What Benefits Does KYC Provide to Online Businesses?

What Benefits Does KYC Provide to Online Businesses?

“Know Your Customer” is a huge industry online these days, what with fraudulent activity taking place around every corner. Many online businesses are now reliant on KYC solutions to help prevent fraudulent activity, but that’s not the only benefit such solutions offer. Here are a few of the benefits such systems provide to take businesses further.

Are Customers Genuine?

With KYC solutions now in place, many online businesses have the benefit of knowing whether their customers are genuine or not. Even some of the biggest web hosting businesses out there are now clamping down on fraud as many bad customers are using stolen identities to order web hosting services, which can be used for warez and other illegal online activities. Therefore, KYC helps online businesses distinguish a genuine customer from a bad one.

Have Customers Had an Account Before?

When it comes to controlling registrations on a site, especially with online deposits into prepaid cards and the like, it’s important businesses allow only one account per person. If this doesn’t happen, businesses can’t control different accounts for the same customers and it makes things complicated. But, it also means certain regulations aren’t followed. KYC solutions like Cognito identity verification can help businesses with that problem by verifying a customer is who they say they are.

Prevent Money Laundering Efforts

Many online websites become victims of money laundering efforts because they offer criminals an easy way to turn dirty money into clean money. Account holders on numerous sites could easily transfer money into their accounts using cash deposits, and could just as easily withdraw that money from that website using a different payment method. However, with KYC now in place, it’s much harder for members to make transactions using different payment methods that do not match with their registration details.

Has the Identity Been Stolen?

As stated above, KYC was introduced to try and prevent as much fraud as possible. While fraudsters are coming up with new solutions to bypass such systems, KYC solutions aren’t far from getting in front. KYC systems have been at the forefront of preventing identity fraud for years now and the systems are continually updated. Such systems are now monitoring identities and are checking with local governments and entities to ensure a user hasn’t stolen someone else’s identity.

Are Customers of Legal Age?

When it comes to those businesses selling age-restricted products, it’s important they cover themselves by introducing KYC systems to prove their ages. Without the right system, anyone can register for an account and buy products/services without being the legal age limit. KYC solutions prevent this by checking with local governments and online credit reference agencies to ensure identity is correct, but also members are of the legal age limit. Many businesses that sell age-restricted products are now required to have the right solutions in place to prevent minors from purchasing products and/or services.

The benefits of KYC are practically endless for online businesses. Ultimately, systems are in place to not only protect online businesses but also to protect customers from having their identities stolen. KYC products are changing online businesses for the better and it’s only a matter of time before they clamp down once more on identity fraud and money laundering efforts.