KYC in the marketplace means that sellers are identified and verified before payout. For Swiss platforms, this is important because payment providers and financial intermediaries must comply with anti-money laundering and due diligence obligations under the Anti-Money Laundering Act (AMLA) and the AMLO-FINMA. Anyone who, as a marketplace operator, forwards payments to sub-merchants must ensure that each seller is correctly verified – or outsource this obligation to a licensed Payment Service Provider (PSP).

This guide explains the legal foundations, shows which data is needed depending on the legal form, and describes how automated onboarding improves compliance and conversion at the same time.

1. What are KYC and KYB?

Know Your Customer (KYC) refers to the legal obligation to verify the identity of a contracting party before entering into a business relationship or carrying out a transaction. In the context of a marketplace, this primarily concerns the sellers (sub-merchants) who receive payments via the platform.

Know Your Business (KYB) is the counterpart for legal entities. KYB means checking the company structure, ownership relations and the beneficial owners. For marketplaces on which LLCs, associations or other organisations act as sellers, KYB is mandatory.

In Switzerland, these obligations arise from Art. 3 AMLA (identification of the contracting party) and Art. 4 AMLA (determination of the beneficial owner). The specific design is governed by the FINMA Anti-Money Laundering Ordinance (AMLO-FINMA) as well as the regulations of the self-regulatory organisations (SROs).

2. Legal foundations in Switzerland

Anti-Money Laundering Act (AMLA)

The AMLA defines who is considered a financial intermediary and which due diligence obligations must be fulfilled. According to Art. 2 para. 3 AMLA, persons who provide payment services on a professional basis are considered financial intermediaries. The core obligations include the identification of the contracting party (Art. 3 AMLA), the determination of the beneficial owner (Art. 4 AMLA), the documentation obligation (Art. 7 AMLA) and the reporting obligation in the event of suspicion of money laundering to the Money Laundering Reporting Office Switzerland (MROS) pursuant to Art. 9 AMLA.

AMLO-FINMA and thresholds

The AMLO-FINMA specifies the due diligence obligations of the AMLA. For electronic means of payment that serve exclusively cashless payment transactions, specific thresholds apply: According to Art. 11 AMLO-FINMA, under certain conditions identification may be waived if no more than CHF 5’000 per calendar year and contracting party is paid and the funds are loaded exclusively via a bank account in Switzerland. If this threshold is exceeded, full identification is mandatory. For marketplaces, this means: As soon as a seller receives more than CHF 5’000 in payouts per year, their KYC must be completed.

Self-regulatory organisations (SRO)

Financial intermediaries that are not directly supervised by FINMA must join an SRO. The SROs issue their own regulations, which meet at least the standard of the AMLO-FINMA. For a PSP that performs KYC on behalf of a marketplace platform, SRO membership is a prerequisite for lawful activity.

3. Which data does a merchant need during onboarding?

Natural persons (sole proprietorships)

For natural persons, the following information must be documented according to the Agreement on the Code of Conduct Concerning the Due Diligence of Banks (CDB 20, Art. 7): last name and first name, date of birth, nationality and the actual residential address. Verification is usually carried out on the basis of an official photo identification document (passport or identity card). Sole proprietorships entered in the commercial register are additionally identified using the commercial register extract.

Legal entities (LLC, AG, association)

For legal entities such as an LLC or AG, the following are required: company name (trade name), registered office, UID number, current commercial register extract (not older than 12 months) as well as the identity of the persons authorised to sign. In addition, the beneficial owner must be determined. Associations without an entry in the commercial register are identified on the basis of the statutes and an extract from the association register or a comparable confirmation.

Comparison: requirements by legal form

4. Beneficial owners

The beneficial owner is understood to be the natural person who ultimately disposes of the assets or controls a legal entity. The determination is mandatory according to Art. 4 AMLA. In the case of companies such as an LLC or AG, the beneficial owner is the person who directly or indirectly holds more than 25 percent of the shares or voting rights.

In practice, the KYC process requires sellers on a marketplace to submit a declaration of beneficial ownership (the so-called Form A). In complex ownership structures – for example, an LLC held by a holding company – the chain must be traced back to the natural person. If no natural person with more than 25 percent participation can be identified, the members of the top management body are considered beneficial owners.

For associations and foundations, special rules apply: here, the founders, the members of the board and, if applicable, the beneficiaries must be identified as beneficial owners.

5. Why KYC must come before the first payout

A common mistake on marketplaces: Sellers are allowed onto the platform, orders are processed, but identity verification is postponed. This is not only a compliance risk, but can also have criminal consequences.

According to Art. 3 para. 1 AMLA, identification of the contracting party must take place when the business relationship is established. For marketplaces that process through a PSP, this means concretely: Before the first payout to a sub-merchant, their KYC must be completed. Funds may not flow to an unverified account.

Example: An online marketplace for arts and crafts takes on a new seller. The seller can list products immediately. Only when an order comes in and a payout is due must the KYC be completed. If the seller is an LLC, this includes the commercial register extract and the determination of the beneficial owner. As long as the KYC is pending, payouts are blocked. The customer has already paid – the funds are held in escrow by the PSP.

6. What happens with inactive or high-risk merchants

The AMLO-FINMA requires ongoing monitoring of business relationships. For a PSP that manages sub-merchants on a marketplace, this results in concrete action obligations:

Inactive merchants: Sellers who do not carry out any transactions over a longer period of time (e.g. 12 months) are usually deactivated. Before reactivation, it must be checked whether the KYC data is still up to date. In the event of material changes (new owner, new registered office), renewed identification is required.

High-risk merchants: If a merchant shows unusual patterns – for example, sharply rising turnover, many chargebacks or transactions with high-risk countries – enhanced due diligence obligations pursuant to Art. 6 AMLA apply. This can mean additional document requirements, a personal meeting or even blocking and reporting to MROS.

A professional PSP takes over this monitoring automatically and thereby relieves the marketplace operator. Nevertheless, the platform also bears a shared responsibility: Anyone who knowingly allows high-risk sellers without adequate control cannot hide behind the PSP.

7. How automated onboarding increases conversion

Manual KYC onboarding – i.e. collecting documents by email, manual review by a compliance team and feedback to the seller – takes several days on average. For a marketplace that depends on rapid seller growth, this is a conversion killer.

Automated solutions combine several advantages: The seller uploads their identification document directly, the review takes place via OCR and database matching (e.g. against the Swiss Official Gazette of Commerce SHAB or sanctions lists), and approval takes place in minutes instead of days. For legal entities, the commercial register extract is retrieved automatically and the ownership structure is checked.

Concrete effect: Platforms that switch from manual to automated KYC onboarding report a reduction in the abandonment rate of 30 to 50 percent. The reason is simple: the fewer steps and the shorter the waiting time, the higher the probability that a seller completes the process.

Checklist: What you should check before starting

✓      Clarify whether your payment model triggers your own AMLA obligations or whether you process through a licensed PSP.

✓      Define which legal forms (sole proprietorship, LLC, AG, association) are allowed as sellers on your marketplace.

✓      Make sure that the KYC process is completed before the first payout – not after.

✓      Check whether your PSP supports automatic identification for Swiss identification documents and commercial register extracts.

✓      Clarify how you handle beneficial owners: From which participation threshold is checked (standard: 25%)?

✓      Define rules for inactive merchants: After how many months without a transaction is deactivation carried out?

✓      Set monitoring criteria for high-risk merchants (e.g. chargeback rate, turnover spikes, country risk).

✓      Ensure that all KYC documents are retained for at least 10 years in accordance with Art. 7 AMLA.

✓      Check whether your PSP supports Swiss payment methods (TWINT, PostFinance, QR-bill) for sub-merchants.

✓      Document the entire onboarding process in writing as part of your internal compliance documentation.

How Payrexx supports you with merchant onboarding

As a Swiss PSP, Payrexx offers a marketplace payment solution that fully handles the KYC and onboarding of sub-merchants. Sellers go through an automated verification process directly in the platform, including ID verification, commercial register matching and determination of the beneficial owners.

The payout to verified merchants is made via split payment: the platform commission goes to the marketplace operator, the remaining amount directly to the seller. This means the platform never touches customer funds. Payrexx supports all common Swiss payment methods – TWINT, PostFinance, credit cards and QR-bills – and can be integrated into existing systems via API.

Payrexx is your sales partner for Swiss marketplaces.