To what extent do I need to verify the people or businesses I'm paying out via the transfers API?
In the “Sending Transfers” documentation, it mentions that I should verify the identity of anybody I'm sending money to. How do I do this and why is this required?
You should be reasonably confident that the person or business you're paying out is who they say they are, and that you're sending Stripe their correct, full legal name.
To give you some context: to help avoid criminal activity and money laundering, it's important that anybody sending money en masse knows who they are paying and checks the payees against certain government watchlists (entities on this watchlist include terrorists, drug dealers, potentially corrupt government officials, etc).
Stripe will automatically check recipients that you create against the lists by name, but this means that the name you send us should be the full legal name of the person or company receiving your transfers.
Here are a couple of ways you can verify your users:
Checking government ID, running background checks, or verifying the identity against a trusted third-party database. If your service or marketplace is based on trust (e.g. cleaning, babysitting, and tutoring services to name a few), you're likely already doing this.
Collecting SSN or EIN (depending on whether the payee is an individual or company), and sending it to Stripe in the recipient creation or update call. Stripe will verify that the name of the recipient matches the SSN or EIN.
Before you launch, you should spend some time thinking about what method of verification works best for you (it often depends on the business, so please feel free to get in touch; we're happy to help!).
Once a payee reaches high transfer volumes (in the thousands) or upon any transfer anomalies, we may request additional information on your verification methods before sending any additional transfers.