Bitcoin Platforms Face Growing Challenges as Payment Methods Under Scrutiny
The rise of cryptocurrency has brought with it a host of challenges for platforms seeking to facilitate seamless transactions. One issue that has gained significant attention is the reliance on third-party payment providers, such as Plaid and Trustly, which have raised concerns over privacy and security.
The Problem with Third-Party Payment Providers
Users are increasingly wary of sharing their login details with these fintech companies, which then use that information to transfer funds on their behalf. Furthermore, it has been discovered that these companies harvest user data, de-identify it, and share it with other companies – a practice that has left many users uneasy.
The PSD2 Directive: A Potential Game-Changer
The introduction of the PSD2 directive, aimed at streamlining direct payments between users and companies, could potentially disrupt the status quo. By allowing for faster, safer, and more secure transactions, this regulation may reduce the need for middlemen like Plaid and Trustly.
The Challenges Facing Cryptocurrency Exchanges
Cryptocurrency exchanges are facing their own set of challenges in terms of onboarding new users without compromising security or user experience. A delicate balance must be struck between preventing fraud and creating frictionless sign-up processes.
ID-Proofing Without Adding Friction
One approach is to leverage data enrichment tools to improve ID-proofing without adding unnecessary hurdles for legitimate users. By using digital footprints and data enrichment, exchanges can gain a better understanding of their users’ identities without requiring excessive documentation or verification.
- A solution like SEON’s data enrichment platform offers real-time, frictionless fraud prevention at key touchpoints, allowing exchanges to identify and mitigate risks while respecting users’ anonymity.
Solutions for Crypto Fraud Detection
As the cryptocurrency market continues to grow, so too do concerns over fraud and security. To combat these issues, exchanges must implement effective fraud detection software that respects the principles of anonymity and decentralization.
- SEON’s comprehensive set of fraud fighting tools offers a robust solution for crypto exchange fraud detection, enabling real-time monitoring and prevention at key points like transaction and withdrawal.
- By reducing fraud by up to 99%, SEON helps cryptocurrency exchanges grow safely and efficiently.
Frequently Asked Questions
How do you check for cryptocurrency fraud?
Conduct thorough due diligence, looking out for signs such as promises of high returns, vague founding team members, and lack of official published code.
Can you chargeback crypto?
No, cryptocurrency payments are irreversible by nature.
What cryptocurrencies suffer from fraud?
Crypto-related fraud is prevalent across most cryptocurrencies, often resulting from user scams or theft.
Sources
- Coin Telegraph: The Mess That Was Mt. Gox: Four Years On
- Coin Market Cap: Top Cryptocurrency Spot Exchanges
- Binance: Buy & Sell Crypto
- CNBC: Visa to acquire Plaid, the fintech powering Venmo and other banking apps, in $5.3 billion deal