Payments organizations are under pressure to change their traditional processes for at least two reasons: margins are increasingly small due to a commoditized industry, and Payment Service Providers (PSP) such as Square, PayPal and Intuit have disrupted the business model (McKinsey, Innovation and Disruption in U.S. Merchant Payments).
Competitive pressures and shifting regulations have elevated merchant onboarding to a strategic business process. A poorly-defined onboarding solution can cost merchant acquirers, processors, and ISOs millions of dollars a year in administrative overhead and revenue leakage. The process of onboarding and underwriting a new merchant was traditionally considered a necessary administrative drag. The collection of physical documents, multiple rounds of physical signatures and careful review by an underwriter, culminated in a weeks-long process to get a merchant set up in the organization’s system. Now, over 80% of financial institutions have made onboarding automation their number one priority.
Many payments organizations are tackling onboarding automation for the first time, while others implemented a system years ago that may be lacking. To automate the merchant onboarding process, a company has three options: build the technology themselves, combine multiple systems, or partner with an experienced vendor. This comprehensive whitepaper reviews the benefits and challenges of each approach. The following is an excerpt from the whitepaper, providing a checklist from which to evaluate onboarding vendors.
In your search for the best onboarding vendor to partner with, we recommend looking into specific results with existing clients such as:
- Software implementation time of 3 weeks or less achieved through agile activation methodology
- Roll-out out of MPOS onboarding in multiple countries, in multiple languages, quickly on one platform
- Near elimination of application errors achieved through real-time error checking and data validation
- Increase client application return rate to more than 98%
- Near elimination of all data entry through data reuse and external data capture and verification
- Reduction of total onboarding time from over a week to less than an hour
- Instant decisioning through automated underwriting
- Straight-through processing from merchant application, to underwriting, to acquirer
- Automated product selection and pricing, through client self-service portal
- Scalability of underwriting and sales departments through productivity increases greater than 40%
This decision criteria will help you weed out traditional BPM-oriented vendors who may have succeeded in major software implementations for some of these specific criteria, but will not be able to help your organization achieve an end-to-end digital transformation of the merchant boarding process.
Read the full whitepaper to guide your key technology considerations for improving merchant onboarding. The payments industry is too competitive to maintain resource-heavy paper-based processes. If you wait too long to go digital with your onboarding, you’ll be among the few who can’t onboard and underwrite a new merchant within a day.