DSA – what identity verification requirements does it impose on service platforms?
Customer onboarding and the process experience – how can UX prevent process abandonment?
12/11/2024
DSA - what identity verification requirements does it impose on service platforms?
Due to the EU's DSA (Digital Services Act) directive, platforms enabling the display of advertisements have been obliged to report to the state administration. The data submitted is to relate to service providers, with the aim, among other things, of countering undeclared business activities. What specific obligations have been imposed on services as a result of these regulations? Which platforms must comply with them? Which digital onboarding tools can support them in effectively meeting these requirements? Find the answers to all questions in our article.
Digital Services Act (DSA) - the purpose of regulation
The EU regulations contained in the DAC-7 Directive were introduced due to several concerns. On the one hand, it is about protecting consumers from entering into relationships with dishonest companies and increasing the responsibility of the service providers themselves. In this way, the customer is much more protected. On the other hand, accounting for tax obligations, which some online advertisers try to avoid, is of great importance here.
Obligation to verify the identity of the entrepreneur - who is affected?
There are many opportunities to provide services online and even to present one's business via platforms. Many services in various subject areas allow users to publish advertisements to sell products, rent premises or offer yet another form of service.
The DSA applies to platforms that allow the conclusion of contracts with entrepreneurs at a distance, such as:
- accommodation platforms (e.g. Booking, AirBnB),
- shops and e-commerce platforms (e.g. Allegro, Booksy),
- other online trading venues (e.g. OLX).
Verification must be proportionate to the scale of the trader's business and the type of services offered. This means that large platforms may be required to undertake more advanced forms of verification, while smaller operators will benefit from simplified mechanisms. Importantly, the reporting will cover sellers who carry out a minimum of 30 transactions on the service in question during the year or generate revenue in excess of €2,000 from those transactions.
Scope of required platform activities
In order to ensure the security and transparency of transactions, online platforms must undertake a range of activities related to the verification of traders. What the EU regulations in question require them to do is to collect basic identification data of traders before allowing them to offer products or services through the platform.
These data should include:
- the entrepreneurs' name or surname,
- registered office address, contact details,
- information about registration in the relevant register (e.g. KRS, NIP, VAT number),
- possible data on licences or permits, if required in a given sector.
As we mentioned earlier, the verified information needs to be communicated to the state authorities, but also to the consumers themselves so that they are aware of who their seller is.
Onboarding from Digital Gateways to support compliance with DSA requirements
The directive also sets out the details of the data capture and verification process. Depending on the services that are offered on the platform and the risks involved, the extent of these activities will vary. These activities must be proportionate to the risk and not too costly and time-consuming. Data verification should be based on publicly available sources, such as trade registers, tax information exchange systems or public databases.
Which of our services can support service platforms in fulfilling their responsibilities?
- Verification of identity (KYC) - The process of verifying a service provider's basic identification information to ensure that the person or company operating on the platform is who they say they are. This is a key element in building trust and ensuring the safety of transactions.
- Financial credibility verification - An assessment of the financial stability of sellers, including an analysis of their income and financial history. This helps to determine the reliability and security of working with a particular trader.
- Checks in external databases - Verification of the trader's data by accessing public databases such as business registers, tax information exchange systems and lists of restricted PESELs or KRD databases. Thanks to this information, it is possible to verify whether an entrepreneur is not listed in debtor registers or other problematic databases.
At Digital Gateways, we will tailor our tools according to the requirements that each platform must meet. Depending on the specific nature of the service's business and its needs, we will tailor our services to enable it to fulfil its DSA obligations easily and efficiently. Thanks to the flexibility of our solutions, platforms will be able to complete verification processes quickly and effortlessly, while ensuring the security of users and the high quality of the service provided.
