Automated merchant onboarding: The benefits of a more efficient onboarding process


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  1. Introduction
  2. What is merchant onboarding?
  3. What is automated merchant onboarding?
  4. How does automated merchant onboarding work?
  5. Automated merchant onboarding process
  6. Benefits of automated merchant onboarding

Technology has made businesses across industries operate more efficiently. One aspect of business operations that has experienced significant innovation is the merchant onboarding process, an important part of the relationship between businesses and payment service providers (PSPs). Automated merchant onboarding solutions can increase operational efficiency and security for payment processing and compliance.

Below is an overview of the benefits of adopting automated merchant onboarding and the components of this technology-driven process. By understanding the implications of automated merchant onboarding, businesses can grow, maintain compliance, and provide a frictionless and secure payment experience for their customers.

What’s in this article?

  • What is merchant onboarding?
  • What is automated merchant onboarding?
  • How does automated merchant onboarding work?
  • Automated merchant onboarding process
  • Benefits of automated merchant onboarding

What is merchant onboarding?

Merchant onboarding is the process through which a business establishes a relationship with a payment service provider or payment gateway to securely and efficiently accept and manage customer payments. This process significantly impacts a business’s operational efficiency, customer experience, and risk management.

A well-executed merchant onboarding strategy ensures a frictionless and compliant payment experience, enhancing customer satisfaction and building trust in the business. Without effective merchant onboarding, there’s a higher risk of delayed or failed transactions, fraud, and noncompliance with industry regulations.

What is automated merchant onboarding?

Automated merchant onboarding incorporates technology to simplify the onboarding process, reduce manual tasks, and enable businesses to start accepting payments more quickly.

How does automated merchant onboarding work?

A combination of technologies and software solutions work together to streamline and accelerate merchant onboarding. Some of the key technologies include:

  • Application programming interfaces (APIs)
    APIs enable communication and data exchange between different software systems. In the context of automated merchant onboarding, APIs integrate the business’s system with the payment service provider’s platform, allowing for real-time data transfer and synchronization.

  • Optical character recognition (OCR)
    OCR technology helps read and understand text from scanned documents such as IDs, business certificates, and financial papers. OCR decreases the need for people to manually enter this information and makes the verification process more accurate.

  • Machine learning and artificial intelligence (AI)
    Advanced algorithms and machine learning techniques perform identity verification, risk assessments, and compliance checks. These technologies help automate decision-making processes, reduce manual review time, and enhance the accuracy of the verification process.

  • Data aggregation and validation
    Automated systems gather and validate information from various sources, such as public records, credit bureaus, and commercial databases, to verify the business and its key stakeholders. This process reduces manual data collection and ensures the information is accurate and up-to-date.

  • Secure document management
    Cloud-based document management systems enable businesses to securely upload and store required documents during the onboarding process. These systems often use encryption and access controls to ensure the confidentiality and integrity of sensitive data.

  • Real-time monitoring and reporting
    Automated onboarding platforms often include real-time monitoring and reporting features, which enable businesses and payment service providers to track the onboarding progress, address any issues, and maintain ongoing compliance with industry regulations.

These technologies work together to create an efficient, accurate, and secure automated merchant onboarding process, reducing manual tasks and enhancing the overall experience for businesses and payment service providers.

Automated merchant onboarding process

The key differences between automated and regular merchant onboarding are the increased efficiency and reduced manual intervention during the automated onboarding process. Here’s an overview of the automated merchant onboarding process:

1. Digital application
Businesses complete a digital application form, which simplifies data entry and speeds up the process. These forms often use smart fields and prefilled information to reduce errors and manual input time.

2. Automated data collection
The onboarding system automatically gathers required information from various sources, such as public records, credit bureaus, or commercial databases, to verify the business and its key stakeholders.

3. Electronic document submission
Businesses upload necessary documents, such as business registration, identification, and financial statements, through a secure online portal. This eliminates physical document handling and speeds up the verification process.

4. Instant identity and risk assessment
Advanced machine learning algorithms quickly perform identity verification, risk assessments, and compliance checks. This reduces manual review time and accelerates the approval process.

5. Easy integration
Automated onboarding systems often offer prebuilt integration options for popular ecommerce platforms and APIs for custom integration, making it easier and faster for businesses to connect their systems with the PSP or payment gateway.

6. Automated ongoing compliance
Post-onboarding, automated systems monitor businesses for continuous compliance with industry regulations, such as Know Your Customer (KYC) and Anti-Money Laundering (AML), reducing manual efforts.

The automated merchant onboarding process is faster and less labor-intensive than the traditional onboarding process. By reducing manual tasks and using advanced technology, automated merchant onboarding helps businesses start accepting payments quickly and creates a smoother overall experience.

Benefits of automated merchant onboarding

Automated merchant onboarding provides several advantages for businesses, PSPs, and payment gateways, making the process more efficient and user-friendly. Some of the key benefits include:

  • Faster onboarding process
    Automated systems significantly reduce the time it takes to onboard a business by streamlining data collection, verification, and compliance checks, enabling businesses to start accepting payments more quickly.

  • Improved accuracy
    Automation minimizes human error in data entry and document processing. Advanced algorithms and machine learning ensure that the information collected and verified is accurate and up-to-date.

  • Enhanced security and compliance
    Automated onboarding systems help maintain compliance with industry regulations and reduce the risk of fraud with ongoing, real-time monitoring.

  • Cost savings
    By reducing manual tasks and labor-intensive processes, automated onboarding systems can significantly decrease costs for businesses and PSPs.

  • Scalability
    Automated systems can easily handle large volumes of merchant applications, allowing PSPs and payment gateways to scale their operations and onboard new businesses.

  • Customization and adaptability
    Automated onboarding platforms often offer a range of integration options, making it easy for businesses to adapt the system to their specific needs and preferences.

  • Real-time tracking and updates
    Businesses and PSPs can monitor the onboarding process in real time, enabling them to address any issues immediately and ensure a smooth transition.

With automation, the merchant onboarding process is more streamlined, accurate, and secure, ultimately benefiting businesses, payment service providers, and payment gateways alike. This improves the customer payment experience, increases compliance, and enables businesses to scale operations more effectively.

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