Could you imagine having to present your identification card to purchase a meal at McDonald’s? In Australia, patrons of the fast-food giant have to do precisely that because they are afraid of falling victim to fraud once again. This is for good reason, as McDonald’s was one of the primary victims in a skimming incident, whereby they incurred AUD 4 million of losses. In addition, many scammers have used sketchy payment methods to get free burgers.
Even multinational corporations with nearly impenetrable security systems are vulnerable to such scams – imagine how much more vulnerable we are! Fortunately, we can safeguard ourselves from such scams through 3 simple steps: identification, verification, and authentication. Let us explore the three steps in the information below.
The first step is to carry out identification, which requires us to identify the individual or entity. It is acknowledging a person’s claim to be a specific individual. By law, financial institutions must identify their customers, which often calls for the collection of certain information. Businesses should normally ask for a person’s entire name, residence address, and date of birth at this stage. Similarly, the process is repeated to in-person transactions. Customers can identify themselves by merely saying their name or showing their identification cards. They could also provide their email address besides their full name for online transactions.
With McDonald’s, they have done so by asking customers for their identification cards and comparing the information against the provided credit cards. While this is valid, there are still loopholes for criminal activities to thrive if they do not take greater safety measures.
You need to perform the next step, which is verification. This ensures that the information given is accurate and genuine. It is essential to avoid scammers, fraudsters, and being victims of any illegal activities. However, the process of verification is mostly used in high-risk settings involving more funds, such as when signing up for online banking. In these cases, a Know-Your-Customer (KYC) or Digital Onboarding function would be ideal for most businesses.
Installing such functions would not be the most optimal for McDonald’s day-to-day transactions with customers, since they could visually try to confirm that the identification card provided is real. This is through looking out for specific font styles, logos and watermarks on each identification card to ensure they are all in place. However, having the functions would be great for onboarding investors.
The last step is authentication. This is unique because the previous two steps were one-time events that happen while the customer is being onboarded, but authentication recurs. It ensures that no one is pretending to be that person and their information is not compromised. This is achieved by asking a customer:
- For the answer to a security question that only they should know
- For a one-time password through 2-Factor Authentication
- To provide biometric data
McDonald’s, on the other hand, does not require this, especially since authentication methods should be handled by the bank that provides the credit card service.
Regtank and You
The 3 steps are designed to help you get to know your customers better, avoid becoming a victim of fraud, and comply with compliance regulations. Ideally, include all 3 steps in your business processes to reap the maximum benefits.
At Regtank, we aspire to provide solutions that can protect you and your business from such illicit activities. Our KYC and digital onboarding functions can fulfill just that for you. So, reach out to us at firstname.lastname@example.org for a free demo today!