The 5 Benefits of Using Identity Authentication for E-commerce

On February 19, 2022, Latin American e-commerce company Mercado Libre’s systems were hacked in one of the most daring cyberattacks targeted at e-commerce platforms. The incident exposed sensitive information about over 300,000 users and rendered the company’s systems unavailable for two days.

But this wasn’t the first or the last time hackers breached the systems of an e-commerce company. Dozens of other online retailers have become victims of various forms of cyberattacks. Even Amazon, whose parent company comprises the Big Five tech corporations, hasn’t been spared.

The e-tailer suffered a major data breach on January 08, 2019, after a bug in its website caused a breach that exposed sensitive financial information.

The ever-increasing cases of cyberattacks targeting e-commerce websites are the reason behind the growing need for identity authentication. Below is a guide to what identity authentication entails, with a special focus on how e-tailers might benefit from this technology.

Introducing Identity Authentication

Identity authentication is pretty much what the term implies – a method to verify a person’s identity.

Most people have gone through everyday processes that require them to prove they’re what or who they say they are. A classic case is when you’re at an embassy, and immigration officials demand your passport or when the cops pull you over and ask for your driver’s license.

On the internet, identity verification mainly happens on e-commerce and many restricted websites. It’s a routine procedure that involves providing specific key information unique to you to prove that you’re a legitimate visitor.

We cannot overemphasize the significance of identity authentication for online businesses. The benefits are virtually limitless, from keeping fraudsters at bay, safeguarding your client’s personal information, and streamlining your marketing campaigns.

Methods of Enforcing Identity Authentication

There are multiple ways to enforce identity authentication. Common ones include;

Password-based Authentication

Passwords are unarguably the most common identity authentication method, making them a soft target for cyber attackers.  That explains why many e-commerce websites require their users to set strong passwords comprising a string of letters, numbers, and special characters.

Multi-Factor Authentication

Multi-factor authentication requires your customers to complete a specified number of actions and enter their passwords. The most common ones include inputting a unique code sent to their email addresses or mobile phones and passing CAPTCHA tests.  Besides helping confirm a user’s identity, multi-factor authentications are commonly used while creating new online accounts.

Knowledge-based Authentication

Knowledge-based authentication (KBA) prompts your website visitors to respond to one or more security questions.  Although these questions are usually simple enough for any online user to answer, the responses are typically unique to each person.

Biometric Verification

Considered the most reliable e-commerce user authentication method, biometric verification involves an online user entering information relating to their biometrics.

These include facial recognition, speaker recognition, fingerprint scanning, and eye scanning.

Benefits of Using Identity Authentication for E-commerce

Fraud Deterrence

Fraud detection and deterrence is the biggest reason to implement identity authentication in your e-commerce website.  Asking your customers to prove their identity gives you peace of mind knowing they’re genuine clients and not malicious entities trying to breach your systems for sinister reasons. This is especially important for companies that provide financial services, as it can deter money laundering activities.

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Safeguards Your Clients’ Privacy

The main reason hackers target e-commerce websites isn’t to shoplift. That would be too much work. Instead, cyberattacks are usually looking to steal client information. Having your clients’ sensitive data slip into the wrong hands can have far-reaching implications. The incident can lead to a drastic drop in sales and deal a massive blow to your reputation. Not to mention the resultant publicity nightmare trying to do damage control.

Improves Online Reputation

A solid online reputation is something that all e-commerce retailers aspire for. Many companies invest a significant portion of their revenue in conducting rigorous publicity campaigns, some of which could be avoided by adopting cost-effective methods like user verification. Having your visitors undergo thorough vetting before signing into their e-commerce accounts expresses your desire to protect their online privacy. And when clients know their data is safe, they’ll become more loyal to your brand.

Streamlines Marketing Efforts

Like any company, e-commerce stores collect significant data on their clients in line with the ever-changing privacy regulations. The collected information allows e-tailers to craft targeted ads. Much of this data is collected during the account sign-up and sign-in processes.

Confirming your identity helps an e-commerce company to study your other behaviors on its website and then curate relevant adverts. This benefits both the e-commerce store (regarding client retention) and its customers (as it reduces the scourge of spam ads.)

Monitors Transactions

Every company must report suspicious activities to the relevant authorities for prompt action. For instance, you have all the reasons to report a client who signs up for an account with your e-commerce company and then makes suspiciously high purchases within a short duration.

You’ll be able to monitor suspicious activities on your website more effectively if visitors sign in with their real credentials.

Wrap Up

There are numerous benefits to enjoy by implementing user verification on your e-commerce websites. Remember that the more rigorous the authentication process, the more hacker-proof.