Trust. 

People hear the word and immediately think of their family, friends or someone whose behaviour might seem within their realm of prediction. 

When we deal with people with whom there is a greater sense of familiarity, we know what to expect. There is trust. And that’s what makes transactions easy with such a group. 

But as the world moved online, so did our ways of predicting behaviour. 

Today we rely on acquired trust. We seldom know who is on the other side of the transaction. But if it’s a seller on a branded marketplace, we take the plunge without second thoughts. 

A brand name such as Google Playstore or Amazon has that kind of a reputation going for them, one that inspires trust. It seldom matters that there are multiple sellers whom we have never heard of or numerous apps that may be malware, but as long as they’re listed on such platforms, we lower our guards. 

But why does this happen?

We prefer to transact with people/businesses whose behaviour is easier to predict using information symmetry. 

This information may be sourced first-hand from knowing the person or having used a platform frequently, or sourced via the experiences of others. It helps us predict, to some extent, that such an entity will not run away with our money or take our undue advantage.  

This is why we have companies pay a lot of money to hire referrals. Many landlords who give the houses on rent exclusively to families. So many people who go back to the same freelancers even if their work is just mediocre. 

See the pattern? It may not be the most cost effective but mental peace and loss aversion trump potential high-risk reward, always. 

That’s why it’s just no longer enough to give deep discounts and create kickass campaigns. 

Now it’s equally important to elicit trust. Not just as a merchant but also as an individual. 

Trust as the foundation of each transaction

Trust has always been the cornerstone of economic activity, now more than ever. With money involved, dealing with a stranger can lead to a high amount of anxiety, and in the case of confidence breach, a great deal of agony. 

This time not just for customers, but also for businesses. 

While users try to depend on the brand name and good reviews, businesses have found different ways to safeguard themselves. 

As individuals, today we pay high amounts as deposits, fill out long onboarding forms and struggle to prove ourselves in every new transaction. 

From both ends, we’ve observed a common pattern. How good reviews and goodwill have become as transferable as currency. As long as we have these two on our good side, we will always have people willing to transact with us. 

Trust for money – From an individual’s experience

Our credit score measures our credit risk. That is a prime example of how trust, acquired in this case, can directly reflect on our balance sheets. 

Here are a few other prime examples – many a time when people rent from someone who’s known them for a long time, the landlord doesn’t mind foregoing their security deposit – which these days is a truckload of money. 

As and when we start paying our bills on time, many fintech services keep increasing our credit limit. Many brands and individuals open us to exclusive offers and customised offerings when they deem us as loyal. And the best example would be how someone hires us without hesitation just based on a good word from a referrer. Amazing, isn’t it?

Can merchants benefit in the same way?

Going to the other side of the table, today, there are not too many ways for a business to know who can be trusted and who shouldn’t be.

As merchants, landing many customers isn’t as important as improving the bottom line. Ten customers who pay on time are far better than fifty who default regularly and damage assets. 

A mad frenzy to onboard multiple customers has already led us to one recession. In the long run, it never bodes well for the business. Eventually, somehow, businesses will figure out how to plug the problem and in that world, only the trusted will be allowed to onboard. 

Businesses also hesitate to transact with a new entrant in the market even if there is enough economic incentive. As per this Forbes article, most of the people were unwilling to shift to a cheaper alternative for their office because they did not know much about the provider. 

Enabling trust transfer

When we, like the responders who are like you and me, raise the caution bar, we limit our circle of transactions. But with trust, when we lower our guards, we open ourselves to a world of new opportunities and better economic decisions. 

Right now, we don’t have the right tools that can help us prove our trustworthiness or gauge the trustworthiness of the other party. We have reviews at most, and we will discuss later how those are flawed. But we can sure expect such a tool to take the centrestage of all future transactions. 

It can be concluded with some certainty that trust will become an increasingly visible part of our everyday transactions. While we will establish trust on individual platforms, there will be an increasing demand for fluid exchange of reputation and ratings from one system to another, akin to monetary exchanges.  

We’ll see more of personal reputation integrated in person-to-person transactions, which will enable deeper transactions in a resource-sharing economy.


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