19% of Merchants Rely on Multiple Verification Methods to Vet New Business Partners 

Businesses rely on a variety of methods for partner validation. In fact, when 150 executives were asked which of 12 verification methods was most important, about one in five answered “all of the above.” 

That’s what the research for “Risk and Resilience,” a PYMNTS and TreviPay collaboration, found when surveying 150 executives at companies with $10 million to $1 billion in annual revenues. 

Get the report: Risk and Resilience 

PYMNTS’ research found that, due to concern about fraud in the new digital-first environment, three-quarters of retailers, manufacturers and marketplaces plan to implement better tools to detect fraud, safeguard against false flags and make onboarding and data management less problematic. 

Read more: Trade Credit, Electronic Invoices Can Be B2B Loyalty Plays 

Employing a Variety of Verification Methods 

While 19% of the executives said all 12 verification methods are equally important, others did have some favorites. 

Three business verification methods for new partners were selected as “most important” by about 15% of the respondents to the survey: checking the company through its employer verification number, searching the web to check the company’s address and phone number, and using due diligence firms that perform automated know your customer (KYC) and anti-money laundering (AML) compliance. 

Close to 10% of the executives selected one of three other verification methods: reviewing court records where the business is registered, checking the validity of companies’ official business addresses and checking for membership or accreditation through community groups. 

About 5% of those who were surveyed pointed to one of two other methods: requesting a credit report through firms that provide reports on business and subscribing to third-party databases that provide business and credit information. 

One percent of the executives said their businesses review reports from the Commerce Department, check the references or reviews on companies’ own websites and contact them, or review filings using the government database. 

A 12th verification method included in the survey was not selected by any of the executives as “most important,” but was chosen by 19% as “important, but not the most important.” The method: requesting trade or banking reference. 

Dealing with Fraud Attacks 

Why are these businesses employing so many verification methods? Part of the answer is that 16% of the executives surveyed said verifying the identity of new customers is the most important challenge to their operations, while another 33% said it is an important, but not the most important, challenge. 

This level of concern follows the wave of digital innovation caused by the pandemic as retailers, manufacturers and marketplaces adopted digital tools to make it easier for consumers and B2B clients to pay and get paid online. 

With this payments modernization came risk: Many businesses were inexperienced in the eCommerce space and didn’t have the resources to enact a comprehensive anti-fraud strategy. Ninety-eight percent of businesses experienced financial losses as a result of fraud last year.