What is KYC?

Tobi
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KYC simply means Know Your Customer. It is a process that all businesses are required to carry out to be able to identify the customers they are doing business with. Some form of KYC is done before businesses enter into a business relationship with the customer, and incremental KYC is done during the period of the business exchange.

KYC ranges from collecting information as simple as the name, phone number, email address and home address of the customer, to collecting more private information and verifying these personal data also known as Personally Identifiable Information (PII). Examples of PII include name, date and place of birth, biometric information and Bank Verification Number (BVN) in Nigeria, Tax Identification Number in Ghana or South African ID number in South Africa. PII also includes any other information that can be used to trace an individual. Information such as medical records, educational information, financial information (including account name and number), and employment information are considered PII.

The main objective of KYC is to know everyone you are transacting with and to also enable you provide information about these people if you are requested to do so. It also helps prevent businesses (financial and non-financial) from being used by criminal elements for money laundering, fraud and other corruption-related activities.

What does good KYC look like?

For a business to know that they have carried out good KYC on their customers, the business would have collected and verified multiple Personally Identifiable Information (PII) like full name, Bank Verification Number (for Nigerian merchants) or Tax Identification Number (for Ghanaian merchants) from their customers.

At the very least, businesses should have the following information about their customers:

  • First name
  • Last name
  • Email address
  • Phone number

Below are more business specific examples of what good KYC looks like for different businesses.

What good KYC looks like for Betting companies

Betting companies are required to know a lot about their customers. In order for these companies to carry out good KYC, they have to collect the following information from their customers:

  1. Full name
  2. Email address
  3. Government issued ID card
  4. Date of birth
  5. Gender
  6. Telephone number
  7. Bank account name and number

Please note that you can request for the information above incrementally. For example, you can choose to request for and verify customers' bank account numbers and bank account names when the customers are trying to make withdrawals. Also, you can request for customers' Bank Verification Numbers to help resolve fraud claims easily.

What good KYC looks like for Savings, Lending, Investment and Wallet-based companies

  1. Full name
  2. Date of birth
  3. Gender
  4. Telephone number
  5. Bank Verification Number
  6. Bank account name and number

More information can be collected from the customer at your discretion or based on the activity of the customer on your platform. For example, you can collect the customer's government issued ID if the customer's activity draws your attention

What good KYC looks like for E-commerce companies

  1. Full name
  2. Telephone number
  3. Home address
  4. Email address

How to verify Customer Information

Information provided by customers can be verified against information contained in several databases available in the country in which you operate. For example, Nigerian businesses can verify customer information by consulting the National Identity Management Commission (NIMC) and Nigeria Inter-Bank Settlement System Plc (NIBSS) databases among many others. Also, Ghanaian businesses can verify customer information by consulting the Ghana Revenue Authority database and some other available databases.

To help businesses easily go through this customer information verification process, Paystack provides a number of endpoints that can be called. Here's a list of identification and verification endpoints that Paystack currently provides:

Resources about regulations around KYC

The documents linked below provide more information about the various regulations around KYC in Nigeria, Ghana and South Africa:

Nigeria

Ghana

South Africa

Kenya

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