Creating a merchant account
A central element of the financial architecture of an online platform, merchant accounts allow the administrator and users/merchants of the platform to take full advantage of the commercial and financial opportunities of their activity.
What is a merchant account ?
Also called a “payment account”, it serves as a channel for user members of a platform to receive income related to the sale of goods/services, but also provides access to additional financial services :
- Collections: payment methods (card, transfer, etc.) and payment facilities (wallets, installments, one-click, etc.)
- Processing: accounting reports and exports, automation services, anti-fraud management, etc.
- Transfers: payout, refund management, etc.
A merchant account is opened by a Payment Service Provider, not a bank like traditional bank accounts. Since it cannot have a negative balance, users keep their collected funds in this account before transferring them to their primary bank account.
How does opening merchant accounts work?
The payment service provider plays a crucial role in creating these accounts. As an intermediary approved by the ACPR (Banque de France), the latter provides its technical and security expertise and ensures compliance with the regulatory requirements imposed by the regulator. The goal is to make the merchant account ecosystem efficient and secure.
The opening process involves several specific steps :
KYC / KYB Procedure
KYC / KYB is a series of processes and procedures designed to verify the identity of a platform’s users before granting them full access to the service. This step involves collecting and analyzing legal documents (identity documents, proof of address, company statutes, bank details, etc.) to verify the identity of legal and/or natural persons. Based on the information provided and through in-depth investigations, the compliance team determines the risk level of each merchant, in light of various factors (industry sector, expected transaction volume, payment history, etc.).
At the end of these checks, the compliance department decides whether or not to validate the merchant’s registration. If so, the merchant will be able to sign the T&Cs that bind them to the payment institution, initiating the request to create a payment account on their behalf.
Creation and configuration of the user profile
Once the KYC/KYB has been validated, the payment service provider’s integration team will create the user profile to which the payment account will be linked. This profile is the basis for the merchant’s identity. At this stage, the merchant will need to provide additional, more specific information (SIREN, identity of legal representatives and beneficial owners, addition of an outgoing bank account, etc.), which will be verified once again before initiating the creation of the payment account.
Opening and activating the merchant account
Once this final verification is complete, the integration team will link a payment account to the user profile and activate it. The user can then start collecting sales on the platform.
NB: Depending on the nature of the activity, the chosen integration workflow or other reasons, certain collection limits may be set by the payment institution and/or the platform. These preventive limits may be lifted following thorough verification of the user.
What is the impact of KYC / KYB on opening merchant accounts ?
The first step in the process, KYC / KYB is essential to ensure security, compliance requirements and integrity of all platform users, in the eyes of the administrator and payers.
Limiting fraudulent activities
By accurately identifying users of online platforms, KYC/KYB provides a bulwark in the fight against money laundering and terrorist financing (AML/CFT). Through in-depth verification, identity theft prevention, and risk analysis, this procedure enables proactive management of potential threats.
Regulatory and tax compliance
Effective KYC implementation ensures compliance with regulations, including security, technology, and operational processes, to protect against potential sanctions and litigation. Furthermore, regular reviews of established procedures allow the administrator to continually adapt to mandatory regulatory changes. This strong adherence to standards and rules strengthens the trust of users and payers.
Reputation protection
By identifying questionable participants, KYC/KYB helps protect the platform and payers from potential malicious users. This protection strengthens trust in the platform and helps not only retain existing users but also attract new ones, thus supporting the platform’s long-term growth.
Thus, the rigorous implementation of a KYC / KYB procedure prior to the opening of merchant accounts is essential in order to guarantee the proper functioning, growth and sustainability of an online platform.
