This Day 19 post of Merpay Tech Openness Month 2022 is brought to you by Manpreet from Merpay KYC team.
Know Your Customer or Client (KYC) in financial services or institutions like banks, money lenders, credit card companies or Fund Transfer Service Provider (資金移動業者) like Merpay(and Mercari Group) requires to verify the identity, eligibility and risks involved in carrying out the payment business with its customers.
Under the Act on Prevention of Transfer of Criminal Proceeds, these businesses are defined as “Specified Businesses”. Therefore making KYC as a mandatory check to maintain the business relationship.
The KYC platform
The KYC at Mercari Group is performed under the same Act, to strengthen the identity verification of our customers.
The KYC platform ensures to:
- Verify the identity of the customer.
- Verify the risk involved in maintaining the business relationship.
Identifying suspicious elements at earlier stages can save our customers and the platform from being misuse and negative consequences.
Our Vision
Be the best Identity Verification System in Japan.
Our Mission
The KYC platform team vision is:
- To provide an easy to use, secure identity verification system.
- To keep our Customer’s Personal Identification Information safe and secure.
KYC at Mercari Group
- After customer registration on Mercari app, an initial screening is performed to assess risk involved in carrying the business with the customer.
The initial screening is done against various risk databases. The customer is marked as suspicious in case of risk involved. Upon suspicion, the customer is requested to submit identification documents. - The customer can also voluntarily initiate KYC from the Merpay UI and needs to submit the Personal information.
- The personal information submitted is audited through manual screening.
The manual screening ensures if the ID provided by the customer matches with the personal information provided. - Upon receiving a successful audit result, the customer can use the platform. In case of audit failure, the customer is requested to resubmit the Identification documents.
A secondary screening can be initiated if the customer is marked as suspicious in the initial screening phase. Here, our Customer Support team does additional checks to ensure whether it is at high risk or low risk to carry out the business. If the risk is low (and acceptable), customers are allowed to use the platform, otherwise restrictions are placed on usage. - Upon audit completion, a Fund Transfer account is created (when KYC type is eKYC or IC chip).
Additionally to ensure the platform’s security, a daily check is performed with different sources to check customer’s suitability for maintaining the payment business.
KYC Types
There are different ways to do KYC, some are legally compliant and provide more security and have less chances of spoofing. For example, eKYC where customers need to hold their identity document in hand and capture the images from different angles and upload to the system.
Then there are legally non-compliant KYC, like ID-KYC which can provide additional security but are not apt for opening a Fund Transfer Account at Merpay.
At Mercari Group, we conduct both the types to ensure security for our customers. Below diagram glances over the different types of KYC and its significance.
Below is the detailed description covering information like when a certain KYC type comes into play, what information we seek from the customer and why certain KYC is important.
Simple KYC
Simple KYC is automatically triggered when a customer registers with Mercari.
When is it triggered?
When a customer registers with the platform.
The information provided by the customer is screened by KYC service to ensure if the customer is not a suspicious person based on the risk databases. Additionally, our Anti-Money Laundering team helps us filter out the customers. If a customer is marked as suspicious, our Customer support team suggests performing KYC and can request additional documents for the verification purposes.
Why is it important?
The Mercari Group of companies must comply with Japanese regulations surrounding AntiSocial Forces (like, An organized crime syndicate) and therefore conduct this KYC type.
ID-KYC
Information provided by the customer in ID-KYC is used when proceeding with listing or transacting money.
When is it triggered?
- When the customer changes their name (for example if they get married).
- When a customer fails Simple KYC or when Merpay’s Customer Support team manually flags a customer.
What information do we look for?
The customer needs to povide any of the below documents to complete the KYC:
- Drivers license
- Residence card with a picture
- Insurance card
- Insurance paper
- Pension book
- Welfare paper
- Seal registration certificate
- Foreigner residence card
- Permanent resident certificate
- Driving record certificate(運転経歴証明書)
Why is it important?
Although not a strict legal requirement, Mercari Group still provides ID-KYC for their customers’ safety while using the marketplace.
Selfie eKYC
Selfie eKYC is a self-service option and is a non-face-to-face KYC method that allows customers to upload information and necessary documents by themselves.
When is it triggered?
When a customer voluntarily chooses to perform KYC in order to use Mercari/Merpay services.
What information do we look for?
Provide personal information mentioned below:
- Full Name (has to be written exactly like on the ID document)
- Date of Birth
- Residence
- Job Occupation
- Purpose of the Transaction (i.e. ”Payment” => 商品・サービス代金決済のため)
Use any of the below documents to complete the KYC:
- Drivers license
- Residence card with a picture
- Passport
- Driving record certificate(運転経歴証明書)
Process:
- The customer needs to fill out the mandatory personal information fields.
- Then the customer needs to hold the ID document in hand alongside his/her face and has to click images from suggested angles on the app.
- Upon completion, the customer needs to submit this information for the verification.
Why is it important?
This type of KYC is required to open the Funds Transfer Account (FTA) i.e. to transact money. Once the customer has been verified, the customer does not have to go through the KYC process for every future transaction.
However, in some specific cases where the customer identity data has been updated, our Customer support team suggests performing KYC and can request additional documents for the verification purposes.
IC Chip KYC
This is the quickest type of KYC (or eKYC) that reads the IC chip embedded in the My Number Card and performs KYC based on the information obtained from it.
About My Number Card:
"My Number" Card is a plastic card that contains an IC chip, and the bearer’s name, address, date of birth, gender, My Number (the Individual Number), and the bearer’s photograph displayed on it.
Benefits
This is the most trusted KYC method that ensures better data reliability thereby enhancing security and safety of the platform.
When is it triggered?
When a customer voluntarily chooses to perform KYC in order to use Mercari/Merpay services.
Pre-requisites
- Customers who have my number card.
- Customer must have NFC (Near-Field Communication) enabled smartphone.
With the IC Chip KYC, the digital signature stored on the IC chip of the My Number card is used for identity verification and KYC completed in real time.
Why is it important?
This is legally compliant. The information obtained from My Number Card is highly reliable, hence the identity verification can be completed immediately. Therefore, it can be used to open the Funds Transfer Account (FTA) i.e. to transact money.
Summary
KYC is a fundamental part of Mercari Group and Mercari Group ensures to provide an easy to use, secure platform for its customers in order to maximize their experience with the platform.
In the end, happy KYCing.
