expressed opinion entrepreneur Contributors are their own.
I still miss my early sneaker collection. In those days, people would line up for limited-edition shoes or meet collectors at the mall for a fair deal on their coveted collectibles.
Granted, it’s not as convenient as clicking “send to cart,” but the experience is rooted in real human relationships — an element that’s become so rare in today’s age of online commerce as it’s so sought after.
While there is no turning back for e-commerce, there is one way to make the digital experience of buying and exchanging goods online more human: verifying all users.
Know your customer technology, or KYC technology, has become commonplace in the financial industry. Investment firms often require clients to verify their identity and submit detailed anti-money laundering information before using their online services. The purpose is clear: prevent fraud and increase trust and accountability among users.
Now, the same technology is used to authenticate users in online marketplaces where we buy and exchange expensive assets. While this creates a layer of friction in the onboarding process for new users, it ultimately provides additional help for businesses and users. That’s why.
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Trust in the market keeps users coming back
The peer-to-peer marketplace has grown into a $100 billion industry, with only the lending part Worth over $115.61 billion last year. While the latter has widely adopted KYC, it has been slower to adopt it in most P2P markets as it sets up barriers to entry, resulting in fewer net users.
While user growth is important, it shouldn’t come at the expense of exposing your real customers to fraud or bad actors. Not only is it more risky if the identity of the person you buy or transact with is unverified, it also reduces trust among users, preventing them from having a genuine relationship with each other. research shows Lack of trust is the main reason shoppers don’t buy products or services online.
With a community-first approach to e-commerce, businesses centered on building trust and managing relationships between users will remain competitive, especially as Gen Z and younger generations grow in purchasing power and demand a more personalized e-commerce experience Rooted in Transparency.
Digital verification ultimately improves the integrity of online marketplaces and helps foster trust and community.
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Early adopters won’t be blinded by regulation
Besides building trust and user accountability, digital IDs are good for businesses operating online marketplaces for another reason—they keep them compliant. The government is now cracking down on businesses that do not authenticate users for tax purposes.
In my sneaker industry, the resale market has boomed during the pandemic, with vendors earning between 2 and 10 times the retail price of sneakers on secondary markets like StockX.The sneaker resale market alone is estimated to be worth it $6 billion in 2019, is expected to increase to $30 billion by 2030. Without user verification, the government cannot tax the profits of bulk dealers. think about it. If a site like StockX generates $1 billion in gross merchandise value — that’s hundreds of millions in personal income taxes that the government doesn’t collect — it’s just an industry.
December 2021, eBay announces It will require all sellers who make more than $600 a year on its site to provide a Social Security or personal tax number starting in 2022 to accommodate America’s Rescue Program Act of 2021. Businesses that don’t start planning for digital identity verification now may be caught off guard and over budget when new regulations are implemented. Verifying sellers for tax purposes also stops bad actors from committing fraud on their website.
Related: What You Need to Know About Multi-Factor Authentication
Online Communities Promote Greater Returns
online marketplace by gross merchandise value over the past ten years. While businesses have profited from this model, it quickly becomes obsolete. We are entering a new era of community-led business. As a result, customers want to shop where they socialize and feel a sense of community that is increasingly moving online.
We now spend more time in our mobile phone than tv We’re no longer just looking for entertainment – we’re looking for meaningful connections with people who unintentionally influence our buying decisions.Here’s why social commerce is expected to bring It will reach $1.2 trillion by 2025. But if we don’t trust the person on the other side of the avatar, we can’t connect.
That’s why online marketplaces protected by user authentication will thrive in the next era of e-commerce. As the connection between community and commerce strengthens, online marketplaces must find the right balance between user experience and protection.
Digital authenticators create a more secure environment for online communities to thrive, which ultimately leads to high-quality user growth and transactions. When it comes down to it: what’s good for the community is what’s good for the business – a principle that holds true in any sustainable market.
