The Importance of Merchant Onboarding: Navigating Through the Process with Akurateco

by Andrew Riabchuk, Founder of Akurateco

Online payments are truly an integral part of every company’s lifecycle. Businesses of all sizes are actively embracing fintech solutions to provide their clients with seamless transactions and enhanced experiences. This is where merchant onboarding comes in handy, providing merchants with swift and safe payment operations.

While you may know the meaning of merchant onboarding, its efficiency can be significantly affected by various aspects. Next, Akurateco, a cutting-edge white-label payment software vendor, will guide you through merchant onboarding, how it works on real examples, what essential documents are needed for it, and which strategies facilitate this process.

The meaning and importance of merchant onboarding

The process applies to the payment processor or acquirer who confirms and registers a business to receive payments.

When businesses want to accept payments online, they collaborate with a payment processor. But for this, a company needs to perform a strict verification process to ensure its legitimacy and security standards alignment. As you can see, merchant onboarding means a systematic process that provides both the business and its customers with a smooth and secure payment experience.

The merchant onboarding process: steps to follow

Once a business decides to accept online payments, the merchant onboarding process begins and involves the following key stages:

Application submission

First of all, the merchant fills out an online application form with details about the business, its procedures, and its owners.

Verification and due diligence

After, payment processors verify the identity of the business owner and authorized representatives. The processor also estimates the potential risks considering such factors as industry, transaction volume, and fraud history. The business is then screened against regulatory requirements, including Know Your Customer (KYC), Know Your Business (KYB), and Anti-Money Laundering (AML) laws.

Technical integration

At this stage, the payment processor’s payment gateway is incorporated into the merchant’s website or point-of-sale system.

Security and compliance

If applicable, the merchant must adhere to Payment Card Industry Data Security Standards (PCI DSS) standards to protect cardholder valuable information.

Account activation

After all checks are cleared, the merchant account is activated, and the business can start accepting payments.

Essential documents for merchant onboarding

For the merchant onboarding, it’s crucial to have the following documentation ready:

• Business license – a legal document that proves the business’s registration.
• Tax Identification Number (TIN) – unique identifier for tax purposes.
• Bank account information – the details of the bank account about deposited funds.
• Proof of identity – government-issued identification documents of the business owners.
• Proof of address – utility bills or lease agreements verifying the business’s physical address.
• Financial statements – current financial records, such as bank statements or profit and loss statements.
• Ownership information – documents showing the ownership structure of the business.
• Payment processing history (optional) – previous processing statements, if applicable, especially when switching providers.
• Compliance certificates like PCI DSS, if required by the payment processor.

The role of compliance and fraud prevention in merchant onboarding

Another merchant onboarding goal is to maintain a secure and compliant payment ecosystem. For this, payment processors implement checks to prevent fraud and money laundering. In this case, two key compliance standards are particularly important:

Know Your Customer

KYC is a regulatory requirement that demands businesses verify the identity of their customers. This process helps prevent scheming activities.

How does KYC work in merchant onboarding?

1. Payment processors confirm the identity of the business owners or authorized representatives.
2. The processor assesses the risk associated with the customer, considering factors like their financial history and transaction patterns.
3. Payment processors continuously monitor customer activity to identify any suspicious behavior.

Know Your Business

KYB works similarly to KYC, but it focuses on verifying the identity and legitimacy of businesses, mitigating risks associated with scheming businesses.

How does KYB work in merchant onboarding?

1. Payment processors verify the legal presence of the business, its registration status, and its activities.
2. The ultimate owners of the business are then identified and verified.
3. The processor assesses the risk associated with the business (industry, transaction volume, and regulatory compliance).

Manual vs. automated merchant onboarding

Payment Service Providers (PSPs) and payment software providers typically regulate merchant onboarding in two ways:

Manual merchant onboarding

With manual onboarding, businesses must introduce required documents and information directly to their vendor’s account manager. While some vendors still utilize this technique, it often takes some time and is inconvenient for both parties. It also requires additional communication and effort, so large companies may experience delays due to heavy workloads.

Automated merchant onboarding

Automated onboarding streamlines the process. Businesses can complete the application form and submit necessary documents directly to the vendor’s system at their own pace. This approach aims to enable instant onboarding, allowing businesses to start accepting payments quickly without relying on vendor communication. Some payment software providers even grant merchants access to the admin panel during onboarding, enabling them to familiarize themselves with the system independently.

Merchant onboarding services and solutions

Merchant onboarding solutions and services vary from comprehensive software for Payment Service Providers (PSPs) to specialized tools aimed at automating specific parts of the onboarding process.
For businesses adopting a single-acquirer approach, payment gateway merchant onboarding is a typical choice. This simplifies the process by requiring interaction with only one PSP. However, it limits flexibility in choosing payment providers and can lead to potential processing delays or failures if the PSP encounters issues.

On the other hand, businesses striving for integration with multiple banks and PSPs can profit from comprehensive payment software like a payment orchestration platform. This solution eliminates the need to interact with each PSP’s onboarding system individually. Instead, businesses can onboard directly with the payment software vendor, accessing a wider range of payment options.

Seamless merchant onboarding with Akurateco: your quick start

Akurateco, a global white-label payment orchestrator with over 370 payment integrations, offers an efficient automated merchant onboarding process.

To get started, merchants are guided to an online admin panel where they can:
Provide essential information. This includes uploading necessary documents and filling out required fields.
Share bank account details to start accepting payments.

Seek support from a dedicated team that is available to assist merchants throughout the process.

After submitting the completed form, businesses undergo a qualification process. During the review, merchants can access the admin panel and try certain features of the software independently. Once approved, the business is ready to go live and start accepting payments.