Also called: Know Your Customer, KYC checks, identity verification, KYB
What KYC is
KYC stands for Know Your Customer. In payments, it is the process a payment provider uses to verify an individual or business before offering an account, processing transactions, or sending payouts. The provider needs to establish who is behind the account and assess the risks tied to that relationship.
For US onboarding, an individual may be asked for a Social Security number. A business may be asked for its Employer Identification Number and a tax form such as a W-9. Checks can also involve identity documents, business registration, ownership information, and screening against sanctions lists.
KYC does not set your card rate, but incomplete verification can hold up account approval or payouts.
How KYC works
The payment provider collects information and checks it against identity documents, business records, and screening data. For a marketplace seller, this happens before the seller is approved to accept payments or receive payouts. A registry search or a missing document can add time, and requirements differ by country and business type.
KYC focuses on verifying a person. KYB, or Know Your Business, focuses on the company, including its legal details and ownership. A business account can involve both: the provider verifies the business and the people who own or control it. In a marketplace, the provider and platform divide the work of collecting and reviewing seller information.
Why it matters to your business
For a small business accepting payments through a provider, KYC is usually an onboarding and account-review step, not a fee on each sale. If your identity or business details do not match the information on file, approval or payouts can be delayed while the provider requests documents or reviews the account.
KYC also helps payment providers identify fraud and money-laundering risks. Weak seller checks create a larger problem for a marketplace: fraudulent activity from a few sellers can lead to disputes, account reviews, or restrictions that affect other sellers using the same platform. In the US, legal obligations depend on the business and the provider’s role, so do not assume every merchant has the same direct KYC duties.
What KYC means for your costs
KYC is not an interchange category, network assessment, or processor markup. There is no universal KYC fee or standard KYC line on a card-processing statement. If you see a charge described as a verification, onboarding, or compliance fee, compare its amount and billing frequency with your contract and invoices; do not treat it as a card-network fee without a clear explanation.
What you can actually change
- Gather documents. Have your government-issued ID, tax details, and business registration information ready before applying. Use the same legal name and business details across your application and tax records.
- Confirm ownership. Provide accurate information about the people who own or control the business when requested. Update the provider if your ownership or business structure changes.
- Track requests. Read onboarding messages and submit each requested document through the provider’s stated channel. Keep copies of submissions and note any account or payout restrictions tied to an unfinished review.
- Review charges. If an onboarding or verification charge appears on an invoice, check its description, amount, and billing frequency against your contract. Keep it separate from interchange, network fees, and processor markup when reviewing card costs.
Frequently asked questions
What does KYC mean in payment processing?
KYC means Know Your Customer. A payment provider verifies your identity and assesses account risk before providing services such as payment acceptance or payouts. For a US business, requested details can include an owner’s Social Security number or the business’s EIN and W-9.
Is KYC the same as KYB?
No. KYC checks an individual’s identity. KYB, or Know Your Business, checks the company, its business details, and its ownership. A provider onboarding a business can request both company records and information about the people who own or control it.
Does KYC affect my processing fees?
KYC does not determine interchange, card-network assessments, or processor markup. The research notes provide no universal KYC fee or standard statement line. If a provider bills a separate verification or compliance charge, review its description and billing terms separately from transaction fees.
Can KYC delay my payouts?
Yes. If a provider needs more documents or cannot match your information, it can delay approval or payouts while it reviews the account. Submit requested records promptly and make sure the legal names, tax details, and business information match.