Navigating the Payment Industry Alphabet - K is for "KYC/KYB"

K is for "Know Your Customer" and "Know Your Business" (KYC/KYB).

KYC/KYB is a foundational compliance process in the payments industry, and in financial services more broadly. It refers to the procedures used to verify the identity of a merchant before allowing them to access merchant services.

KYC is not just a regulatory requirement—it’s a critical risk management tool. There are a variety of data elements that are collected for KYC/KYB. Some financial intuitions require that identification be validated by evidentiary proof (i.e. government issued IDs or biometric data) to establish the identity of an applicant. Most ISOs utilize third-party validation databases or services that can verify the authenticity of the identity evidence provided by the applicant.

KYC typically involves:
* Collecting and verifying personal and/or business information
* Validating government-issued IDs and/or business licenses
* Screening against watchlists (e.g., OFAC, PEP lists)
* Ongoing monitoring for suspicious activity

From a compliance standpoint, failure to implement robust KYC processes can result in:
* Regulatory fines
* Reputational damage
* Loss of banking relationships
* Increased fraud exposure

🔍 Key takeaway: KYC isn’t just about checking a box—it’s about building a secure, trustworthy payments ecosystem. The stronger the KYC, the lower the risk.