Security & Fraud

Deep Dive: Protecting Platform Payments

Online payment platforms have changed how worldwide consumers do business. Ride hailing platforms and short-term rental websites aren’t the only ones looking to get in on that revenue, though. Fraudsters are increasingly targeting marketplace platforms and related companies in hopes that still-fledgling firms won’t yet have their security and authentication processes perfected. The August Digital Identity Deep Dive looks at how marketplace platforms are protecting customers.

Online payment platforms have no doubt changed how worldwide consumers do business. After all, they can simply open the Uber or Lyft app on their phones to go wherever they need to be, instead of stepping outside to hail a cab. Hotel reservations are out when traveling, too, and marketplaces like Airbnb or VRBO are in.

Consumers and companies alike are even turning to marketplace platforms like Fiverr and TaskRabbit when hiring freelancers, handymen and other short-term or part-time workers. All told, this “sharing economy” is set to generate $40 billion in annual revenue within just four short years.

Ride-hailing platforms and short-term rental websites aren’t the only ones looking to get in on that revenue, though.

Fraudsters are increasingly targeting marketplace platforms and related companies in hopes that still-fledgling firms won’t yet have their security and authentication processes perfected. What’s more, companies entering the space not only need to authenticate their customers’ identities when they make payments, but verify the sellers or workers receiving said payments, ensuring each side of a transaction is truly what it claims to be.

Fighting Fraud

Identity theft has become a pervasive threat in the marketplace sector, particularly as fraudsters develop additional tools and techniques in their quests to commit cybercrime.

Recent research found that identity theft and fraud are the most common techniques used to target sharing economy service providers, especially following a data breach. Approximately 31.7 percent of customers whose records were exposed eventually became victims, posing a problem for marketplace platforms that become vulnerable to data breaches through background checks and other process issues.

Breaches and fraud attacks don’t just cost companies in stolen revenue, however. They can also cost them their reputations.

Trust is a make-or-break component in the sharing economy. Consumers who utilize services must believe that the independent contractors on the other side of a mobile app interface will hold up their end of the bargain (whether driving them safely to their destinations or ensuring their payments process without a hitch), and do so without bad actors getting their hands on personal or financial information.

If companies don’t prove they can be trusted with their business, consumers will quickly find another merchant in which to put their faith. After all, for every Uber working to dominate a market, there’s a Lyft nipping at its heels and ready to steal precious customers away.

Going Digital

Many companies are now investing in enhanced personal identification solutions that rely on digital credentials like digital driver’s licenses (DDLs). These tools aim to be more secure than the methods previously used to attest to consumers’ identities. DDLs and other digital identity credentials are designed to offer a more convenient experience for the consumers and merchants being verified. Companies and government agencies could also offer extra perks or rewards with these tools in place, including speedier and more convenient service.

Marketplace platforms are also investing in technologies like 3-D Secure (3DS), which operates as a messaging protocol to enable faster and more secure authentication of consumers making online purchases. It uses information like mobile device, gift card, time zone, location and other data to establish patterns into which secure transactions typically fall, then flags those outside the patterns.

If solutions like DDLs, 3DS and other related tools cannot help protect marketplace platform payments, a quickly growing sector of the economy could be at risk.

To download this month’s Digital Identity Tracker™, please fill out the form below.

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About The Tracker

The Digital Identity Tracker™, produced in collaboration with Jumio, is a forum for framing and addressing key issues and trends, facing the entities charged with efficiently and securely identifying and granting permission to individuals so as to access, purchase, transact or otherwise confirm their identities.

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