Fast Forward: How the Fusion of Automation and Expertise is Revolutionising Merchant Onboarding

Ebooks , Education

The Future of KYB Compliance: Embracing automation and real-time insights

As the digital economy expands, electronic transactions are seeing remarkable growth. The 2023 McKinsey Global Payments Report[1] reveals that the increase in digital transactions over the past five years is nearly three times that of overall payments revenue. In this rapidly evolving landscape – continuously reshaped by disruptive technologies and new business models – it is crucial for e-commerce platforms and payment providers to ensure swift and seamless merchant onboarding.

When onboarding a new merchant, these companies must perform detailed checks to verify the merchant’s identity and the legitimacy of their business. This step is vital for spotting any potential financial or legal risks. However, the verification process must also be expedient to align with industry expectations for prompt service.

While specific merchant verification process steps can vary based on factors like jurisdiction, industry and business relationship, the overarching goals remain the same: to ensure compliance with regulations, mitigate the risk of fraudulent activities and establish a secure environment for financial transactions.

Common stumbling blocks in manual merchant verification

Traditionally, merchant verification has been a largely manual process, involving human experts who review documents, conduct background checks and make judgement calls based on their knowledge and experience. While this method allows for nuanced and expert decision-making, particularly in complex or non-standard cases, it has its limitations.

Here are some issues that cause friction in the manual merchant verification and onboarding process:

Onboarding delays

Manual approaches that rely on phone interactions, back-and-forth emails and human data processing can be incredibly time-consuming. This can cause extended delays before the merchant can commence trading, with a negative impact on the service provider’s reputation for efficiency and responsiveness.

A recent Mastercard survey [2] in the Asia-Pacific revealed that 30%-35% of merchants consider onboarding speed and simplicity to be critical factors in choosing a payment processing company. In a market where swift service is expected, prolonged or complex verification processes can frustrate merchants, compelling them to seek faster alternatives.

Risk of outdated information

Verification approaches that are too slow can also compromise the accuracy and reliability of the merchant data that is being collected. Information can quickly fall out of date, leading to inaccuracies that might have serious implications, including fraud risks and legal complications.

High cost of hiring and scaling expert teams

The reliance on human experts makes heavily manual processes more expensive, due to the costs associated with hiring, training and maintaining a skilled workforce. As the volume of merchant verifications increases, so does the need for additional staff, which may not be sustainable or economically viable, particularly for rapidly growing businesses.

Is technology the answer to these challenges?

Integrating technology such as AI and automation into merchant verification processes can address many of these issues.

By automating the most repetitive and labour-intensive tasks, businesses can optimise performance and resource allocation. AI enhances this by powering advanced data autofill capabilities, which automatically populate fields with verified information from trusted sources. This saves time for all parties involved, reduces the risk of human error and significantly speeds up the onboarding process.

Digital merchant verification solutions with direct links to government registries and other official sources allow for real-time data retrieval. This enhances the accuracy and reliability of merchant information used for verification and decision-making, greatly reducing risk.

Additionally, automated systems are capable of quickly scaling to handle increased volumes of merchant applications during peak periods or as the business grows. This adaptability is crucial for maintaining efficiency and responsiveness as market demands evolve.

The limitations of automated merchant verification

While automation and AI significantly enhance the efficiency of the merchant onboarding process, these technologies are not a universal remedy for every verification challenge.

One notable concern is the risk of becoming overly reliant on these technologies. Taking a complete ‘set and forget’ approach could lead to oversights in handling nuanced or complex cases. Automated systems may struggle with atypical cases or exceptions, where human judgement and expertise are crucial.

Additionally, the effectiveness of automated verification largely depends on the quality and accessibility of the data sources they use.

The value of including human expertise and oversight

Combining human expertise with automated processes can offer the best of both worlds. While automation speeds up the merchant verification process, by handling the bulk of data collection and initial verification, humans can step in to manage exceptions, provide nuanced judgement, and oversee the quality of data and the decision-making process. This hybrid approach ensures that the onboarding process is not only efficient but also adaptable and reliable, with humans and machines each playing to their strengths.

Bringing in a human element can, for example, be incredibly valuable in cases where documents may not be straightforward or where the context and subtleties of a merchant’s background need careful consideration.

How AsiaVerify finds the balance

As a leading RegTech solution provider, AsiaVerify is transforming merchant verification across the Asia-Pacific (APAC) region, delivering 100% live data in seconds through direct connections to government registries and official databases.

Our technology further enhances the merchant experience with instant auto-fill capabilities, as well as assistance throughout the full merchant verification process.
Through a dedicated API endpoint, our clients can access comprehensive data and insights to support their Know Your Business (KYB), Ultimate Beneficial Owner (UBO), Know Your Customer (KYC) and Anti-Money Laundering (AML) programmes.

With our unique access to authoritative data sources, our expert-driven solutions and our in-depth regional knowledge, AsiaVerify overcomes the limitations of both manual and automated verification methods, helping businesses verify and onboard merchants across APAC with speed and confidence.
The results speak for themselves. Our clients have reduced their merchant onboarding times by 95% and achieved as much as an 86% reduction in costs.

Discover how AsiaVerify can support your merchant verification needs here.

 

[1] https://www.mckinsey.com/industries/financial-services/our-insights/the-2023-mckinsey-global-payments-report

[2] https://www.mastercardservices.com/en/advisors/payments/insights/digital-merchant-onboarding

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