Businesses are currently being encouraged to verify the identity of their customers using ID verification services. Some governments, such as the U.S. federal government, have even made it mandatory for businesses to record customer details such as ID number and address in what is known as the Customer Identification Program (CIP).
But, why is verification so important, I hear you ask? Why do digital businesses need to know the identities of their customers? There are six main reasons;
1. To Curb Online Fraud
Card-not-present fraud costs keep rising every year. According to research company Aite Groups, by the end of 2018, digital businesses will be losing $6.4 billion annually to this type of fraud alone. That would be three times the figures reported in 2011. Then, you need to think about the other types of fraud too. Cases of lost or stolen merchandise, for instance, have also been on the rise. The same applies to the fraudulent request for refunds/return and friendly fraud. The very first step in curbing these crimes is customer identity verification.
2. Keep Prices Low
Among other things, fraud increases the cost of doing business. If your business losses merchandise to online scammers, for instance, you may be forced to raise the prices of the remaining goods to compensate for the losses. Verification automatically reduces the possibility of encountering scams.
3. Verification Makes Ordering Easier and More Convenient
Imagine this; a customer comes to your website, picks a few items from the store, fills in their credit card information, and checks out. Having been impressed with your services, two weeks later, the customer returns to make another purchase, only to find that they need to re-submit their personal and credit card information again. In most cases, such a customer would be enraged and possibly abandon the whole process. If you want to reduce abandonment, you need to embrace customer verification.
4. Build Consumer Confidence
Studies show that consumers tend to avoid businesses that have not secured their payment channels. It gets worse; if owing to your negligence you encounter an attack where personal records are compromised, you’ll lose even more customer. Again, the first step in preventing such calamities is to verify your customers.
5. Reduces Shipping Errors
Address verification can also help in reducing shipping errors. When a customer comes in, an ID verification service would engrain their address into the system so that you can easily route their products to the right address. What’s more, customers are prone to making mistakes. A person could easily mistype their address causing their goods to be misdirected. By verifying each customer’s address against the billing address, you can catch those errors and expedite the shipping to avoid poor customer service.
6. To Be in Compliance
Finally, and most importantly, you need to verify your customers’ identities just to remain in compliance with government regulations. Failure to comply can result in hefty fines and potential lawsuits.
So, if you’re not verifying your customers’ identities yet, the time to start is now.
