The process of onboarding merchant clients has long been a competitive differentiator for payment facilitators, fintechs and other embedded payment providers, at least in some form or another.  Shortening the time frames to approval and activation is paramount for both the provider and the merchant.  “Reduced friction” has become a catch-phrase within the industry.  But at the same time, card networks, banks and regulators expect strong KYC and  underwriting.  In fact, they demand appropriate compliance controls.

Payment facilitators increasingly depend on multiple technology platforms to onboard merchants, verify identities, monitor transactions, detect fraud, manage disputes, reconcile funds, and report to sponsor banks.  That technology makes scale possible.  But it also creates a significant operational challenge: the gaps between platforms.

Growth creates opportunity for payments companies, but it also creates compliance pressure.  Processes that worked when a company had a few hundred merchants can quickly become inadequate as transaction volume grows and payment channels become more complex.  Know Your Customer (KYC), Know Your Business (KYB), and transaction monitoring are especially important because they sit at the intersection of regulatory compliance, operational capacity, technology, and customer experience.

The Beneficial Ownership Rule may be ending, but effective due diligence is not. For payments companies, the real opportunity is to build smarter, risk-based KYB processes that reduce unnecessary friction while still identifying who owns, controls, and ultimately stands behind a business. Read RPY Innovations’ latest perspective.