KYC, or know your customer: the checks your payment provider runs on your shop
The identity checks a bank or payment provider runs before, and after, it lets you take money. You don't run KYC on your shoppers. It's run on you.
- 072KYC (Know Your Customer)
- The process businesses undertake to verify the identity of their clients, crucial for preventing fraud and ensuring compliance with regulations.
- Who runs it
- Payment providers, banks, buy now pay later firms and marketplaces
- What they ask for
- Company details, the people who own and run it, ID and a bank account
- Why it exists
- Anti-money laundering rules that regulated firms have to follow
- If it stalls
- Payouts can be held until the checks are finished
Who runs KYC checks on an online shop, and what they ask for
Every firm that moves money for you has to know who you are. Your payment provider, your business bank, a buy now pay later provider, a marketplace you sell on: each one checks, and each one can come back and check again.
- The company: its registered name, number and address, and what it sells
- The people: directors, and anyone who owns or controls a big enough share
- Proof: photo ID, and sometimes proof of address
- A bank account in the business's name for payouts
- Often your website: what you sell, your prices, how to reach you, and your refund and terms pages
Get the website right before you apply. A shop with placeholder products and no terms of service looks unfinished to a risk team, because it is. None of this is legal or compliance advice. Each provider sets its own checks and tells you what it needs.
Why payouts get paused, and how to stop it happening
So, the awkward bit. KYC isn't a one-off at sign-up. Providers check again when something changes, and if they can't finish, your payouts can sit and wait.
- Finish verification fully before launch, not when the first payout's due
- Keep your details matching what's filed at Companies House
- Warn the provider before a launch or sale far bigger than a normal week
- Tell them when owners, directors or what you sell changes
- Keep ID in date, and know who on the team holds the login
What KYC isn't, and the fake verification emails that copy it
Checking your shoppers is a different job with different rules. Screening orders for fraud is one, and checking age on restricted products like alcohol or knives is another. Mix them up with KYC and you end up asking customers for documents you've no business holding, which is a GDPR problem of its own.
Then there are the fakes. Real providers do email when they need documents, which is exactly why phishing emails copy them. Never upload anything from a link in an email. Log in to the dashboard directly and look there.
The same trick gets played on your customers, in your name. DMARC is how you tell inboxes what to do with mail that claims to be from you and can't prove it.
Related terms
FAQs
Why is my payment provider asking me to verify my identity again?
Because something changed, or the rules did. Providers check again when volume grows, when owners or directors change, when what you sell changes, or when documents expire. It's routine, not an accusation. Answer it inside your dashboard, never through a link in an email, and do it quickly, because payouts can wait on it.
Do I need to run KYC checks on my customers?
Not for ordinary retail. KYC is an obligation on regulated firms like banks and payment providers, not on a shop selling candles. You might still need fraud screening on orders, or age checks on restricted products, but those are separate jobs with their own rules. If you sell anything regulated, ask a solicitor.
Is KYC the same as anti-money laundering?
KYC is one part of it. Anti-money laundering is the wider set of rules regulated firms follow, and knowing who their customers are is the piece you see as a seller. The rest happens out of sight, in how the provider watches transactions, and now and then it surfaces as a question about a payment you took.
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