Know Your Customer

In the wake of the U.S. terrorist attack on September 11, 2001, Congress acted quickly to pass the USA PATRIOT Act, also known as the Uniting and Strengthening America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act of 2001.”

As the title suggests, the USA PATRIOT Act was intended to arm the intelligence community with the information necessary to detect and stop acts of terrorism before enacted. You may recall the controversy surrounding the Act’s championship of wiretaps, undisclosed financial investigatory power, and expanded access to business and individuals’ telephone and email records. While parts of the PATRIOT Act have expired or been amended, one element still remains as active today as the day the Act was signed: “Know Your Customer” or KYC.

What is Know Your Customer (KYC)?

Patriots Act - Know Your CustomerKYC is the regulatory and legal process which ensures that everyone associated with a banking relationship can be identified and legitimized. Initially, KYC was intended to combat money laundering and shut down schemes that finance terrorism. Over the course of a decade of KYC enforcement, however, it has evolved to also include an element of consumer protection.

What is National Merchants Association’s (NMA) Involvement with KYC?

Since NMA is the conduit through which a merchant connects their payment system with a bank, we are held accountable for many of the same regulatory pressures that a bank would face. For NMA, KYC is the process of completely understanding our customers, understanding our merchants’ business, business models, payment schemes, and ultimately, confirming that our payment solution meets their needs.

While KYC does require us to collect certain types of customer data, our goal is to equip them as quickly as possible to process payments, while gathering all of the information necessary to protect all of the parties involved. The more efficiently this information is collected, the more quickly our merchants can begin processing payments.

What’s the Process?

Before establishing a relationship with a customer, we first collect a series of documents that verify a business owner’s identity: driver’s license or identification card, bank account statement, company registration certificate, etc. The goal is to make sure everything is valid and up-to-date, and to identify the ultimate beneficiary of the transactions.

We also review the online footprint of a company, their website, news concerning the company, its reputation, ensuring that the website and email addresses are functional and that we are not facing a case of identity theft aimed at taking payments without providing the end user with the service or product purchased.

On average, how long does the KYC process take?

The KYC process must be completed before the customer begins using our solution. Therefore, we do our best to ensure that it is done as quickly as possible. If we receive all of the necessary documents quickly, everything can be completed in minimal time. Generally speaking, however, the more transparent and cooperative the merchant, the faster we complete our KYC process.

Why is it important to implement these processes? For NMA? For merchants using NMA? For customers of merchants?

For authorized payment institutions, KYC is compulsory and we are required to implement these processes. However, we do not do it simply because we are obligated. KYC minimizes our risk – enabling us to serve more merchants and partners.

For our merchants, it is necessary for them to understand that using our services is the same as working with any other financial institution in regard to the regulations imposed. We follow the same regulations as other payments institutions in order to guarantee the validity and credibility of our business.

Finally, for our merchants’ customers, it is reassuring for them to know that the companies they patronize rely on trusted third-party providers, especially when it comes to issues as sensitive as payments.


Merchants need to understand the value of the KYC process and cooperate (i.e. submitting the necessary documents) in order to start using our solution as quickly as possible. Our goal is to protect all stakeholders without imposing a cumbersome and intrusive process and, most importantly, without interfering in merchant activity.