The online platforms have become more vigilant due to cybercrimes. Businesses have suffered losses due to account take over and other cybercrimes. The need for some robust solution that can verify online customers is inevitable. Covid-19 has pushed businesses to adopt more digital operations, e-learning, online food delivery and e-health were the sectors that transformed efficiently. Identification and verification of the users online was a challenging task for every business. E-commerce has lost millions due to returned shipments. The reason was that the address of the buyer was not verified or not properly processed. An address verification system can save online service providers from chargebacks and returned shipments.
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Address Verification System
An address verification system ensures that only legitimate users with verified addresses onboard on the business website. Online address verification verifies the users’ addresses through their primary and secondary documents. User address verification and business address verification can be done through this system.
The documents that are used for the verification of the identity of a customer. Primary documents must be authentic and government-issued. Most commonly used identity documents are listed below
- ID Card
- Driving Licence
The documents that can verify the recent address of a user are known as secondary documents. Primary documents also contain the address of the user but the address is not recent because the user may have changed his residential or business address but doesn’t change that on his ID documents. Sometimes primary documents are used for address verification only if they are issued in the past three months. Commonly used secondary documents are listed below
- Bank Statements
- Employee Letter
- Insurance Agreement
- Tax Bill
- Rent Agreement
- Utility Bill
Working of Online Address Verification System
- User uploads an image of holding primary documents in his hands
- The image on documents is matched with the face of the user
- Secondary documents are matched with the primary through ID number of the user
- Address verification system fetched the address from the documents
- The address is examined and the system shows the result to the user
Documents checks for online Address verification
- Forged or modified documents are not rejected
- Primary documents must be issued by the government
- Secondary documents should be only three months old
- The document image should not have any folded edges
Problems with Traditional Address Verification
The traditional address verification in which a user just enters his address in one line raises many problems for online businesses. Spelling mistakes or acronyms were the most common problems like some users may write the US instead of the USA or America in their country section. Then the businesses introduce a dropdown menu in which the user can choose from the choices. This was not well comprehended by the user because the searching process was irritating and time-taking. Then postal codes were introduced but most of the online users were unaware of their postal codes.
The traditional methods in which the user had to manually fill the address field on a website was not liked by businesses and users because of low accuracy and slow processing.
Benefits of Address Verification System
The most significant reason for address verification is to combat frauds and scams. Financial institutions like banks and insurance corporations have been heavily hit with financial scams. Fraudsters try to open bank accounts through stolen documents or provide fake addresses during onboarding. BankCard Services reports that business lost $30 billion due to chargebacks issued by fraud victims in the last decade. By verifying the address of a customer the risk of frauds and identity theft drops significantly.
Online markets face huge losses due to returned shipments. The most common reason for returned shipments is the wrong address of the buyer. This happens when a buyer unintentionally gives his wrong address. According to Tobin Moore, CEO of Optoro return shipments will be taking over a trillion per year.
Summing it Up
All of the above discussion narrows down to that businesses should adopt the address verification system. This will develop a better online environment and reduce the risk of fraud, scams, money laundering, and other illegal activities. Also, it will help the business to have a better Know your Customer and Anti-Money Laundering compliance.