Rapid Onboarding is Your Key Advantage Over Traditional Banks

Posted By: Nancy Licata (deleted) APP Monitor,

Advances in technology lead to increased expectations, especially when it comes to speed of communications and decisions. To be clear, merchants have never wanted to endure the long wait of a slow onboarding process. In the past they were often left with no choice, but today they do have choices. When it comes to increasing payment facilitator profit, rapid onboarding may be the greatest advantage you have over a traditional bank. Improving onboarding speed means you can also obtain a better underwriting ROI, but only if you have the right technology in place.

Rapid onboarding would be worthwhile if the only advantage were increasing payment facilitator profits. However, it also makes the process much easier for your merchants and your staff. The faster you can onboard merchants, the happier they’ll be with the process, and the faster you can start processing their payments and collecting revenue.

The availability of software solutions means that approving applications in real time is well on its way to becoming the price of entry for merchant acquirers. Your payment facilitator needs this capability to stay competitive.

Rapid onboarding increases payment facilitator profitability

Your speed of onboarding is essential to your profitability in the long term. Consistent growth requires that you increase your volume, and this shows the need for speed. You must onboard merchants at a faster rate than your competitors, while still staying within acceptable risk models. 

Traditionally, the merchant onboarding process takes about three weeks. That three-week period starts when the merchant signs the application and ends when the merchant is finally approved and ready to start collecting payments. Most of that period is devoted to the underwriting process, and any attempts to shorten the time results in only small decreases. There are only so many hours in the day.

Traditional “digital” onboarding channels can reduce the time spent waiting to somewhere between three and five days. This is no longer fast enough. Stripe and Square are out there boarding merchants in minutes. We want to ensure you’re capturing as much of the market as possible.

Automated underwriting is the solution to this challenge, greatly speeding up the examination of KYC, AML, and other data sources that indicate if the merchant is a good risk. Underwriting is extremely complicated, and you need to have complete confidence in the automation you put in place. When it’s configured correctly, automated underwriting improves the process by giving your underwriters more time to focus on the “grey area” merchants, the applicants who really need serious consideration.

As we mentioned above, speed of onboarding is the greatest potential advantage you have over the traditional banks. How can you fully realize this advantage and set your organization up for sustainable growth?  First, implement a digital application process, with all data being fed to a central dashboard. Second, evaluate the applications with a rules-based engine. Finally, use a configurable scorecard.


Start with speed: Digital merchant applications drive the process

The onboarding process requires a lot of data. This sometimes results in merchants submitting the same information over and over again, causing unnecessary friction for the merchant and inevitably leading to a higher abandonment rate. It also introduces inefficiencies into your process, as much of the information you’ve collected has no bearing on the final decision.

When implemented correctly, digital merchant applications eliminate the friction and redundancies. In addition to digitizing the application process, you must ensure that it is a minimum viable process. A minimum viable process only collects the information truly required to make a good decision, rather than just gathering as much information as possible and then forcing underwriters to sift through it.

Digital merchant applications also eliminate manual data entry and its attendance errors and inefficiencies. A centralized dashboard can provide you with more complete insight into all of your merchant applications and underwriting data. This approach to data and analysis allows you to see the entire process unfold in real time, giving you the power to calculate the true cost of onboarding new merchants. Using insights into how and which information is gathered, you can streamline your process even further.


Rules-based engine and scorecard configured to your risk profile

Digitizing the applications process will increase your onboarding speed, but it’s really underwriting that takes up the lion’s share of the time. The first step in accelerating the process is to use a rules-based engine to regulate how applications are processed. Quality engines can automate the most common checks and balances, including blacklists, verifying identification and addresses, credit analysis, and much more. A good engine will also quickly and efficiently sort merchant applications for further processing and can help identify the more obvious pass/fail decisions.

A risk scorecard configured to your business and risk profile can further improve the onboarding process. Not only does it automate the process for greater speed, but it can provide a much richer representation of each merchant’s profile. You should be able to set the weighting of factors to accurately represent your organization’s risk tolerance and the clients you’re seeking. 

You will want your risk scorecard to be configurable to account for practically anything, including average transaction size, sales channel, financial standing, and credit card processing volume. This level of automation gives your underwriter the ability to quickly approve or deny the vast majority of merchant applications in a much shorter time than they could previously. This leaves them with more time to perform in-depth examinations on the applications where it’s really required and deliver more accurate results.

About Agreement Express

Agreement Express is a leading provider of merchant onboarding software for payment facilitators. For more information on how Agreement Express can help you take your onboarding to the next level, please contact us here.


SPONSOR DISCLOSURE:  MAC is an independent, sponsor-supported membership organization. MAC has relationships with multiple card brands and industry vendors, but those relationships do not span the universe of possible solution providers within the industry. The article that appears in this blog post is from an organization from which MAC receives financial support.  This blog post does not represent an endorsement by MAC of a product or service.  Outside of defined sponsorship activities, MAC requests that content for our blog be educational in nature, but acknowledges that on occasion some educational content may also contain promotional material.