Meeting KYC Requirements without PCI Scope
Blog post from Basis Theory
Merchants face a trade-off between relying on payment service providers to perform Know Your Customer (KYC) checks and gaining control of the customer data needed for identity verification, payment validation, underwriting, and potential migration to other providers. While PSP-managed KYC can simplify compliance, it may leave merchants unable to access or reuse customer personally identifiable information (PII), forcing them to recollect data when changing providers or adding multiple PSPs. Managing KYC data directly presents cybersecurity, data-residency, regulatory, cost, and operational challenges, particularly because storing sensitive information expands an organization’s compliance responsibilities and breach exposure. The text argues that tokenization platforms and secure data vaults can offer an alternative by storing encrypted PII outside a merchant’s systems while allowing token-based access for KYC checks, analytics, sharing, and processing through chosen PSPs or gateways. It presents Basis Theory’s tools as an example of this model, in which PII is collected, tokenized, verified through a proxy that reveals plaintext only in transit, and retained securely for later use without exposing raw data to the merchant’s own environment.
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