First Published on 27th June, 2016-06-24
Ai Editorial: Sharing economy platforms can be global from their very outset so they need to create global identity verification processes, writes Ai’s Ritesh Gupta
What’s holding back online peer-to-peer transactions?
HooYu’s recent Trust in the Digital Age Survey found that 61% of people will refuse to or are unlikely to trust in somebody they don’t know until they are confident in that person’s identity.
Before we look specifically at the travel sector and related sharing economy platforms, it needs to be understood that the trust factor also depends upon the nature of the transaction.
According to HooYu’s survey, not all sharing activities require the same level of trust in the other participant’s identity.
The survey, which featured over 2,000 people in the UK and the US, indicated that sharing activity that required the most identity trust were renting personal items to other people (69% require proof of identity) or renting a room in somebody’s house (68% require proof of identity).
Trust and booking funnel
Talking of online peer-to-peer transactions such as buying something from an online marketplace or renting a holiday property, it needs to be noted that this segment has grown exponentially in the last five years. eBay, for example, has over 158 million active buyers and 800 million listings worldwide. To date, Airbnb has facilitated 10 million nights of accommodation. And BlaBlaCar motors 40 million passengers and drivers a year. “There has been huge growth but it has to date been delivered by the early adopters and trust and confidence issues are holding back mainstream expansion of the sharing economy,” said David Pope, marketing director at HooYu.
As a specialist in this arena, HooYu helps in building trust and security. As an ID checking service, it uses online and social media identity data, ID documents and facial biometric checks to prove that a person is who they say they are.
So how should operators that facilitate peer-to-peer transactions look at increasing the credibility of their platforms during the course of the booking?
Pope says the first step that sharing economy platforms need to take is to get rid of their caveat emptor approach to the identity of their users. Statements such as “We cannot and do not confirm each member’s identity” or “User verification on the Internet is difficult” are frequently buried in the T&Cs on sharing economy sites.
“As a traveller using peer-to-peer sites if I trust the platform I am likely to trust the person on the other end the transaction,” says Pope. “Our research found that four times as many people would be likely to use a sharing economy platform is they received an in depth identity confirmation report on the person they are transacting with. In other words, knowing the identity of the other party in the transaction is key to credibility of the platform.”
Fraud in online peer-to-peer transactions
It’s an inconvenient truth that fraudsters find ways to exploit any economic system, highlighted Pope. He referred to following:
· Some car sharing sites have had to shut down because they have not adequately checked the identities of customers using their car fleet and fraudsters using fake identities have disappeared with cars.
· In the ride sharing sector, fraudsters use ride sharing platforms to launder money. A fraudster creates two accounts, one using compromised identity and card details and another with a fake identity that they control. The then pay for a rideshare (that never actually took place) and via the rideshare platform move money from the compromised card to another financial instrument that they control.
· In the vacation rentals sector, stories abound of fake property owners. They post a property for rent and in their profile on the marketplace add text to say to email them if they don’t respond quickly via the platform’s own messaging system. The unwitting holiday maker who wants to bag that property at that low advertised price follows-up by email and at that point the fraudster has taken the holiday maker Out-Of-Bounds of the safety of the platform. Then they encourage the holiday maker to pay via bank transfer instead of the platform’s payment mechanism. Then the holiday maker has paid for a non-existent booking on that holiday rentals platform.
5 ways to increase trust and confidence in vacation rentals sites
Pope recommends five ways:
· Offer a well-lit marketplace by verifying your sharers, it will return dividends in terms of keeping fraud out and attracting new customers to register and transact.
· Don’t just use social sign-in as your verification mechanism. Social sign-in just identifies the customer, it doesn’t verify the customer. Platforms need to examine and cross reference the data that they are receiving. HooYu’s approach to identity uses multiple sources of identity to confirm and corroborate an identity.
· Lose the caveat emptor approach, it doesn’t engender trust & confidence
· Enable your customers to build confidence & trust in the people they wish to transact with. HooYu can be offered as a peer-to-peer identity confirmation system
· Go beyond identity. Identity is just one component of trust. If somebody is using their own identity, then you can more safely assume that they will evidence good behaviours. However, competence and intention are also parts of trust and confidence which must be built through mechanisms such as ratings and reviews.
Sharing economy platforms can be global from their very outset so they need to create global identity verification processes.
Checking identity databases such as voters’ rolls or credit reference agency data will only work in a handful of countries. Instead platforms need to look at universal identity attributes.
Also, a platform needs to understand its demographics’ attitudes to trust and confidence in the context of the peer-to-peer transaction that they are offering.
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