Approval Automation as a Tool for Merchant-Acquiring Business Growth


October 22, 2019

PAC-MAN™ was never a very realistic game. He would eat and eat and eat but never get any bigger.

The Merchant Acquiring game is very much like a realistic version of PAC-MAN™. If Acquirers and ISOs don’t acquire merchants, they’ll be eaten. But make no mistake, the ones who do the most acquiring are getting bigger and bigger, and the pace is only quickening. Take, for example, merchant acquiring giants Global Payments and Total System Services. Global Payments announced in May of 2019 that they would be purchasing their smaller competitor Total System Services. Gobble gobble.

If Global Payments is considered the top of the market, then Square is the bottom of the market, accepting razor-thin margins to serve the underserved micro-merchant market. While they’ve been dismissed by Merchant Acquirers who believe they are in an entirely different market, Square recently released 2019 Q2 results, detailing a 44% increase in sales volume over the previous year, amounting to $1.17 billion in revenue. That aggressive growth means they are slowly but surely eating the market from the bottom up.

With the Global Payments of the world eating the market from the top down, and the Squares of the world eating the market from the bottom up, the rest of the Merchant Acquirers are left with one choice: figure out how to onboard more merchants than their nearest competitor to stay alive.

Why approval process?

How do most Merchant Acquirers approach growth strategy? They hire more salespeople, introduce a new product, and hire more back office staff to support growth. Then they realize they can’t afford to sustain that level of growth forever, and back off.

I’m going to suggest a different approach: start with the merchant approval process. More specifically, start by implementing an onboarding automation platform.

Merchant acquirers need to grow and need to scale. Here are 5 reasons why approval automation software is the silver bullet for growth.

1) It allows you to scale

Whether you realize it or not, the approval process is the single biggest bottleneck in your sales process. Hiring more underwriters and administrative staff to process additional merchant applications is not sustainable.

Your organization may be able to increase revenue with sales and product initiatives, but you will constantly struggle to keep costs down without removing the bottleneck of approvals.

2) It can double your sales output

If your sales team had the capability to approve a merchant on the spot, from a mobile device, would they sell more? The answer is yes, they probably would.

If your sales team had to deal with 95% less administration, waiting, and back office phone calls, and if merchant defection in the approval process was slashed in half, would they sell more? They definitely would.

And yes, this type of approvals is a reality for some acquirers.

3) It optimizes underwriting

In your underwriting process, if you don’t have a scientific understanding of who exactly has passed, who has failed and who has passed on for further inspection, you are leaving money on the table.

Let’s say your underwriting team has a clear Statement of Intent (which is more than most underwriting teams have). Do you have insight into what percentage of applications fall within your target range? If the percentage is suspiciously high, your sales team isn’t being aggressive enough. If the percentage is too low, either your sales team is targeting the wrong demographic, or underwriting is using too many (overlapping) scoring factors, causing the merchant risk score to be artificially high.

None of this is the fault of the underwriting team or the sales team, but rather of the approval system itself. Arming your underwriting team with good data and pre-defined data sources will make a world of difference in making sure the right merchants get passed, and the right merchants get failed.

4) It increases merchant referrals

When something is very good, people tell each other about it. This is the secret of hole-in-the-wall restaurants that locals love.

In the merchant world, very little matters with the exceptions of how easy you made it for them and, of course, cost. This has been the story of Square for many merchants. They were able to create an account on their iPad in a matter of minutes and text their friends to tell them about it.

You probably can’t compete with Square’s prices, but you can easily recreate a similar approval experience with an onboarding automation platform.

Create a fast, intuitive, digital approval experience for merchants (without compromising underwriting standards), and the referrals will start to come in. It’s inevitable.

5) Merchant expectations are high

You may not see Square as the competition—in truth, they aren’t a direct competitor to every merchant acquirer. But they are an indirect competitor. They have fundamentally changed merchant expectations as to how fast, convenient, and digital the merchant approval process can be.

When a more established acquirer tries to sell them on an approval process that will take days, not minutes or hours, their main reference point is Square. “My friend got signed up with Square in one day. Why can’t I do that with you?” There is no real, satisfactory answer to that question since merchants don’t care about the inner workings of compliance or legacy systems.

Today, a fast, digital approval process is table stakes for a merchant acquirer.


Approval automation isn’t just a nice-to-have in a PAC-MAN™, fintech world. It is the silver bullet for growth in merchant acquiring organizations. Approval automation is step one in a long journey of becoming a more efficient business, scaling up, and serving customers with a fast, intuitive, digital experience that meets them where they are.

Competition is fierce, margins are getting compressed, merchant expectations are high, and the available technology is too good not to automate the merchant approval process with approval automation software.