Strengthening Trust in Global Transactions with Identity Authentication
Identity authentication has a crucial role in fostering trust and reliability in international trade. In this article, we’ll delve into the various methods and procedures involved in verifying identities during cross-border transactions, highlighting their significance in mitigating risks and ensuring secure dealings. By emphasizing the importance of robust identity authentication, the article aims to showcase how it strengthens confidence among trade partners, contributing to smoother and more trustworthy global business exchanges.
What is the role of identity authentication in cross-border transactions?
In an article, it explains that when there’s mutual recognition of ID systems between countries —- rather than the need for harmonization — this can become a “key driver of economic growth” because of the greater possibilities afforded to customers as a result. With transactions moving increasingly online, cross-border identification is becoming more and more important. What’s more, with cross-border identity authentication, it’s possible for customers to be able to open up bank accounts in other countries or sign contracts to trade in other countries without having to enter the country at all.
Identity authentication is also important for preventing fraud during cross-border payments. When it’s possible to recognize different types of identity documents across multiple countries, it’s then possible to confirm their identity, therefore helping to mitigate the risk of someone pretending to be someone they’re not. Customers who present incorrect identity information are potentially riskier. This is particularly so in cases of identity fraud, where criminals will use false identities consisting of counterfeit documents in order to make transactions.
As more and more consumers use the internet in order to make transactions, this process is increasingly becoming the target of fraudsters. This means that there’s a greater emphasis on companies to enhance trust throughout their transaction processes – for customers, their partners, and their entire supply chain. In this next section, we’ll cover how fraud detection is important in helping to cement trust in a global market.
Why does fraud detection help to cement trust in a global market?
Trust is closely associated with company performance. In particular, “global threats” were negatively correlated with profit margins. And as found in a study on the growing global trust market, digital trust is “the confidence participants have in the digital ecosystem to interact securely, in a transparent, accountable and frictionless manner.” While using fraud prevention and detection tools can help keep your own business safe from attacks, it’s important to look at the relationships that your supply chain partners have with their own cybersecurity measures. Do they have them in place? And if so, are they good enough to prevent the most dangerous of attacks?
This is where strategic cybersecurity partnerships can be especially useful. It can mean working with partners who have cybersecurity strategies already in place or encouraging partners to strengthen them. A good partner will also have knowledge of government regulations that they need to comply with as a business, and an attack on your supplier can be just as critical as an attack on your own networks.
The cost of supply chain disruption
What is the cost of cybercrime when it comes to supply chain disruption? If your supply chain is disrupted, then your organization’s processes are disrupted too. Take, for example, the 2017 NotPetya malware attack on companies dealing with Ukrainian supply chains such as Cadbury’s and FedEx, costing European businesses millions and this destructive malware paralyzed computer networks.
Therefore, by strengthening adherence to cybersecurity hygiene throughout your supply chain, businesses may be able to prevent future attacks such as these – both for themselves, their partners, and their customers.
The current issues surrounding cross-border identity authentication
According to a guide to the KYC verification process, Know Your Customer – or KYC – is often a legal obligation of businesses (particularly financial institutions, neobanks, or gambling operators). However, they found that the fact that KYC regulations are different across the globe, the documentation is different, causing a “logistical nightmare for companies working with an international user base.” Since there are around 150 different passports and national IDs across the globe, it can become a laborious and time-consuming process verifying so many different IDs according to their unique systems.
One way around this issue is to introduce pre-KYC checks, which thin out the number of customers during this process by spotting the most obvious fraudsters before they even have a chance to get to the KYC stage. Pre-KYC checks can also save financial institutions money, as SEON found that KYC checks cost the average bank $60 million each year.
What’s more, criminals are becoming smart about KYC technology detecting counterfeit documents, and they are increasingly turning to strategies like phishing in order to trick victims into giving away their real identification documents. This means that there’s an imperative for companies to increasingly have to use other tactics in order to spot criminals who are using stolen, real credentials.
With the help of KYC and pre-KYC checks, you can help enhance your trust relationships with both your partners and customers alike. With KYC being particularly challenging when authenticating documentation across different countries, pre-KYC can be a useful means of thinning out the number of customers who reach this stage, therefore also making it more cost-effective. By communicating with the rest of your supply chain about cybersecurity strategy, you can help ensure that there are fewer vulnerabilities for both your business and your customers.