One of the main challenges faced by payments companies when signing up new merchants is their reluctance to switch to, or get started with, a new service provider. There are several reasons for this. Many merchants are afraid of downtime and concerned that if they switch, they will risk not being able to take payments. Others may be worried that if the process breaks down, they will lose service continuity.
And for some, it’s simply because they don’t understand how the sign-up process works and how easy it can be. Over the past decade, technology has transformed the way merchants access payment processing services. The boom in ecommerce, the growing influence of social media and the rapid growth of online payment platforms have given rise to a consumer culture where buyers want instant access, 24/7, to products and services from their favourite brands.
Because of this change in demand, merchants are under more pressure than ever to provide a slick and seamless purchasing experience to their customers. This, in turn, means acquirers, independent sales organisations (ISOs), independent software vendors, and payment facilitators (PayFacs) are also under pressure to enhance the speed and ease of their onboarding experience, to help them attract and sign-up more merchants and benefit from the raid growth in card payment volumes.
It can be doubly hard to convince merchants to switch if they have been scarred from a slow and overburdensome onboarding process in the past. This means the merchant either sticks with what they already have and usually end up paying higher fees than they need to as a result. It needn’t be like that.
Datam has revolutionised the onboarding process, making signing up new merchants a faster and smoother experience. The problem is, many acquirers, ISOs, ISVs and PayFacs still don’t realise the potential benefits this can bring. While they’re aware that the process should be more integrated, the cost of building, or buying a solution is too great, while the hassle of integration to systems either too costly and risky, or they lack the focus and expertise to join up the large number of services needed to provide an excellent experience to merchants. Here, we take a closer look at what merchant onboarding is and how it can help your payments business provide the best possible service to the merchants you work with.
So, what is Merchant Onboarding?
As its name suggests, merchant onboarding is the process that connects a merchant (a business or individual that wants to take payments) to a payment processor. Traditionally, acquiring banks representing card providers were responsible for the entire onboarding process. But, as the payment services industry evolved and grew, it became unviable for acquirers to sell to and onboard every single merchant they underwrite themselves.
This presented opportunities for intermediaries – such as ISOs, ISVs and PayFacs – to create easier ways for merchants to accept electronic payments, and for acquirers to recruit and underwrite vast numbers of merchants via ISO, ISV or PayFac platforms. In its simplest form, the onboarding process involves the merchant submitting information about its business – often via the intermediary – to the acquirer to review and decide if it’s happy to underwrite the risk. If the acquirer approves the application, it will issue and merchant ID, which must then be configured with its preferred terminal provider, payment gateway, logistics provider and even a hardware finance company.
Only then can the intermediary provide the merchant with all the hardware and technology they need to start taking payments, whether at a brick-and-mortar business or online. Traditional merchant onboarding is a time-consuming process that involves manual (and even paper) processes and typically results in a long wait for underwriting approval. However, acquirers still need to perform rigorous verification procedures to meet their regulatory and risk requirements requiring a significant amount of information from merchants.
Intermediaries are increasingly carrying out more of the data collection and verification checks on behalf of the acquirer and even taking on more of the risk. The more risk the intermediary is willing to take responsibility for, the greater share of residual revenue from the merchant’s transactions they can generate. So, it’s in the intermediaries’ interest to offer a slick and seamless onboarding experience to potential customers, which helps ensure compliance and improve efficiency.
Datam’s innovative use of technology makes that possible. It enables payment providers to streamline the entire merchant journey from initial enquiry to onboarding its automated processes and APIs to eliminate the manual procedures involved in the traditional process. As a result, merchants can be registered quickly, accurately and above all safely by the most relevant member of the distribution channel or value chain. Datam’s platform is at the forefront of this shift in the market. Our revolutionary approach to merchant journey management simplifies the entire process to help our customers and partners overcome their sales and onboarding process inefficiencies – while ensuring compliance and keeping their businesses safe from regulatory sanctions and substantial fines.
We’re on a mission to transform the world of merchant onboarding by providing an innovative platform that enables our customers to increase sales, improve efficiency, ensure compliance and enhance productivity whilst eliminating the risk of human error along the way. If you’d like to know more about Datam and how we can help you and your business, get in touch with us today.