Streamlining KYC document collection, a crucial challenge for marketplaces

Alexandre AMIOT
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Are you familiar with Rungis International Market, the largest physical B2B food marketplace in Europe? Imagine if, before being allowed inside the market, or each time they wanted to make or pay for an order, customers had to present a piece of ID, their company registration number and a list of all shareholders possessing more than 25% of their company’s stocks? In the physical world of trade, these checks are not always conducted because payments are often made in cash, and trust relies a lot on non-verbal cues!


Mandatory KYC for marketplace Payment Service Providers (PSPs)

Online, however, trade practices are very different. Over the years, regulators looking to prevent fraud, money laundering and terrorist activities have come up with processes to verify client identity. It all started with banking regulators imposing KYC requirements on all regulated entities (such as banks).  Because they are associated with banking institutions, Payment Service Providers (PSPs) are also subject to this regulation. As a result, they have an obligation to check the identity (or KYC) of their customers, and of the marketplaces for which they manage cash movements and payments. Marketplaces can make KYC document collection easier for the PSP by forwarding them the documents already collected for client onboarding.

Different requirements for different marketplaces and customers: KYC, KYB, KYS

So what do these KYC processes look like for marketplaces and their clients? Clients that create an account, want to conduct transactions or use new services (such as financing, which is becoming increasingly available on this type of platform), must send a number of documents, the nature of which differs according to the client’s profile. For instance, a listed and an unlisted corporation will need to present different documents. Depending on the type of marketplace, the KYC process can take on different names. On B2B marketplaces, it is often called KYB (Know Your Business), while on e-procurement marketplaces, it is referred to as KYS (Know Your Supplier).

KYC document collection and authentication is costly at up to €800 per seller

Recently, the onboarding manager of a large, CAC 40 corporate group’s procurement marketplace pointed out that his teams spend a lot of time on the admin required to onboard sellers. For one, they have to chase suppliers repeatedly to make sure they send all the required documents. Additionally, there is a constant back-and-forth with clients and KYC and PSP services when documents are not scanned properly, for instance. Overall, based on the average salary of onboarding personnel and the time spent collecting KYC/KYB/KYS documents, the cost of onboarding is estimated at around €800 per seller. You can imagine, then, how costly this is for a marketplace onboarding about 10 new sellers a month!

The need to simplify and automate the collection of KYC documents

Simplifying and automating KYC document collection is therefore a business imperative for marketplaces. They need to make these processes more secure while lowering collection costs — urgently. If they don’t, prohibitive seller onboarding costs may affect their profitability. Innovative solutions are available today to secure and centralise the collection of the various documents required for KYC processes.

It is therefore crucial for marketplaces to quickly implement this type of solution, without losing sight of the quality of the user experience, since this is central to a marketplace’s value creation.

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