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Given the stellar factors associated with the digital economy, consumers are increasingly moving towards e-commerce and prefer to shop online. In certain instances, brick and mortar stores and services cannot match the digital platforms’ convenience, safety, and speed.
In India, the finance minister Nirmala Sitharaman pushed for increased digitalisation of the economy. In addition, the UK digital economy stood at a whooping GBP 149 billion as of 2017, which is nearly 7.7% of the UK economy.
The shift towards digital platforms and increased online transactions is in motion. But, it has put forth unprecedented risks and digital frauds. As a result, the need for consumer identity verification and authentication is crucial, including the deployment of efficient safeguards to protect the merchants from frauds. On the other hand, the solution cannot minimise the speed and convenience of the digital transactions platforms.
Given the challenges faced by merchants, banks, and NBFCs, let’s examine why digital identity verification is crucial in the financial sector and the digital economy.
Minimises frauds
Cybercriminals are becoming increasingly sophisticated and utilise complex mediums to exploit the risks associated with digital financial transactions. As a result, the merchants and service providers are facing unprecedented challenges to prevent fraud. In addition, it has also become challenging to maintain a healthy balance between the deployment of safeguards to minimise risks and offer a seamless transaction experience for the customer.
Digital authentication technology offers an excellent solution for offering greater security and a stellar user experience. For instance, Wibmo’s ACCOSA IVS (EMV 3-D secure solution) runs the CNP (card-not-present) transaction through the 3DS, flagging the transaction as per the risk levels. Let’s say the risk level is medium, so it will trigger an OTP via SMS verification to provide a 2-step verification. On the other hand, high-risk transactions get flagged and declined.
Such solutions and digital checks make it increasingly challenging for fraudsters to steal a consumer’s identity or create a fake persona, significantly minimising the risks.
Regulatory and compliance requirements
Financial crime prevention organisations, such as FATF, and the stringent KYC and fraud prevention rules setup by regulators, make it challenging for merchants to meet the compliance obligations. In addition, meeting 2FA and SCA regulatory requirements is also crucial for service providers.
Consumer identity verification helps meet such complex provisions. It is also pivotal in maintaining a risk profile for the merchants and the banks to mitigate risks while providing a frictionless experience to the consumers.
Getting benefitted – Merchants, card issuers, and the consumers
Utilising a customer identification tool for EMV payments benefits all the parties involved. For instance,
The Merchant
- Liability Shift: Chargeback (an act of returning the money to the payer during a transaction) shifts from the merchant to the card issuer.
- Revenue Growth: Seamless experience to reduce cart abandonment, increasing the sales growth
- Merchant Opt-Out: Consumer identity verification solution for offering merchants particular authentication parameters to use individual decisioning.
Card Issuer or Banks
- Enhanced Fraud Prevention & Detection: Exhaustive risk assessment and safeguards for each digital transaction enhance fraud prevention and detection.
- Easy Authentication Methods: Multiple authentications and identification methods, such as OTP and biometrics, are available based on preference.
- Real-time Risk-based Authentication: Real-time risk detection empowers the card issuer to assess the cardholder’s profile
Consumers
- Seamless Transaction: A seamless and frictionless transaction experience
- Thorough Security: A secure gateway to process EMV payments
Conclusion
This post outlined the stellar benefits of using customer identity verification and authentication solutions in the increasingly complex digital economy. Post-covid-19, it is also pivotal in preparing for the new normal and increasingly digitised economy. So, explore the available solutions in the market to find the best customer identification verification solutions.
