KYC, or Know Your Customer, is the set of procedures that financial institutions and payment companies use to verify the identity of their customers and assess the risk they may pose. At its core, KYC answers three questions: who is this customer, are they who they claim to be, and do they present any risk of involvement in financial crime? The process typically involves collecting identity documents, verifying them against trusted data sources, screening the individual or business against sanctions lists and politically exposed persons (PEP) databases, and making an ongoing assessment of whether the customer’s transaction patterns are consistent with their stated profile.
KYC is not optional. It is mandated by financial regulations in virtually every jurisdiction, including the EU’s Anti-Money Laundering Directives, the US Bank Secrecy Act, and the UK’s Money Laundering Regulations. These laws require regulated entities to perform due diligence on their customers before establishing a business relationship and to maintain that diligence throughout the relationship. The depth of diligence scales with the perceived risk: a sole trader processing low-value domestic payments will undergo lighter checks than a cross-border marketplace handling high-value transactions in high-risk jurisdictions. Failure to meet KYC obligations can result in regulatory fines, criminal liability for officers, and loss of banking or payment processing relationships.
For platforms that onboard merchants or sub-merchants, KYC is one of the most friction-heavy parts of the process. Merchants must submit documents, those documents must be verified, screening must be performed, and risk assessments must be documented, all before the merchant can begin processing payments. Done poorly, KYC creates delays that cause merchant drop-off. Done without sufficient rigour, it exposes the platform to regulatory action and financial crime liability.
Shuttle Global’s onboarding sits alongside each provider’s KYC rather than replacing it. When a platform uses Shuttle’s Embedded Payments to offer payment processing to its own customers, merchants go through a white-label Merchant Setup flow in which each merchant connects its own provider account, either by signing in to the provider or by entering its account details, and that provider verifies the merchant under its own KYC process. Because Shuttle connects to over 40 payment service providers, the platform offers one onboarding flow across the providers it supports rather than building a separate connection flow for every processor.