The increasing demand for online transactions has led to a growing need for businesses and software providers to facilitate online payments. However, the process of onboarding merchants to payment platforms can often be frustrating and time-consuming.
To address these challenges, it is important to understand the reasons behind the pain points and explore solutions for a more streamlined onboarding experience.
Merchant onboarding – or payments onboarding - refers to the process of integrating a business with a payment service provider (PSP) or online payment gateway. It involves providing necessary documentation and information to the payment service provider, such as details about the business, its operations, financial information, and compliance requirements. The goal of merchant onboarding is to establish a secure and efficient payment processing system for businesses, enabling them to accept payments online.
When it comes to the merchant onboarding process in payment solutions, there are various requirements that businesses need to consider. These requirements can vary depending on the payment service provider and industry regulations. Businesses should consult with their chosen payment service provider to understand the specific merchant onboarding requirements for their payment solution.
A prescreening process will need to be conducted to assess the suitability of potential merchants. This may involve evaluating the merchant's business model, operational history, and website content analysis.
All merchants should undergo identity verification and Know Your Customer (KYC) checks. These checks help ensure the legitimacy of the merchant and mitigate fraud and money-laundering risks.
The merchant's history must then be reviewed, including their previous payment processing relationships and any relevant industry-specific factors.
Regulatory requirements and industry standards must be adhered to when onboarding new merchants. This includes maintaining Payment Card Industry Data Security Standard (PCI DSS) compliance and implementing risk management measures to monitor merchant activities and detect any suspicious or non-compliant behavior.
Payment service providers may conduct underwriting and analysis of the merchant's business and operational model to assess merchant onboarding risks and ensure compatibility with the payment solution.
Evaluating the merchant's website content is often part of the onboarding process to ensure compliance with legal and industry guidelines and identify any potential risks.
Merchant onboarding is not a one-time process. Payment service providers typically have ongoing monitoring systems in place to detect any changes in merchant activities, such as spikes in transaction volume, changes in products or services offered, or unusual cross-border activities.
The traditional approach to merchant onboarding, which involves multiple steps such as integration with a payment acceptance model and selecting an acquirer, can be time-consuming and restrictive.
The process of integrating a payment acceptance model into an app or website alone can be complex and add to the overall onboarding timeline. Selecting an acquirer is crucial as it determines the payment options available to customers, but the onboarding process with traditional acquirers can be slow, with extensive merchant onboarding forms to complete and stringent KYC checks to undergo.
Furthermore, even after obtaining a Merchant ID (MID), acquirers often impose strict restrictions on the merchant relationship, such as retaining a percentage of each transaction for a certain period. This outdated approach to merchant onboarding can cause significant delays and frustrations for businesses.
One effective approach to streamline merchant onboarding is for software providers to integrate payment processing capabilities into their offerings. By adopting a payment facilitator model, software providers can leverage technology to automate the onboarding and risk assessment processes, significantly reducing the time required from weeks to mere minutes.
For example, Access PaySuite acts as an intermediary between software providers and the broader payments infrastructure, essentially acting as a proxy acquirer. Through this streamlined onboarding process, software providers can swiftly enable their customers, the merchants, to commence accepting payments within a matter of hours. This not only simplifies the integration and onboarding journey for merchants but also presents new revenue opportunities for software providers or marketplaces.
By embracing payment processing software and the payment facilitator model, businesses can revolutionise the onboarding experience, eliminate the slow and arduous nature of the process, and deliver enhanced services to their customers.
In conclusion, merchant onboarding is a critical step in establishing a secure and efficient payment processing system. By understanding the requirements and challenges associated with onboarding, businesses can explore modern solutions that streamline the process, simplify integration, and drive customer satisfaction.