But despite those impressive forecasts, Jupiter Media Matrix reports that lack of trust is one of the top inhibitors for business buyers considering using e-marketplaces. Authentication, which identifies and validates buyers and sellers, is key to establishing a trusted community, and is a critical component in trusted online commerce and payments. Although the B2B cycle isn't complete until the payment has been made, few e-marketplaces have basic online payment capabilities. Authentication can reduce risk, provide more transaction assurance, and legitimize B2B trading online. Ideally, buyers can expand their base of companies from which they can source direct and indirect supplies, sellers can expand their reach to touch new buyers, and exchanges and enterprises can deliver a trusted environment that encourages and supports online transactions and payments between parties.
Financial validation begins when a company joins an e-marketplace as a buyer.
Its business history is checked against databases containing both historical and real-time information. Companies receive a financial rating based on payment history, credit rating, and financial strength. Corporate validation for sellers is based on a rating that measures their inventory turnover, sales track record, and business longevity. E-marketplace participants use these ratings to evaluate purchase offers and negotiate payment terms. Without validation, unproven members could harm the community reputation needed to attract participants and improve an e-marketplace's liquidity.