Merchant verification in the fast-lane

Ebooks , Education

Merchant verification in the fast-lane

Every day, digital marketplaces grow more integral to our daily lives. McKinsey’s 2023 Digital Payments[1] survey found that more than 90% of consumers have used some form of digital payment in the past year. Meanwhile, e-commerce is expanding rapidly around the world, with global B2B sales set to reach $36 trillion by 2026[2] and B2C sales on track to hit $5.5 trillion by 2027.

These trends are empowering businesses to transcend geographical boundaries, opening doors to dynamic new markets, particularly in the Asia-Pacific region. Here, China is driving over 33% of global retail sales [3], while India is emerging as a leader in retail e-commerce growth, with a projected compound annual growth rate of 14.1% through to 2027.

In this landscape, it’s easier than ever for merchants to engage in online transactions. While this accessibility fuels entrepreneurship and economic growth[4], it also imposes significant responsibilities on financial service providers, payment processors and e-commerce platforms to manage the associated risks. These organisations are on the frontlines, acting as gatekeepers for digital transactions and cross-border commerce.

Why merchant verification matters

Before authorising new merchants to process payments or set up shop online, it’s essential to confirm their identities, ensure the legitimacy of their businesses, and identify their beneficial owners. This verification process plays a key role in mitigating fraud and enhancing the security of digital transactions for all those involved. Many organisations, especially those in financial services and payments, are also subject to strict regulatory requirements, including Anti-Money Laundering (AML) and Combating the Financing of Terrorism (CFT) directives.

While merchants are typically corporate entities, they can also be natural persons. This means that both Know Your Business (KYB) and Know Your Customer (KYC) checks should form part of the onboarding process. Organisations therefore need to ensure they have the resources to gather comprehensive background information on the merchant, including their business registration details, ownership structure, financial history, and any relevant legal or regulatory issues.

The critical need for UBO checks

Regulators around the world, including the Financial Crimes Enforcement Network (FinCEN) in the United States, the Monetary Authority of Singapore (MAS), the Anti-Money Laundering and Counter-Terrorist Financing Ordinance (AMLO) in Hong Kong and similar bodies, require organisations to peel back the layers of a merchant’s corporate structure to verify the identities of beneficial owners.

This typically refers to individuals and entities who hold a 25% or greater stake in a company, although legal thresholds can vary across jurisdictions. The aim is to identify the true decision-makers, who often differ from the named owners.

Reducing blind spots and risk beyond onboarding

Organisations should not only verify the identities of key individuals and beneficial owners at the onboarding stage, but also engage in continuous monitoring. This includes conducting deeper periodic reviews, even for the most established merchants.

Ongoing checks are essential for identifying any changes in a merchant’s business details or model that might indicate a shift towards suspicious or illicit activities. Regular and thorough reviews help ensure that businesses remain compliant with regulatory requirements over time and allow organisations to respond promptly to any red flags or anomalies. This proactive approach enhances the overall security and integrity of digital transactions, providing a safeguard against evolving threats and ensuring long-term trust in the system.

Best practices for 2024 and beyond

Today’s merchants expect seamless service and quick onboarding experiences. Conventional approaches, such as asking a merchant to send the relevant documents and manually performing checks, can take weeks. These methods can drain resources and lead to long onboarding delays, with no assurance that the gathered information will remain relevant when it’s time to make onboarding decisions.

Technology provides a far more efficient approach, matching the pace of digital commerce.  Automation, along with AI and machine learning, can streamline the entire data collection, verification and monitoring process for greater speed and accuracy.

When looking for a merchant verification system, consider the following features:

 

  • Regional expertise:
    Choosing a merchant verification solution that is designed for a specific region of focus, particularly complex markets such as the Asia-Pacific, ensures optimal compatibility with local regulations, languages and data handling standards. Partnering with providers who have a deep understanding of local legal frameworks, regulatory authorities and market complexities can significantly reduce the time, resources and risks associated with onboarding new merchants.
  • Real-time access to data:
    Automated systems connected to government registries and other official sources can facilitate real-time data retrieval, reducing the risk of outdated information and enhancing the overall reliability of the verification process.
  • Autofill capabilities:
    Technology that automatically populates onboarding forms with relevant information, direct from authoritative sources, saves time and reduces the risk of human error. It can also make it easier to vet merchants from countries with different languages and alphabets. For example, Chinese merchants may not have official English names, complicating registration on platforms that only accept Latin characters. A merchant verification system with autofill capabilities can bridge this gap by translating or transliterating names and other information into the required format.
  • In-built, high-quality translation:
    Systems that provide fully translated business information ensure there are no gaps in understanding across different languages and regions. This ensures a seamless verification process in multilingual regions.
  • Direct retrieval of primary source documents:
    Accessing legal documents straight from authoritative sources ensures the accuracy and authenticity of the information, further enhancing the credibility of the verification process.
  • A single location for KYB, UBO and KYC intelligence:
    Being able to obtain all necessary data, documents and verification checks for KYB, UBO, KYC and ongoing monitoring in one place significantly streamlines merchant verification processes. This advantage is especially valuable when one solution provides not just local but regional coverage, encompassing the jurisdictions of your choice.Such a centralised system should provide access to registration information, government IDs, phone numbers, bank cards, watchlists, court records, penalty records, bankruptcy data and more. A consolidated approach saves time and enhances the merchant experience, helping organisations gain an edge in a competitive digital marketplace.

By embracing technology that supports these best practices, financial service providers, payment processors and e-commerce platforms can automate and elevate their merchant onboarding, verification and monitoring processes, ensuring a secure and efficient digital transaction environment for all stakeholders.

AsiaVerify: Your single source of merchant intelligence in APAC

Unlock the potential of the Asia-Pacific – the world’s largest and fastest-growing e-commerce market – with a single, expert merchant verification partner for this vast and diverse region.

Whether you choose to fully automate your compliance requirements through seamless API integration or prefer accessing our services via our web portal, AsiaVerify is tailored to simplify merchant verification in your APAC markets of focus. Our comprehensive solution provides intelligence on 344 million entities and 2.9 billion individuals across the region to meet your KYB, UBO, KYC and ongoing monitoring needs effectively.

Our advanced technology ensures you receive 100% live data in seconds, directly connecting you to government registries and official databases. We enhance the merchant experience by providing instant auto-fill capabilities and comprehensive support throughout the entire merchant verification process, making it smoother and more efficient for your team.

If you’re interested in reducing your onboarding time by up to 95% and cutting costs by as much as 86%, contact our team to find out more.

Email us at [email protected] or leave us a message here and we’ll get back to you soon.

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