PSPs and MAs have enjoyed a boom in business as micro-merchants proliferate in the digital marketplace. However, as the industry has grown, so too has the need for greater insight into who merchants are – and what risk providing services to them represents.
This quickly monthly update details the main KYC steps for merchant onboarding:
The massive growth in digital commerce and transactions over the last decade has meant new micro-merchants are constantly entering the digital marketplace. These new merchants are untethered from the limitations of brick-and-mortar retail and are accustomed to fast, efficient, and dynamic digital processes.
So, Payment Service Providers (PSP) and Merchant Acquirers (MA) face a challenge: how to onboard merchants efficiently while having a clear picture of their risk profile and providing them with fast and effective transactional services.
While PSPs provide the technology that facilitates a transaction, MAs are responsible for hosting a merchant’s finances. These roles – as a conduit and a host of merchant’s financial transactions, mean that MAs and PSPs need to have a precise understanding of the regulatory risk presented by their merchant customers. Manual form filling, case-by-case document verification, and risk assessment carried out by human compliance teams can drag out application times and pose a considerable cost burden on both customers and the service providers – in this case, MAs and PSPs.