What is the difference between KYC and KYB?
KYC (know your customer) verifies the identity of a person and screens them for risk. KYB (know your business) verifies that a company exists, reviews its activity and identifies the people who own or control it, who then go through KYC. In payments, KYB is used to onboard merchants and sub-merchants, as in the PayFac model.
In detail
KYC and KYB are two forms of customer due diligence. KYC, or know your customer, applies to a natural person. KYB, or know your business, applies to a legal entity such as a company or partnership.
What KYC checks
- Identity: an ID document and often a selfie or liveness check.
- Address: sometimes a proof of address.
- Screening: sanctions, politically exposed persons and adverse media.
What KYB checks
- Existence: the company’s registration and status in the official register.
- Activity: what it sells, its website and expected volumes.
- Ownership: directors and ultimate beneficial owners, who then go through KYC.
In payments, KYC applies to cardholders, wallet users and sole traders, while KYB applies to merchants and sub-merchants. A PayFac runs KYB on every business it onboards. Both checks are repeated over time, and both feed the same goal: knowing who is paying and who is being paid. Read KYC vs KYB and see how an onboarding workflow organizes the checks.