Why Is Address Verification Essential For an Online Business?
The businesses are dealing with more sophisticated efforts of frauds and scams in the modern world. From financial institutions to e-commerce websites every online business has to verify its customers for secure and safe onboarding.
The verification of the address of onboarding customers through his documents is known as Address Verification. The two
Primary Document for Identity Verification
The step is in which a customer uploads his primary or identity documents to prove his identity. The address verification software extracts the required information from the documents like name and age also it matches the image on identity documents. The identity verification is done to kill the chances of identity theft. The identity documents should be government-issued and authentic like ID Card, Passport or Driving Licence.
Secondary Documents for Address Verification
Primary documents also contain the address of the users, but that is not updated to have the most recent address of the user secondary documents are used. The secondary documents should not be issued before three months. Some examples of secondary documents are rent agreement, employer letter, tax bill, utility bill, bank statement, and issuance agreement.
Address verification is done in the three steps listed below
- User uploads the image of himself holding the primary documents in his hands
- An image of secondary documents of address is uploaded
- The software analyzes the extracted information for address verification
Why Is Address Verification Important For Your Business?
The desire for an effective verification solution is growing day by day to combat cybercrimes. Here are some reasons why address verification essential for a business.
The most important reasons for any business to adopt address verification is prevention and protection against frauds. Credit card providers and merchants of online business can face chargeback by customers over the unauthorized use of credit cards.
Fraudsters use stolen or expired debit or credit cards to perform a digital transaction. They usually avail online services like purchasing products from e-commerce websites through stolen debit cards. After the online payments are done, both the merchant and user came to know that they have been scammed through.
Identity Theft Protection
Online platforms are a potential target of identity theft in this modern world. The practice of obtaining personal or financial information of a legitimate user to fake his identity is called identity theft. Fraudsters try to commit frauds through identity theft decreasing the chances of being caught. The easiest way to steal a user’s identity is by phishing emails.
Decrease Number of Returned Shipments
The E-commerce industry or online products delivery sector is heavily damaged by returned shipments. According to the reports to Statista, global returned shipments cost one trillion US dollars in 2019. Returned shipments are mainly caused by fake or false addresses. The false address means that the user was legitimate but didn’t enter his address correctly. Only one misplaced number in the address can deliver a parcel to a different state.
Better Customer Experience
Due to the above problems both business and customers face troubles. Businesses are at risk of losing customers’ trust in online platforms for shopping. Due to failed shipments business can lose reputation among customers.
Compliance with Global Watchdog Guidelines
Global watchdogs like FATF, FinCEN, FTC, and EU have issued recommendations against money laundering and terror financing. These recommendations are mandatory to comply with every business for better aml compliance. If an organization does not adopt these recommendations, it can be fined or blacklisted by FATF. Businesses have paid heavy fines due to non-compliance with FATF recommendations.
Wrapping It Up
All of the above problems can be solved by implementing address verification on onboarding customers. A customer whose address is verified is more trustworthy for online businesses. And if a user is involved in criminal activity later it becomes very easy to catch him because now the business has all its verified personal information. Address verification also saves a business from blacklisting and penalties. It also creates a more reliable online environment.