to complete an identity verification process with high-security protocols. The verification systems must comply with global regulations for AML/KYC/KYB in order for the business to complete Know Your Buyer compliance procedures without friction.

Know Your Buyer Persona

Your customers or your business’ customers can have varied priorities and choose different metrics to steer progress. Using a buyer-centric approach to business expansion and growth will translate into fruitful long-term customer relationships.

Key information and credentials about buyers can also help you know your buyer’s persona in a better way. Buying behavior in the digital age is a key indicator of shaping new plans and promotions and can be gleaned from the channels that the buyer is choosing for a purchase.

Especially true for new entrants, brands can leverage this data to target a specific audience that has shown interest in their product or service. This will also help streamline business policies and schemes if you know your target market, eventually boosting user experience for the end product.

For the safety of growing digital economies, knowing your customers, businesses, and buyers has long-lasting implications. As we continue to embark on new avenues for cashless transactions, complying with essential regulatory directives will help keep us on the right track.

Disclaimer: No warranty is herein provided that the information contained in this document is accurate, up-to-date, and/or complete. In no circumstance(s), does such information constitute legal or any other advice. Any person who intends to use, rely, pass-on, or re-publish the information contained herein in any way is solely responsible for the same. We suggest to verify the information and/or obtain expert advice independently if required.

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Multi-Tier Security - Another Line of Defense Against Bank Account Scammers
Implications for E-commerce and Online Security
The banking sector has been witnessing a significant rise in criminal activities is a major concern of security authorities these days. The latest reports revealed that banks have been violating KYC and AML regulations and there were skyrocketing penalties in 2020. Protecting banks and customers is necessary and identity verification is one of the best ways of doing so. However, conventional methods like manual document verification do not suffice for the needs. There must be more robust and automated systems like digital identity verification and video KYC that can enhance the efficiency of the process.

A single line of defence does not work when it comes to technologically advanced fraudsters. There must be layers of security to filter them no matter how hard they try to surpass ID checks. Hence, multi-tier security is what the banking sector needs. Multiple layers of security checks and identity verification methodologies will make it impossible for fraudsters to enter banks.

What is Multi-Tier Security?

Multi-tier security refers to multiple layers of identity verification to enhance security in organisations. Fraudsters are developing sophisticated ways of fulfilling their malicious intent and a single layer of security cannot help companies. Therefore, there must be multiple layers of ID verification that can prevent fraudsters from entering the business.
A Summary of Bank Scams and Frauds

Over time, many different types of frauds and scams have struck the banking industry. Due to advanced technology, not only banks are streamlining their processes, but criminals have also figured out techniques to execute their plans. Many new breeds of scams have surprised organisations, especially banks. Let’s take a look at some of the fraudulent activities.

Account Takeover Fraud

Account takeover (ATO) refers to the fraud in which criminals get illegal access to bank accounts and use them for illicit activities like money laundering and chargebacks. As technology advances, fraudsters have also become sophisticated in committing account takeover fraud. There was a 43 per cent increase in account takeover fraud during the global lockdown in 2020. The numbers are expected to increase this year as well due to rapid digitisation.

New Account Fraud

A new breed of frauds struck the world a few years ago by the name new account fraud. With time, the rate of this fraud has increased and defeated all other kinds of scams. For a new account fraud, fraudsters use stolen, forged, or synthetic identities to open a new bank account, get a new credit/debit card, or loan money from the bank. According to Javelin Strategy, 3.2 million customers were affected by this fraud alone in 2018.

Identity Theft

Identity theft has been a threat to businesses for a very long time. The numbers are continuously increasing and banks are the primary target. Unfortunately, identity theft has taken various forms as well, including child identity theft, medical identity theft, and social identity theft. This enables criminals in making purchases, opening new bank accounts, and enjoying numerous other benefits with false names.

Data Breach

Data breach is a social engineering technique that fraudsters use to acquire customer information. The stolen data is later used for bank account scams, identity theft, and numerous other illegal activities. The identities stolen from a data breach are also used for new account fraud. Around 8,000 data breaches were reported in 2019. In the first half of 2020, 540 data breaches were reported only in the United States according to Statista.

Biometric Authentication – The Additional Security Layer

Biometric authentication is the additional layer of security that not only enhances the level of security, but it is also a rigid measure that fraudsters cannot dodge. Fooling biometrics is not a piece of cake for criminals because biometric authentication requires the live presence of the individual for identity verification. Voice, face, palm, iris, pupil, and retina are some of the biometric traits of an individual that are required for biometric verification.

Biometric verification employs various artificial intelligence models and the following techniques are used for authentication:

3D depth analysis

Micro-expression analysis

Skin texture analysis

Liveness detection

All these techniques ensure the live presence of individuals and any spoof attacks or deepfakes can be identified within seconds.

How will Multi-Tier Security Help Your Bank?

Digital identity verification is a multi-tier security measure that your bank needs. This system has multiple methods of verifying identities that prevent fraudsters from entering the business. Here is how the process of multi-tier security works:

First, the individual has to register on your bank’s website for the identity verification process

Along with the registration details, government-issued ID documents are also submitted

Then, the information submitted is verified with the government-issued ID document

Once the documents are verified, biometric authentication comes in action and face verification checks are performed

Customers have to submit their selfie or video during verification which is matched with the image on the ID document

Lastly, consent verification checks are also performed in which the customer has to submit a handwritten or typed consent note

Conclusion

All in all, verifying identities with the manual method is not an adequate option in the digital world. Digital identity verification is an automated process of verifying identities with layers of security to increase the efficacy of the process. One of the strongest layers in this method is biometric authentication that ensures the live presence of the customer for verification. Fraudsters cannot bypass these checks through any of their techniques. Due to the robustness of this technique, bank account scammers fear from the additional layers of security to verify identities and transactions. Identity theft, account takeover fraud, new account fraud, and data breaches are some of the criminal activities that have increased over time. Now, banks need a multi-tier security system to ensure the security of the customers as well as the organisation.

Get in touch with our experts and learn more about the digital ID verification system and biometric authentication.

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Why You Need To Know Your Buyer