Importance of KYC Verification for online Businesses

Businesses have discovered a new way to improve their operations and generate more revenue. Businesses have migrated online to target new markets as technology and internet availability have improved. The online shift has produced new opportunities for businesses to expand their market and reach more customers. For the sake of convenience, customers are increasingly opting for online shopping rather than visiting establishments.

Online firms, on the other hand, have faced the possibility of fraud on their platforms. In the worldwide economy, fraud and scams amount to billions of dollars in losses. KYC verification is required of businesses in order to validate the identity of persons.

Online Threats

Businesses face many online after their movement into the online market. These threats are just not causing the businesses millions of loss in revenue but can also affect their reputation in the market. Organisations are searching for ways to protect themself from these crimes.

KYC verification has been used for a long time and its popularity increased after 9/11. With the innovation of technology, KYC verification also evolved for better results. The traditional method of identity verification is no longer effective. Lack of identity check can cost a lot of threats. These threats are explained following

Identity Theft

Identity theft is one of the major issues that KYC addresses. KYC is based on the provision of appropriate verification of your legal identification. Previously, fraudulent documents or stolen identity evidence could be used to open bank accounts.

Identity theft is a serious concern that has damaged millions of lives. It is dangerous for families and can also help fraudsters in stealing from businesses. Online business and other institutions can confirm identities and prevent fraudulent accounts by following KYC best business practises, which include keeping a record of each account holder and ensuring that only the proper persons offered their services.

Financial Fraud

Financial fraud was another situation where KYC verifications proved to be extremely beneficial. Financial fraud can take various forms. However, the ones in which the culprit creates dummy accounts using phoney or stolen IDs are among the most difficult. Account takeover fraud is where fraudsters take over an individual account for personal or financial gain.

Fraudsters try to apply for loans with false identity to steal from banks. In the case of online business, fraudsters try to make purchases with fake identity and put the burden on someone else. Fake orders have caused much damage to the online business.

What is KYC Verification

‘Know Your Customer’ or ‘Know Your Client‘ is an abbreviation for KYC. A method by which a company can confirm a customer’s identity in order to assess their authenticity and trustworthiness. Banks, insurance firms, online businesses and other financial institutions are the most likely to employ this method to verify the authenticity of consumers.

KYC verification can be done by verifying the documents collected or through facial recognitions. These two are common verification processes used by online businesses for verification purposes.

Document Verification

Businesses require some documents from the individual to verify its identity. Online ID document scanning services are also gaining in popularity. ID verification systems that are integrated with innovative technology provide consumer authentication using government-issued ID documents.

Documents originality is verified using artificial intelligence algorithms. The documents are run through the system which scans the documents. Artificial intelligence (AI) and machine learning models ensure that the document provided for verification is legitimate.

Facial Verification

Facial recognition is a method of verifying or certifying a person’s identification by examining their face. People can be identified in pictures, films, or in real time using facial recognition technology. It is a form of biometric verification that identifies a person using his face.

It is an important and effective way of identifying the identity of an individual. It works by capturing and storing a person’s picture in the database. The person then verified himself by showing his face which then matched with the data in the database.

Conclusion

It is always a good idea to take precautions then becoming the victim of the threat. Every year businesses face millions of dollars of loss due to fraudulent activities. Businesses can help in preventing identity fraud by verifying and notifying the identity of individual.