Why identity matters for the future of the internet economy.

Posted by Pat Phelan on March 25, 2014

Identity verification is our business at Trustev and its something we take very seriously. You see we believe in an online future that sees most goods and services moving online to make life easier for consumers and merchants. Trading online can be massively beneficial for any business - suddenly, as my friend Liam Casey, likes to say, geography is history. If you're a merchant, your potential market multiples in size as you expand where you can sell and ship to.

However in bringing a new level of convenience to consumers, it does bring a whole new list of requirements and business changes for merchants. For instance; take payments. Anytime you collect a payment online using a credit card its referred to as a Card-Not-Present (CNP) transaction, demonstrating clearly that the current credit card processing system was always designed to be an in person, in store system for payments.

These CNP transactions are considered far risker than in store transactions (its easy to understand why) , so anytime a merchant accepts one of these CNP transactions they take on the liability and risk for that transaction. This means there’s more responsibilities for the merchant in these transactions. Primarily they take onboard the responsibility for confirming the customer’s identity to protect themselves from fraudulent behaviour.

I think we’d all agree that there are two pretty basic facts at the centre of all this.

(1). Customers are entitled to their privacy. In order to purchase something online, no-one should be expected to have to hand over every single piece of private information about themselves.

(2). Merchants are entitled to know who they’re selling to, for the purposes of protecting themselves against fraud.

In the past some merchants have shown themselves to be irresponsible with the data they collect about customers. They’ve used it to confirm identity and then hang onto it and market in an excessive way to the customers. One of the biggest problems with data protection these days is the obsession by big business to focus on collecting data without having any purpose or use for the data in mind when they’re done collecting it. With no clear use case in mind, sloppy mistakes can be made about the security around the data happen and thats why serious breaches occur.

So let’s separate the two and say that in a CNP transaction it’s reasonable to expect that a merchant has the right to know who’s on the other end of the transaction, however they don’t then have the right to use any information they collect any way they see fit.

Let’s also say that a customer can expect their privacy to be respected and not be interrogated or hounded but must appreciate that a merchant has certain legal and financial obligations to know who’s on the other end of a transaction in order to protect their business from liability and loss.

And let's finally also agree the obvious - that a system that benefits both consumer and merchants is best outcome for all parties, resulting in lower costs for merchants and better experiences for consumers.

In the early days of the internet fraud prevention was a pretty brute force, border crossing sort of approach - show your papers, prove your identity or you’re getting nowhere. Now as we move into the era of a more consumer friendly internet, I think we can all agree that the ‘barbed wire fence and buried landmine’ approach of many of these older fraud prevention systems has no place in the modern world of ecommerce. As we finally see enhanced customer experiences becoming a huge part of customer conversions, identity verification is something that should be a given. Both parties in any transaction should feel safe and secure.

That’s what Trustev is focussed on and what we obsess over - true global commerce, where identidy verification is something that sits in the background, enhancing the overall customer experience without interfering in it.

If you’d like to take a closer look at our approach and how you can build a more customer friendly checkout process, while reducing fraud and the cost of policing fraud, then why not drop us a line.

Topics: fraud, Identity