Detected puts $10.4bn annual cost on SMB merchant onboarding gap

Detected, a UK-based business verification platform, has published a report arguing that structural limits in business registries cost the North American market an estimated US$10.4 billion a year in failed and abandoned SMB merchant onboarding. The figure carries a wide defensible range of $3.5 billion to $31.7 billion, reflecting the difficulty of measuring abandoned applications rather than institutional labour costs alone.

The report, titled The Collection Ceiling, focuses on what Detected describes as the gap between information held in public registries and the full data set financial institutions need to onboard and underwrite small and medium-sized business merchants. According to the company's field-level assessment, approximately 57% of the data points required to onboard a North American SMB merchant cannot be retrieved from any public or commercial source and must instead be collected directly from the business. Detected calls this self-reported layer the "attestation layer," and argues that no amount of API aggregation or AI-driven automation can close it, because the underlying data was never collected in the first place.

Regulatory context

The report lands at a pointed moment for the US market. On 11 August 2026, the US Treasury issued a final rule permanently removing Corporate Transparency Act beneficial ownership reporting requirements for US-formed entities and US persons. That decision follows an eighteen-month interim exemption and effectively reverses the CTA's original intent to make beneficial ownership data more accessible to financial institutions. In practical terms, the ownership-request loop that currently accounts for a significant share of onboarding friction in the United States is now unlikely to be resolved by regulatory change in the near term.

The contrast with Canada is instructive. Beneficial ownership information for federally incorporated Canadian companies is filed publicly and is searchable. Delaware LLCs occupy the opposite end of the spectrum: equivalent data is structurally unavailable. Detected's argument is that the Collection Ceiling is therefore a policy artefact rather than a technology failure, and that the gap between jurisdictions will persist until legislators make different choices about what governments should collect and disclose.

Liam Chennells, chief executive of Detected, said: "You can build a better API, aggregate more sources and deploy increasingly sophisticated AI, but none of those things can retrieve information that was never collected in the first place."

Market implications

The report also challenges the premise of perpetual know-your-business programmes built entirely on external data feeds. Information such as a merchant's stated business model, expected transaction volumes or supplier relationships has no external refresh mechanism. It may be accurate at the point of collection but can change without generating an observable event in any public database. Detected argues this distinction between retrievable data and attestation data needs to become a first-class design consideration in the next generation of KYB infrastructure.

The company cited one named customer outcome in its release: Navan, a travel and expense platform, reportedly reduced average onboarding time from 52 days to one day using Detected's platform, which the company said equates to 98% faster onboarding decisions. No independent verification of that figure was included in the release.

The broader KYB and merchant onboarding market is increasingly contested. A number of well-funded compliance technology vendors, alongside incumbent identity verification players, are pursuing automation of the retrievable portion of onboarding data. Detected's positioning, that the retrievable portion is the easier half and that the attestation layer represents the more material commercial problem, is a differentiated framing that will be tested as financial institutions compare actual abandonment-rate improvements against vendor claims. The Collection Ceiling is described as the first in a planned series of research into the structural economics of KYB and merchant onboarding in North America.