Automated merchant onboarding, do you know what it is? Actually the majority of people in the globe are not aware of this, only the merchants are far more familiar with this process. These days, merchant onboarding is facing a real problem that is related to speed, flexibility and scalability.
The majority and well know software companies that have entered the merchant onboarding software processing market are changing customers’ expectations. Now clients or customers are asking “If Paypal can board customers in 5 minutes, why can’t my acquirer do the same?” Customers want a faster, better, and more convenient experience.
With this article you’ll be able to understand how automated merchant onboarding works and the solution to it.
What is Client Onboarding?
Client Onboarding is the practice of welcoming new clients into your business. It means addressing all their concerns, questions, and ensuring that they thoroughly understand the services available to them. Do not settle with the idea that your current customer service structure is enough for your client onboarding process as these leads to client dissatisfaction and cancelation of their accounts.
Believe it or not, client onboarding is one of the most essential functions on any business as it directly affects your client’s experience with your business that will eventually affect your revenue. So, don’t neglect your client after they sign up and assume that they can figure things out on their own because it can greatly damage your business that will lead to closure.
What is Merchant Onboarding?
Merchant Onboarding meaning, it is the supporting review to make sure that the merchants meet their (KYC) Know your Customer requirement before bringing them into the platform. Actually the specifics lies upon the types of merchants you want to board like the region they are operating and the requirements for your acquiring relationship.
In general merchant onboarding process has 3 critical components:
- The Onboarding Process
First in line of the merchant onboarding process is the so-called instant processing. Your potential merchant should be very clear in defining this term “instant” or the other phrase they are using in advertising their speed. You can actually get the facts for these with the help of these questions:
- How fast can the merchant start processing as they are provided with the needed information?
- What’s the service level agreement for a Yes or a No?
- Are they capable of providing MIDs for a preapproved MCC codes?
As you begin interviewing several solutions providers, you’ll hopefully find the right answers to these questions so that you’ll be able to gain knowledge of the speed in which you want to take your digital merchant onboarding. In this matter you should prepare yourself because what they often say is instant is not instant after all.
- Underwriting Management Solutions
In an automated merchant onboarding, the underwriting solution should satisfy both parties which are you and your provider. You will encounter that most merchants will offer full control but you will only reach that level of control once their requirements perfectly match with yours. Here are some of the questions you can ask:
- Can your solution support progressive onboarding where in most basic data are being collected and additional information are collected as well and is being required?
- Can you provide or are you able to define merchant risk profiles on your compliance and for risk requirements?
- Is your solution capable of monitoring merchant boarding activity and is able to trigger real time alerts and notifications?
- Flexibility and Control
In order to achieve full flexibility and control it is highly important that you make your business model your top priority and don’t let your partner’s limitation define yours as a merchant.
Ultimate guide to automated merchant onboarding
As a merchant acquirer or a PSP or payment service provider, you know to yourself that digital merchant onboarding is the key to your development. With this fact, you want more and more merchants to bring in more transactions but, automated merchant onboarding will push you to onboard questionable merchants that authorize fraudulent transactions at times and as a result, you’ll be facing charges and losses that will make a great impact in your business.
With this matter, how will you ever balance the trade-offs while ensuring that you are seamlessly onboarding good merchants while preventing bad merchants from harming your business? Tough, right?
According to research, the global payment realm is growing in a fast phase and changing rapidly due to the complexity of both technology and fraud attacks. But US banks was able to provide Risk Management Guidance which is said to be the most applicable approach when onboarding merchants.
This approach is said to be very applicable when it comes to automated merchant onboarding. Well, not all merchants are the same so they are instances that the level of risk and amount of diligence changes consequently. Although they are evident differences with the level of due diligence, standards still needs to be met. Aside from that, they are compliance legal factors like AML, KYC and KYCC.
That’s not all, standards and rules should be met with the card networks as they demand that a legal contract to all merchants that control a relationship with third parties. There are also rules when it comes to credit underwriting as the merchants continue to offer unsecured loans.
Successful Digital Merchant Onboarding
If you want to successfully onboard a merchant here are the seven particular steps you should follow:
Step 1: Prescreening
Step 2: Identity Verification/KYC
Step 3: Merchant History Check
Step 4: Business and operational model analysis
Step 5: Web Content Analysis
Step 6: Information Security Compliance
Step 7: Credit Risk Underwriting
In some articles you’ll be able to see a merchant onboarding process flow chart were each steps are briefly identified and explained.
You can have a successful merchant onboarding process just by simply following these steps. But, if you want your merchant onboarding to succeed 100% you should know a one key component which is automation. In the online industry merchants like you always find manual work to be a great pain like data entry which is done multiple times. Well, manual work can slow down the process and will eventually cause failure in the system. Not only that, manual process adds extra cost to the process. I’m not saying that manual process should not be included in the process but merchants should be more focus in spotting out fraudulent attacks and not their data entry work.
As you apply automation in the process you will see a lot smoother incorporation with the steps. If your data entry is digital from the very beginning, your entire merchant onboarding process has a huge potential for automation especially for smaller merchants. The new risk assessment automation which includes integration and optimization are now available on the market so now all the improvements are possible.
When it comes to merchant monitoring a change in the risk criteria highly requires reassessment of the merchant as it can already be damaged. The ongoing monitor should watch for the following:
- Noticeable spikes in activities
- Exceeding thresholds
- Unusual cross border activities
- Change on website products
- Adverse media attention
- Inclusion of people in the sanction lists
Monitoring automation is already seen to have great success but they are still issue with the false positives. Right now the industry is having a hard time in fine tuning the matches so they seem to accept that is far better than the alternative options. Another issue also arise when it comes to merchants going into new segments or offer new channels as the technology is not keeping up with the current changes.
Right now, the industry is a lot tougher to compete in. The competition requires merchants to grow in higher risk segments and markets. Although things are getting tougher and tougher technology still offer hope with the arising situation. Digitalization of procedures that are previously manually written and to analyze risk using very advance data analysis provides a greater opportunity in improving automated merchant onboarding.
Benefits of Automated Services and Payment Gateways
1. Time Efficiency
This is one of the greatest benefits of automated merchant onboarding. The traditional merchant onboarding would take 3 to 5 days while it only takes up to 5 minutes as you use payment gateways. A payment gateway is a merchant service provided by an e-commerce application or service. This application or service authorizes credit cards or direct payments for all of your online business, online retailers, brick and clicks, and traditional brick and mortar. By using automated payment gateways, you are effectively solving the issue of traditional acquiring.
In general, the cost is calculated by asking how much IT is used to process the application cost. Most white labeled payment gateways has successfully streamlined their onboarding process to the point that merchant no longer have to speak to anyone for it to setup.
Merchant Onboarding Solution
iPayTotal risk analytics and decisioning platform has the ability to automatically gather data from multiple systems and bureaus to be analyzed and to come up with a decision. With iPayTotal you’ll be able to complete KYC, AML and the other processes in minutes, offering our beloved clients with fast merchant onboarding process at lower costs.