Merchant onboarding is more than just the initial step of integrating a new merchant into a payment gateway. It’s the foundation upon which successful business relationships are built.
Merchants choose payment gateways for the speed, reliability and security they deliver, aiming to provide customers with a seamless experience. The onboarding process should mirror these qualities, reflecting the high standards that merchants expect. Yet, inefficiencies during onboarding are costly: the global commercial and business banking market loses over $3 trillion annually[1] due to abandonment during onboarding.
These avoidable barriers not only waste marketing investment but also hinder growth, as valuable prospects disengage before even starting. A streamlined, secure onboarding experience reassures merchants, demonstrating that their time and trust are valued and that the partnership is built for the long term.
By eliminating friction and enhancing the onboarding process, businesses can improve conversion rates, transform sales and marketing investment into revenue, and set the stage for successful, enduring merchant relationships. In fact, 30% of merchants identify onboarding speed as the top factor when selecting a payment provider, with 24% influenced by recommendations from other businesses[2]. A fast, seamless onboarding experience not only increases sales but also generates positive word-of-mouth – a powerful asset for winning more business in the competitive payments industry.
Understanding merchant onboarding: Why compliance counts
Merchant onboarding is the process by which a payment gateway provider sets up a new merchant to start accepting online payments. A crucial – and often challenging – step in this process is verifying the merchant’s business and ensuring compliance with all relevant regulatory requirements designed to prevent fraud, money laundering and other financial crimes.
For payment gateways and other financial service providers, this involves completing Know Your Business (KYB) and Ultimate Beneficial Ownership (UBO) checks. These protocols confirm the legitimacy of each merchant and identify the individuals who ultimately own or control the business. This way, the organisation providing the payment gateway knows exactly who they’re dealing with, thereby mitigating risks and maintaining trust across financial systems.
How merchant onboarding impacts conversions rates and sales
A smooth, user-friendly onboarding process is essential for boosting conversion rates, allowing more merchants to complete registration and quickly start using the service, ultimately driving transaction volume and increasing sales.
Organisations invest heavily in marketing to attract new prospects, but these efforts can be wasted if onboarding is inefficient, causing prospects to drop off due to avoidable hurdles. Additionally, legitimate merchants may be mistakenly rejected due to data gaps in KYB and UBO checks, leading to missed opportunities.
To convert prospects into loyal, long-term merchants, organisations must ensure that their systems are set up for a quick, seamless onboarding experience. Best practices include keeping communication simple and clear, and requesting each piece of data only once. Repeated data requests are a major source of friction and frustration – an issue often associated with traditional banking onboarding processes that are slow and heavily paper-based. In one recent study[3], for example, 93% of respondents reported being asked by a bank for the same information multiple times, with 56% facing repeated requests for identical details on several occasions.
Technology’s role in onboarding: 5 key benefits
Advanced KYB and UBO technologies offer payment gateways a unique opportunity to streamline onboarding, making it faster, more efficient and user-friendly. Here’s how:
- Automated verification:
KYB and UBO platforms establish direct connections with company registries, using advanced algorithms and AI to eliminate manual steps and repeat requests for information, which slow down the approval process and frustrate merchants. - AI-driven compliance checks:
Artificial intelligence can quickly analyse data and documents to verify the legitimacy and legal standing of a business or the identity of a beneficial owner, reducing the burden on both the merchant and the platform. - Enhanced coverage:
Leading providers offer live data from company registries, ensuring full coverage of corporate entities within a region. This is particularly beneficial for onboarding sectors like startups, SMEs, and new businesses, often underrepresented in traditional databases, and for identifying Ultimate Beneficial Owners (UBOs). - Improved compliance:
Automated KYB and UBO solutions stay continuously updated with the latest regulatory requirements, helping organisations maintain AML compliance without extensive manual intervention. - Scalability:
As payment gateways expand their services or grow into new markets, KYB and UBO technologies can easily scale to support more merchants, enabling global growth while preserving quality and compliance – unlike traditional, labour-intensive methods.
KYB and UBO technology: Key considerations for a complex market like APAC
When choosing technology to power KYB and UBO protocols during merchant onboarding in a region as diverse and complex as the Asia-Pacific (APAC), here are some key features to consider:
- Catering to regional nuances and multiple languages
Look for software that effectively manages a variety of languages and alphabets. In APAC, where non-Roman scripts are common, merchant names, addresses and legal documents may require transliteration and translation. A robust KYB and UBO solution should be able to recognise, translate and process these unique scripts, offering reports in both local languages and English to remove barriers, save time and minimise data entry errors.
- Managing diverse data sources and structures
Each country has unique business registration and compliance standards, which means formats for business licences, tax IDs and other information can differ widely country-by-country. The software should seamlessly handle these variations to avoid putting unnecessary roadblocks in the onboarding journey. Systems capable of interfacing with diverse governmental and regulatory databases simplify this task by retrieving and verifying information from numerous sources, each with its own structure and access protocols. An adaptable solution should also be able to handle sensitive data in compliance with varying local data protection laws.
“The Asia Pacific region is continuing to innovate and embrace new digital technologies. As companies expand globally and plan their cross-border strategies, it will be essential they consider how to address the unique demands in this region. To cater to the growing demand for seamless cross-border transactions, companies will need to prioritize customer data security, AI and machine learning for efficiency, and understand localization requirements. Compliance with evolving regulations is also crucial to establish a successful payment strategy in the region.” – Jayanthi Sivasankar, Vice President, Asia Pacific International Markets, Mastercard
Benefits of choosing a well-suited merchant verification solution
By choosing a merchant verification solution tailored to their market, equipped with essential features and advanced tech capabilities, payment gateway providers can unlock a range of powerful benefits. Here’s what a well-suited solution can offer:
- More satisfied merchants:
A seamless onboarding experience creates a positive first impression, building trust in the payment gateway or platform. By reducing unnecessary steps and simplifying the process, merchants feel valued and confident that they’re working with a provider that understands their needs.
- Accelerated time to market:
An efficient onboarding process enables merchants to get up and running faster, minimising delays and allowing them to start selling their products or services sooner. This speed to market serves as a critical differentiator for payment gateway providers, helping them, in turn, to attract more merchants and drive transaction volume.
- Long-term engagement:
Satisfied merchants are more likely to remain loyal to the payment gateway, contributing to a stable and thriving merchant ecosystem.
Next steps
We encourage you to take a close look at your current merchant onboarding processes. Are there opportunities where technology could improve efficiency and reduce friction? If you’re ready to refine your merchant onboarding strategy and unlock greater sales potential, reach out to us for expert consultation and tailored solutions.
AsiaVerify specialises in best-in-class merchant verification technology and services for the Asia-Pacific region, designed to accelerate digital onboarding and deliver significant advantages to payment gateway providers and other payment services companies looking to build a competitive edge in this high-growth region.
Email us at [email protected] to learn more.
[1] https://asiaverify.com/merchant-onboarding-how-to-increase-conversions-with-a-digital-first-approach/
[2] https://www.mastercardservices.com/en/advisors/payments-consulting/insights/digital-merchant-onboarding
[3] https://www.retailbankerinternational.com/news/87-percent-of-corporate-treasurers-abandon-banking-applications/?cf-view
