Merchant onboarding is one of the most important parts of the payments ecosystem, which is why we have laid out a typical merchant onboarding process flow chart for you to review.

This key process isn’t just a chance to make a good first impression with your merchants, it’s also crucial to compliance and risk management. Get it right, and you satisfy both merchants and regulators with a frictionless merchant experience and rigorous fraud protection. Get it wrong, and you’ll lose business, heighten your risk, and stall your company’s growth.

A good merchant experience relies on efficient and effective service right from the start. Your new merchants are eager to get going, knowing that every minute they wait is a minute that they’re losing business. Slowing them down with a time-consuming and overly complicated merchant onboarding process harms your reputation and costs you future clients. It’s a competitive and fast-paced market out there and merchants won’t wait around for you to catch up. They’ll go to your competitors who can offer the speedy service they need and expect.

So how can you ensure your merchant onboarding workflows keep pace with the market and merchant demand? To answer that, we share a bird’s eye view of the journey of an underwriter to merchant approvals with a typical merchant onboarding flow chart. Then, you’ll see how automation vastly improves the merchant underwriting process.

The first flow chart shows a typical onboarding and underwriting process that is heavily reliant on manual underwriting, drawn from feedback we’ve received from our clients. The second shows the same journey, but this time using Agreement Express’ automated underwriting platform for a lightning-fast underwriting approval process.

Your Existing Merchant Onboarding Process Flow Chart

When you’re getting your merchants from application to approval, ideally you want to accomplish that in as few steps as possible. The manual merchant process onboarding flow chart above has multiple stages, increasing the likelihood of bottlenecks and complexities. This causes costly delays for both merchants and Payment Service Providers (PSPs). Merchants lose business, PSPs lose merchants – all because the journey to approval is too slow.

Step 1: In the initial stages merchants are asked to provide sales agents with all their documentation. This information is then submitted to the underwriting department where it’s funnelled into the queue of applications awaiting attention. Depending on how long that queue is, merchants could be waiting days or even weeks for underwriters to get to their application.

Step 2: Underwriters review the merchant application to verify that all the required information is there. If it is, the application moves along the chain to compliance checks. If not, the underwriter requests more information from the merchant. Once all the data is there, underwriters thoroughly check merchants business information to assess their risk – performing web crawls, scanning OFAC watchlists, determining their fraud risk, aligning with current KYC/AML requirements, and more.

This stage is the most labor intensive part of the process, involving hours of effort and careful attention to detail. While their application is being checked and double-checked, merchants are anxiously waiting behind the scenes to get their green light and the PSP is losing potential revenue.

Step 3: When the results of all the compliance checks are compiled, underwriters must pour through the report to ensure everything’s in order. If something’s still awry, they will then trigger a more extensive manual review before making their final decision.

Step 4: After all that, the impatient merchant finally gets their answer – their application is either approved or terminated.

Fast And Frictionless Merchant Onboarding Flow Chart With Agreement Express

Below, you can see the merchant onboarding process flow chart when you use an automated underwriting solution.

When comparing the two systems side-by-side, the difference is immediately apparent. Automated merchant onboarding with Agreement Express software is significantly more streamlined, with less steps and expedited reviews.

When a new merchant application is submitted, the Agreement Express automated underwriting tool, Merchant ScanXpress, immediately gets to work reviewing the documentation.

If anything is missing, the software will instantly flag it so there’s no waiting in queues or back and forth between merchant, sales agent, and underwriters. If everything is there, the platform begins auto-decisioning.

Using more than 100 pre-built rules, the platform assesses each application’s risk, building an accurate risk profile within minutes. It integrates with a wide variety of identification verification and authentication tools, such as TINCheck, KYC SiteScan, and Experian to make compliance easy. Underwriters don’t have to bounce around between programs, they can direct the platform to perform all the checks they need, all from a single user-friendly interface and with lightning-fast results.

When the checks are completed successfully, so is the merchant’s approval application. Your merchant is now cleared for onboarding and ready to go.

Of course, not every application is smooth sailing. Auto-decisioning doesn’t mean taking chances – if the software finds any warning signs, suspicious activity, or potential problems, it will flag that application for manual review. This means it’s turned over to the underwriters for more scrutiny, going through expedited manual review before the final decision.

Optimizing The Merchant Onboarding Flow Chart

For most PSPs, the biggest obstacle to fast merchant onboarding is performing due diligence. Payments organizations need to know their merchants are trustworthy because taking on business inevitably means taking on risk. That risk comes in several forms. At the federal level, payment service providers must comply with strict AML/KYC requirements, which involves checking various Office of Foreign Assets Control (OFAC) watchlists to ensure their merchants haven’t been red-flagged or placed under sanctions.

Then there’s the risk of merchant fraud. Businesses aren’t always who they say they are and payfacs have to be sure their merchants aren’t dealing in illegal activities, or plotting other forms of merchant fraud. Financial crime is a growing problem and it is wise to be wary of suspicious merchants who could slip through the onboarding process only to cost them millions in fines or lost revenue down the road.

PSPs can’t afford to cut corners when it comes to compliance, but they also can’t afford to frustrate merchants. Thankfully automation has the answer.

In the world of digital payments, automation is a game-changer. As seen in the above flow chart, payment processing with automated onboarding can significantly speed up merchant approvals while still performing accurate and thorough compliance checks. Handing off previously manual tasks to digital tools also takes the burden off of underwriters, giving busy teams more time to focus on the applications that need their full attention rather than getting buried by those that don’t.

Faster Processing, Better Results – The Many Benefits Of Automated Onboarding With Agreement Express

As our merchant onboarding flow chart shows, compliance doesn’t have to be complicated. And you don’t have to sacrifice service to minimize your risk.

With Agreement Express, merchant approvals are effortless. The innovative system offers instant approvals, even for complex merchants, so there’s no pressure on your underwriters and no unnecessary roadblocks. Merchants will appreciate the timely service and hassle-free merchant experience while your underwriting team will see the benefit in delegating their routine tasks to a digital decision-maker.

The software’s risk scorecard strengthens risk management by allowing risk-bearing payments companies to set and customize their own rules. This gives them the ability to tweak their risk model as their business grows or moves into new industries. The added checks of the latest KYC regulations and requirements give payment service providers peace-of-mind that they’re not risking sanctions, fines or fraud by unwittingly onboarding high-risk merchants.

For many Agreement Express clients, one of the biggest benefits of automating their approvals and onboarding is the ability to scale. All too often, PSPs find themselves just getting by – relying on outdated processes that are adequate for now, but won’t stand up to increasing demand or industry innovation.

As risk-bearing payment organizations grow, they accumulate more risk across their expanding portfolio. That’s why it’s so crucial that they have tools that don’t just serve today’s merchants, but also tomorrow’s business. Even the best manual workflows can become strained trying to accommodate an influx of new clients. So, if it’s been a while since you upgraded your underwriting processes, you’re probably due a refresh.

Scaling up while maintaining consistency of service and rigorous compliance is almost impossible to achieve without some degree of automation. Taking advantage of these cutting-edge tools isn’t just a way to stay at the forefront of the market, it’s an investment in your company’s future. Talk to the Agreement Express team today to see how we can help, or schedule a demonstration to see our onboarding process in action.