Multi-vendor marketplace : What are KYC and KYB?

  • 6 minutes reading
online marketplace: what are KYC and KYB?
On online platforms such as multi-vendor marketplaces, which generate a large number of transactions with a large number of different players (sellers and buyers) who never meet, it is necessary to set up identity verification systems that allow each user to be uniquely identified. These verification systems are called KYC (Know Your Customer) and KYB (Know Your Business). These processes are not just best practices, but legal requirements that ensure the transparency, security, and regulatory compliance of your platform. That’s why it’s so important for online marketplace operators to understand and implement these processes.

Key points for understanding KYC and KYB .

  1. Why is KYC required by law?
  2. The legal significance of KYB in securing B2B transactions.
  3. How to implement KYC and KYB verification processes?
  4. What documents are required for KYC / KYB verification?
  5. Graphic summary in partnership with Paysurf.

1. Why is KYC required by law?

Primarily used for B2C and C2C multi-vendor marketplaces, the KYC process is a legal requirement in many countries. It involves verifying the identity of your users before they can complete transactions on your platform. It is designed to prevent and combat fraud, money laundering and terrorist financing.

  • Fighting against Money Laundering (AML) and the Financing of Terrorism (CFT): In a world where all sales and transactions are virtual, we don’t always know who we’re dealing with. Collecting and analyzing KYC data enables online marketplace operators to identify their users, making it easier to detect and prevent illegal activity in compliance with global AML and CFT laws.
  • Protect consumers: The KYC process helps create a safe environment for users by ensuring that other users and businesses exist and are legitimate.
  • Accountability and Transparency: By collecting user identity data that is then analyzed by the PSP, KYC ensures transparency and accountability in the event of disputes.

The KYB verification process, which is essentially the same as the KYC process, focuses on identifying and verifying the organizations that use your platform, particularly in a B2B environment.

  • Business compliance: KYB ensures that companies operating on your platform comply with local and international business laws and regulations.
  • Anti-fraud: KYB helps identify fake or fraudulent businesses, minimizing risk to your platform and its users.
  • Transparency in B2B transactions: By verifying the identity of companies, KYB facilitates transparent and secure business transactions.

For businesses, due diligence can enhance KYC/KYB checks. This involves a more in-depth analysis of a company’s management, allowing us to assess

  • The solvency of the company: it’s better to accept vendors who will be able to fulfill their orders in the long term. The same goes for customers, who can check the value of their shopping carts and even authorize delayed or installment payments.
  • Reputation and criminal record: Reputation and trust are essential to the proper functioning of a marketplace. For example, you don’t want to integrate a seller whose company has a criminal record. In addition, to create real trust in your platform, it’s recommended that you work with sellers who share the same business values that you promote through your platform.
  • VAT control: For a number of years now, online marketplace operators have been required to provide the tax authorities and individual sellers with a document summarizing all transactions carried out on the marketplace. This helps to avoid “mistakes” by sellers in their VAT declarations.

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3. How to implement KYC and KYB verification processes?

Even if the platform needs to know the identity of the people using it, it simply collects the various KYC/KYB documents and passes them on to its PSP, which is responsible for analyzing the various documents and ensuring compliance with the financial institutions. Although it’s not the multi-vendor marketplace itself that verifies the elements, it’s much easier for users, especially sellers on the platform, to provide these elements when they are onboarded. To improve the user experience and streamline and accelerate the onboarding of these sellers, Origami Marketplace’s SaaS solution can be used to set up workflows that allow sellers to easily track the status of their document processing. If you have questions about setting up a marketplace solution and reviewing the necessary documents, book a quick call with an expert.
fenêtre écran ordinateur avec tous les KYC validés - back office Origami Marketplace validation KYC

4. What documents are required for KYC / KYB verification?

For individuals, a dual identity check is often required, with one of the primary identity documents (ID card, passport or residence permit) plus a secondary identity document such as a driver’s license, carte vitale or bank card.

Please note: As a private individual, KYC verification is often invisible, as it takes place either at the “account verification” stage or at the checkout when you make a purchase. Using some payment methods may allow marketplaces to validate your KYC elements.
For businesses, the elements to be provided are (non-exhaustive list)

  • Identity card of the legal representative and all shareholders holding at least 25% of the company’s shares
  • A certificate of incorporation less than 3 months old
  • The company’s share distribution document
  • The company’s bank details.

5. Graphic summary in partnership with Paysurf.

Paysurf infography online marketplace KYC KYB Origami Marketplace

Team tips 🎓

For a future online marketplace operator, it’s essential to implement identity verification systems such as KYC (Know Your Customer) and KYB (Know Your Business). Key points to consider:

  • Why is KYC required by law?
    • To prevent fraud, money laundering and terrorist financing.
    • To ensure consumer protection and transparency.
  • The legal importance of KYB in securing B2B transactions:
    • Ensuring commercial compliance and combating fraud.
    • Ensuring transparent and secure B2B transactions.
  • How to implement KYC and KYB screening processes?
    • Collect the necessary documents and send them to your PSP.
    • Use SaaS solutions such as Origami Marketplace to simplify onboarding and document tracking.
  • Documents Required for KYC/KYB Verification :
    • ID, certificate of incorporation, share distribution, ORIAS registration, RIB, etc.

By adopting these processes, you will strengthen the reputation and trust surrounding your marketplace, while remaining compliant with regulatory requirements.

A brief summary of KYC and KYB?

KYC and KYB processes are not only fraud prevention measures, but also legal requirements that contribute to the reputation and trust of your marketplace and financial institutions. Collecting and verifying these elements is certainly time-consuming, but can be greatly accelerated with SaaS solutions such as Origami Marketplace, which allows your sellers to see the missing elements at a glance. Finally, it’s worth mentioning that these KYC elements will need to be updated regularly as long as the seller is using your platform. All the more reason to automate this process to optimize your teams’ time.

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