SpecTrust Empowers Marketplaces to Unlock Great Customer Experiences

BY PATRICK CHEN

Merchants doing business online are often forced to sacrifice revenue growth for fraud prevention controls that introduce friction into the customer journey. They must limit their upside to limit their downside. Marketplaces (i.e., two-sided markets with buyers and sellers) face even tougher decisions when it comes to creating great customer experiences on their platforms. 

First, the payout to sellers triggers several sets of regulatory requirements that many marketplaces struggle to implement seamlessly. Just to name a few of these regs:

• Know Your Customer (KYC)
• Customer Identification Program (CIP)
• Sanctions list checks (e.g., OFAC and PEP lists)

Second, marketplaces typically have a separate set of requirements from their payment processors or sponsor bank. When done poorly, the friction introduced by these checks results in lower conversion during seller onboarding or seller attrition due to slow payouts.

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Seller Onboarding Often Has Undue Friction

Marketplaces may choose to outsource these seller onboarding checks to accelerate their platform launch date, but asking 3rd party vendors to manage compliance checks effectively creates a data silo. Buyers are managed separately from sellers, though the ideal marketplace customer is a part of both groups: it is a virtuous cycle to have a buyer sell an item at a later date and purchase a replacement. To make matters worse, the buyer/seller data silo usually becomes permanent, as the decision to bring compliance checks in-house becomes deprioritized behind initiatives with clear revenue lift.

An outsourced onboarding can result in a degraded customer experience:

• Buyer profile data and purchase history is not used to prefill seller onboarding forms (or eliminate certain questions altogether)
• For example, your customer was a victim of identity theft now your vendor is asking for a huge amount of information up front because the customer has been flagged as high risk despite a good, longstanding relationship with your marketplace
• Seller information is often collected through an embedded iframe or different website with completely different UI / UX from the marketplace platform

The hard work that was done to expand these buyer relationships is ultimately put at risk, with reduced conversion of buyers into sellers.

Progressive Onboarding Can Reduce Friction and Fraud

In our opinion, the best customer experience is delivered by a marketplace that can access all relevant customer information for a progressive onboarding process. Imagine this seamless seller onboarding experience:

1. The seller is asked the bare minimum required to directly query a KYC verification service
2. If the KYC check flags the buyer as risky, marketplaces can reduce friction for trusted buyers by allowing them to sell with a soft cap on goods/services sold, perhaps $500
3. The customer can begin the seller journey while the marketplace platform gradually prompts for data verification, and soft caps can be raised in line with data provided
4. A final check at payout can refer back to the seller’s onboarding status and subsequent behavior on the platform to ensure funds are only paid to good sellers 

SpecTrust’s Fraud Defense Cloud Can Protect You and Help You Grow at the Same Time

Our platform’s ability to unify data, provide comprehensive customer context, and ultimately deliver the best customer experience for buyers and sellers means reducing fraud while generating revenue. We didn’t want to pick one or the other when we were merchants ourselves, and we built SpecTrust so others wouldn’t have to either. It is possible to do better for our customers. Read our marketplaces whitepaper to learn more.