Despite registering an exponential growth rate in recent years, e-commerce has been extensively undermined by online fraudulent activity. This has prompted merchants, customers, issuers, acquirers, governments, and regulators to put particular emphasis on data security.
Thankfully, although fraudsters have gotten a lot smarter since the start of the e-commerce revolution, identity verification has seemingly evolved fast enough to keep up. Today, online retailers have rigorous ways of dealing with common problems like identity theft and chargeback fraud. As a result, more and more customers are confident to share their credit card data online.
What The Evolution Of ID Verification Looks Like Today
Over the last two decades, global currencies have been shifting from paper to electronic data. This change has been mainly championed by the widespread adoption of digital computing, mobile communication, and hyper-connection.
As such, the business world has evolved, and so does identity verification. The rapidly increasing speed of doing business has necessitated the need for extra layers of verification to prove payment authenticity.
Not only that, retailers, both online and offline are moving from the age-old PIN and password to computer-vision and biometric-scanning products, which establish the real-world identity of consumers, rather than just checking a set of keyed in characters.
The use of digital biometric identity and computer vision means that buyers no longer have to remember complex passwords or repeatedly enter their details to make purchases. Even better, sellers don’t need to worry about mistakenly selling to an illegitimate buyer with stolen credit card information. The result is an ultra-fast and -secure online business environment for all.
Curbing Chargeback Fraud With ID Verification
Chargebacks were created to protect the customer from dubious merchants, and resultantly, build public confidence in credit cards. Any shopper that was dissatisfied with a sale could easily get their money back by filing a chargeback against the merchant. Of course, despite the nobleness of the policy, fraudsters were quick to exploit the opportunity, and it didn’t take long for retailers to start feeling the pinch.
The evolution of identity verification shines a blinding light on the chargeback fraud problem. This is because merchants can verify the identity of their online customers in the real world. The anonymity of the internet, which e-commerce fraudsters used to enjoy, is now gone.
Criminals with stolen credit card information cannot complete a purchase until they unequivocally prove that they are the legitimate card-holder. This is done through biometric scanning, where the merchant’s security software makes use of the fingerprint scanner of a recurring customer’s smartphone, tablet or laptop to verify their identity. Other utilities require new customers to hold the actual card onto the camera instead of having to fill in information themselves, which confirms that the physical card exists and is with the customer.
With modern ID verification technologies, merchants can now rest easy, knowing that any chargebacks filed against them are by actual buyers and not criminals.
Wrap Up
Current statistics indicate that 86 percent of all chargebacks filed are fraudulent, but with the future of commerce moving in line with ID verification, it’s possible that the numbers will drop significantly in the coming years. And, once we get to the point where a single digital identity, backed by biometrics and computer-vision, can be used in many places easily and securely, chargeback fraud will be a thing of the past.
