KYC Verification to Make E-Payment Safer

KYC Verification to Make E-Payment Safer

in Business

KYC, Know Your Customer, is the process of recording the personal information of the customers before dealing with them. KYC verification is the process of using their personal information to verify their identity. Businesses, financial institutions, banks, e-commerce, hospitals, etc. are required by the law to perform KYC verification processes on all their customers. This is to ensure that the person they are dealing with is not an identity thief and is actually using their own credentials.  

Due to e-payment methods, there has been an increase in identity theft and online financial fraudulent activities. In this blog, we will be discussing the identity frauds in e-payment methods and the need for online ID verification.

What is E-Payment?

E-payment, also known as electronic payment, is the process of paying for goods or services or making transactions online through an electronic medium like your cell phones or laptops. It is a payment method without the use of any form of cash. Due to the growth in online banking, the trend of the e-payment method has increased over the years. Famous e-payment systems are Paypal, Venmo, Amazon payment, Google Checkout, Wepay, etc.

While an electronic payment method might be convenient for the users, it does not come without its drawbacks. One of the major drawbacks is identity theft. There has been a 30% increase in e-commerce frauds. If the payment methods are not secure, then there is a very good chance of the customer becoming the victim of identity theft.

What is Payment Fraud?

Payment fraud is an illegal financial activity in e-commerce business platforms. It consists of any illegal payment or transactions made online. The victim of payment fraud gets deprived of their personal information or money.

Payment fraud can occur through identity theft. Identity theft has increased over the years due to the online system. People can steal other people’s personal information like their id card details or credit card details by hacking their systems. Then they can use that information to take part in illegal activities. They can use other people’s identity to buy things online under their bank accounts without having to pay for anything. This can cause chargeback fraud for businesses.

In 2016, the E-commerce industry already lost around 6.7 billion USD due to the chargeback frauds. According to the FTC, around 1.4 million complaints related to identity theft fraud were reported in 2018. It was also reported that the customers lost around 1.48 billion USD in fraud complaints in 2018. This is an increase of 406 million USD since the previous year.

Online KYC Solution

According to the bank secrecy act of 1970, all the businesses are required to perform KYC on all their customers to ensure that no financially illegal activity is occurring. The same law applies to e-commerce platforms as well. They are to verify the identity of their customers online, or else they can face the consequences in the shape of penalties and frauds.

Now there are artificially intelligent solutions that can help businesses to verify a person’s identity before dealing with them. These solutions can help to perform E-KYC services and verify the identity of the person no matter where they are located.

The online shopper is required to submit their KYC documents at the time of registration. These KYC documents could be their ID card, passport, driver’s license, etc. Then whenever the end-user is trying to order something, they are asked to submit the picture of their identity documents. Then these AI software can screen and match those ID documents with previously submitted documents and verify the identity of the person. KYC verification can be done through ID verification, document verification, address verification, face verification, and biometric verification.

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