The Indian e-commerce market is growing exponentially, and according to RedSeer Consulting firm, the industry is expected to reach $350 billion by 2023. Growth is primarily driven by a combination of factors that is increased online spending, the growth of per capita income, young millennial households, and the ease of seamless payments and transfers. The surge in cross-border trade has further catalyzed this growth, making the competition fierce within India and globally.
As we revel in this growth, it’s essential to acknowledge that it’s not just attracting legitimate players. Market growth is equally appealing to fraudsters aiming to exploit its potential. Another hurdle intensifying e-commerce fraud is the existing regulatory framework. With no dedicated e-commerce laws or regulatory bodies, various government ministries and departments deal with different aspects of e-commerce. This regulatory gap allows for oversights and grants an upper hand to fraudulent entities to make illicit profits.
Before delving into the role of identity verification solutions, let’s first lay down the number of e-commerce frauds directly impacting businesses’ bottom-line profitability.
In light of these challenges, there is a need for a robust verification framework for sellers and end customers. Seller verification can reduce the occurrence of fraudulent or counterfeit product listings, protecting buyers from purchasing substandard or non-existent items. Similarly, buyer verification can help protect sellers from chargebacks and disputes and lessen the risk of unjustified refunds or returns. This can establish a safer and more reliable environment for buyers and sellers.
There needs to be a stringent KYC process for buyers and sellers verification registering on the platform for purchasing/selling goods and services. Three prominent factors need to be taken into consideration:
Methods such as two-factor authentication, biometric scans, identity checks, and criminal record checks can make it more difficult for fraudsters to create fake accounts or impersonate identities. Digital Address Checks can help prevent shipping fraud and ensure the products are delivered to legitimate recipients. This will also reduce fraudulent rerouting of packages, which is a concerning factor for businesses these days.
Other verification mechanisms, such as confirmation emails, SMS notifications, or one-time passwords, ensure transaction security. This will help users promptly identify and respond to unauthorized activities, reducing the risk of financial losses due to fraudulent transactions.
The verification should be done at more than just the initial stages during onboarding. There needs to be continuous compliance and monitoring of all the key stakeholders, i.e. buyers, sellers, and delivery partners, at periodic intervals for a compliant ecosystem.
Based on the verification requirements of the businesses, additional verification tools can be deployed to detect anomalies, such as sudden changes in login locations and unusual buying patterns.
AI-powered identity verification solutions that are scalable and customizable have emerged as pivotal tools in countering e-commerce fraud. Robust AI-driven solutions for individual verification (buyers/delivery partners), business verification (sellers/channel partners), and end-to-end onboarding and risk management solutions can help facilitate a much safer and transparent ecosystem. The approach should not just be confined to AI-powered verification systems but also incorporate robust security systems, two-factor authentication, human expertise, and educating the users on the best industry practices.
Identity verification solutions are instrumental in fostering a sense of reliability between sellers, buyers and all the other critical stakeholders in the ecosystem. Businesses leveraging it already have a strategic advantage in cultivating a mutually beneficial ecosystem where trust thrives.
Source: ABP LIVE
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