When accepting payments in Bitcoin one of the major positives as a merchant is the inability to chargeback a transaction. However, does this mean fraud is less present on the Bitcoin network?
The answer to that question is unfortunately no. With the anonymity and personalized nature detecting fraudulent payments has become a daunting task for Bitcoin accepting merchants. Because of this ID software-as-a-service company Jumio has formed the Bitcoin Identity Security Open Network (Bison). The network will allow its users to share fraud trend data relating to payments made in the cryptocurrency.
The formation of Bison spawned from Bitcoin companies’ desire of authentication tools. Jumio is experienced in the field with its NetVerify solution, allowing consumers to scan ID documents, like a driver’s license or passport, using their webcam or mobile device. In addition to fraud detection, the software also provides KYC (know your customer) capabilities that do not disrupt the transaction process.
Bitcoin companies already on the Bison network include Coinmkt, BitAccess, CoinRnr, the Digital Currency Exchange of Texas, SnapSwap, Bitnet Technologies, Hashpop.io, NoveltyLab, and most recently European Bitcoin exchange Safello. These firms will share their customer and fraud data to prevent any suspicious and fraudulent activity when accepting Bitcoin.
“These businesses are seeking some way to do KYC (know your customer vetting) on their customers…but want to do it in a way that is efficient and doesn’t hurt the transaction,” says Marc Barach, chief marketing officer at Jumio.
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The companies on the network conduct group meetings to discuss what is needed and what products should be added to the service. Jumio’s goal is to eventually have an aggregated database to serve as fraud screening for Bitcoin accepting merchants, similar to conventional fraud screenings for CNP transactions.
“All the information will appear without the customer having to do anything…which will be very convenient for the consumer in this shared network,” Barach added.
Jumio plans on announcing 10 more Bitcoin firms which will join the network by mid-June and are currently in talks with 30 more companies to be added later on.
According to Jumio, 70%-80% of customers are verified when asked to authenticate their identity. From the reaming 20%-30% and average of 1%-2% result as fraud sources.