For payments service providers (PSPs), the traditional approach to Know Your Business (KYB) has long assumed that company registry data is sufficient to confirm a merchant’s legitimacy. Onboarding teams check the registry, validate directors and addresses, and tick a box. In the past, that may have been enough, but in today’s complex payments ecosystem, this assumption increases risk.
The way that merchant business models are built are evolving rapidly. Marketplaces host hundreds or even thousands of vendors, digital-first service providers operate across multiple sectors, and platforms often blur the line between B2B and B2C. In each case, a company’s registry entry tells only a fraction of the story. Static data is valid for confirming the existence of a business, but it lacks the depth into how it operates, who controls it, or any hidden risks that may exist in its day-to-day activity. For PSPs, this gap creates exposure to financial, regulatory, and reputational risk.
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Why one-size-fits-all checks fail
Consider the marketplace example introduced above. Here, registry data might show the platform as a single legal entity, but in reality, risk resides at the individual merchant level. A high-risk vendor could exploit weaknesses in the platform’s compliance or payment processes, potentially exposing the PSP to fraud, chargebacks, or regulatory scrutiny. Similarly, digital-first businesses often operate across borders, sectors, or payment types, obscuring their operations from traditional registry checks. In both cases, relying on a static snapshot leaves PSPs blind to the dynamic realities of modern merchant activity.
The problem is compounded by the fact that registry data itself lacks certainty. Public registries are subject to delays, errors, and even vulnerabilities and changes in directors, ownership, or addresses can go unnoticed for weeks or months. Fraudsters understand these gaps and exploit them, targeting the period between onboarding and the next formal review. In effect, PSPs that rely solely on registry data are building compliance frameworks on a foundation that can be incomplete or even compromised.
Building a fuller picture of merchant risk
So how can PSPs address this blind spot? The solution lies in combining structured registry data with broader, real-world signals. By integrating alternative sources like transaction patterns, web presence, document verification, ownership trees, and reputational insights, PSPs can construct a more accurate, real-time picture of merchant activity. This layered approach strengthens compliance and risk oversight and enables faster onboarding which in turn means businesses that are legitimate and low-risk can be verified quickly, while higher-risk cases are flagged for further scrutiny.
Continuous monitoring is essential
Continuous monitoring and ongoing due diligence are central to this approach. Modern fraud is relentless and driven by intelligence so static, point-in-time checks simply cannot keep pace with the rate of change in today’s business landscape. Regulators are increasingly recognising this reality. The Financial Conduct Authority (FCA) and other regulators are clear that onboarding-only KYB is no longer sufficient. PSPs are expected to have mechanisms to detect material changes in a merchant’s risk profile over time, from director changes to new operational jurisdictions or unusual transactional behaviour.
Ongoing due diligence should also be seen as a competitive advantage. PSPs that can assess merchant risk more accurately and respond quickly are able to onboard new businesses faster without compromising compliance. In contrast, those relying solely on registry data may experience friction in the onboarding process, slower approvals, and higher operational risk. This is about maintaining trust, protecting the business ecosystem, and ensuring the smooth flow of payments for both merchants and consumers, all of which are essential to a compliant organisation.
Seeing the full picture
The lesson for PSPs is clear. Merchant risk has changed, and will continue to change, so KYB processes must keep pace. Static checks built on registry data are no longer enough in isolation. By embracing layered verification, ongoing due diligence, and continuous monitoring, PSPs can build resilience, reduce exposure to fraud, and ensure regulatory compliance.
In a payments landscape where business models are more complex, fraud is smarter, and regulation is tightening, PSPs cannot afford to rely on a single source of truth. Registry data is important, but it is only one piece of the increasingly complex puzzle. To protect their business, their partners, and their customers, PSPs need a more complete picture and one that reflects the realities of modern merchant operations.
Mateusz Pniewski, CEO, TransactionLink
