The Asia-Pacific region represents a massive growth opportunity for e-commerce, payment and fintech companies. Over 50% of the world’s internet users live in Asia and this region accounts for around 60% of global e-commerce transactions. Time and time again, Asian consumers have been quick to embrace new technologies, including digital marketplaces, social media shopping, and digital payment systems[1].
“Asian players are in the lead in nearly every aspect of digitalization.” – International Monetary Fund[2].
As providers expand into this high-growth landscape, their success will largely depend on how efficiently they onboard new merchants. A seamless experience sets the stage for a lasting relationship.
First things first: Merchant verification
Verifying merchants is a mandatory first step in this journey, to protect against fraud and abide by anti-money laundering (AML) laws. This area of compliance is increasingly under regulatory scrutiny. In the United States alone, the Department of Justice (DOJ) and the Federal Trade Commission (FTC) have taken enforcement actions against more than ten payment firms in the past three years, resulting in fines exceeding $200 million. The main reasons for these regulatory actions were inadequate merchant due diligence and poor adherence to industry standards[3].
This is understandable, given that fraud and other financial crimes can have such a devastating impact on businesses, customers and the stability of the digital marketplace itself. But let’s be honest, gathering and analysing the necessary data for robust Know Your Business (KYB), Know Your Customer (KYC), and Ultimate Beneficial Owner (UBO) checks can be a laborious task. And any delays have a negative impact all round.
Merchants, eager to start trading, may become frustrated with the wait and look for faster alternatives. For service providers – slow, manual verification processes strain their resources, potentially compromising operational efficiency. Also, these delays increase the likelihood of errors, heightening the risk of compliance failures and fraud.
With all these issues in mind, how can e-commerce, payment and fintech providers follow merchant verification best practices while making the entire process faster and easier for all involved?
Why so many service providers are turning to technology
Technology adds value to the merchant verification process on many different levels. Its major advantage is the ability to improve data accessibility, completeness, accuracy and timeliness. It can also introduce tools like AI and machine learning to enable faster processing and analysis of all that data.
As organisations grow, the need to manage increased volumes of merchants efficiently becomes all-important. Technology supports scalability in onboarding processes, allowing providers to handle growth without compromising quality or compliance.
Adopting advanced technology in merchant onboarding can also lead to significant cost reductions. By minimising the reliance on manual labour and reducing errors, which are costly to rectify, providers can optimise their resource allocation and save money in the long term.
All of these factors are driving the adoption of technology-driven merchant verification solutions.
Technologies that are reshaping the merchant verification landscape
AI
This field of computing encompasses a broad range of technologies that simulate human intelligence processes, including deciphering information that is not in a traditional structured machine-readable format. Given the IDC estimates that 80% of data will be unstructured by 2025, this is an incredibly useful tool[4]! When it comes to UBO discovery, for example, identifying the true owners of a merchant’s company sometimes involves navigating opaque shareholder structures that span multiple jurisdictions. This complexity is compounded by the fact that shareholder information is frequently found in an unstructured format, such as images of official documents. AI and optical character recognition (OCR) can simplify UBO discovery by transforming unstructured data into structured formats, and then analyse and cross-check data from multiple sources much faster than any human.
Another valuable application is AI-enabled translation. This is particularly useful for merchant verification in regions such as Asia, where there are multiple languages to manage. This helps to overcome language barriers and also address the challenges of purely human-driven translation, which can be both slow and costly. AI-assisted translation, using tools such as Asian OCR, provides accurate, real-time translations of documents and data. This accelerates merchant onboarding and helps to reduce blind spots, ensuring no important details are overlooked.
Machine learning algorithms
A subset of AI, machine learning is focused on building systems that learn from data and identify patterns with minimal human intervention. Machine learning algorithms excel at recognising patterns and anomalies in data. In the context of merchant verification, this allows organisations to very quickly analyse vast quantities of data to identify irregularities which may put their businesses at risk.
Blockchain
This distributed ledger technology is known for its security because it spreads its data across a network of computers, making it difficult for would-be cyber criminals to target any single point for attacks. Also, each transaction must be agreed upon by the network through a process called consensus, further securing the data. Every transaction on this technology is recorded on a “ledger” that is visible to everyone who has access. This means anyone can see the details of transactions, adding a layer of transparency that isn’t always present in traditional private record-keeping systems. And once a transaction is recorded on this ledger, it cannot be changed or deleted. This provides a permanent and unalterable audit trail that helps to prevent fraud and ensure that each record can be trusted.
In merchant verification, there’s an opportunity for blockchain to securely store and verify credentials and transaction histories without the need for a central authority. This transparency ensures that all parties have access to a consistent, unalterable record, reducing the potential for fraud and enhancing trust.
Biometric verification
This technology makes it possible to use unique human characteristics for identification, such as fingerprint, facial or voice recognition. As it is extremely difficult to forge or steal biometric data, this provides a highly secure method of confirming a merchant’s identity.
Automated background check systems
By automatically gathering and analysing an individual or company’s historical data, such as credit scores, previous addresses and criminal records, these systems streamline the process of vetting a merchant’s credentials. Automating this process eliminates the need for manual information gathering, which can save a significant amount of time. This ensures decisions are made with fully up-to-date and accurate information. Additionally, because the data is gathered directly from the source, it is not at risk of keying errors.
In all these ways, technology acts as a powerful enabler in the merchant verification and onboarding process, transforming it into a more efficient, secure and cost-effective operation.
AsiaVerify: groundbreaking merchant verification technology
AsiaVerify specialises in developing innovative, technology-driven business verification solutions for the Asia-Pacific region. When it comes to merchant verification, we are laser-focused on innovation and continue to integrate emerging technologies into our products to deliver solutions that truly save time, reduce operational costs and mitigate risks for our partners and clients.
To date, our approach has proven successful and our merchant verification solution has delivered outstanding results:
- 99% Increase in accuracy: Our live connections to official data sources ensure only accurate, up-to-date information is used to identify and verify merchants.
- 95% Reduction in onboarding time: Through automation, auto-fill and access to real-time data, delays are eliminated and the entire onboarding process becomes seamless.
- Up to 86% reduction in costs: Our solutions help clients allocate resources more effectively, freeing their teams to focus on more in-depth analysis and strategic tasks, enhancing overall productivity.
Learn more here or get in touch to arrange a demo.
[1] https://blog.brankas.com/the-future-of-ecommerce-digital-payments-asia
[2] https://www.imf.org/en/Publications/fandd/issues/2018/09/asia-digital-revolution-sedik
[3] https://www.mckinsey.com/capabilities/risk-and-resilience/our-insights/the-future-of-the-payments-industry-how-managing-risk-can-drive-growth
[4] https://solutionsreview.com/data-management/80-percent-of-your-data-will-be-unstructured-in-five-years/
