Merchant onboarding is the process of getting a freshly recruited merchant both approved and set up for payment processing with an acquiring bank. The merchant onboarding process happens both on the ISO and processor sides and sees the merchant go through initial submission, underwriting, eventual approval or denial, and the granting of a merchant account. 

As the ISO, your role in the merchant onboarding process depends on how much responsibility you’ve agreed to take on with each of your processing partners. For most ISOs, the onboarding process consists of accepting a filled-out merchant processing agreement (MPA) from a newly signed merchant, entering the data from the MPA into a payment processor’s merchant onboarding portal, and then waiting to hear back after the processor performs their underwriting process. If everything was done right, an acceptance comes back, and the merchant can begin taking payments. If there was information missing, the processor might request an update. If there is too much information missing or the merchant represents too much risk, a denial is likely, in which case the process has to be started from scratch with a new payment processor. 

If you’re a wholesale ISO, you’re responsible for some or all of the underwriting process. Underwriting is a risk assessment process that ensures a new merchant is worth working with and isn’t likely to cause any major problems down the road. It’s a multistep process that requires identity verification, background checks, business model analysis, and more. Underwriting can be an involved and difficult process that takes substantial time and resources, but it has to be done right to curb the potential costs associated with fraudulent or financially unstable merchants. Once the underwriting process is complete, the application is sent on to the payment processor through their merchant onboarding portal so an approve or deny decision can be made. 


Three Tips for Better Merchant Onboarding

The merchant onboarding process is incredibly important, but unfortunately, there are also some significant flaws built into it that can trip up your boarding team, waste your time, and even cost you money. The following are three tips to help you navigate those potential pitfalls and make your merchant onboarding process as frictionless and successful as possible. 


Tip 1: Make Merchant Onboarding Faster and Easier for the Merchant with Comprehensive Digital MPAs

The merchant is the primary focus for your ISO because the merchant’s success determines your residuals. Merchants have a lot of options in payment processing, including both the other ISOs you compete with and third-party processors like PayPal and Square. To ensure you can recruit the best merchants and that their experience as your partner is positive from day one, it’s important to make the merchant-side of the boarding process — the merchant processing agreement — as easy as possible. One of the best ways you can do that is by adopting digital MPAs, which replace paper forms with PDFs and allow documents to be legally signed using e-signature technology like Adobe Sign.

Digital MPAs offer a number of significant benefits over paper applications. First and foremost, they save time. There is no need to worry about printing, scanning, or storing paper. Merchants can be emailed their relevant documents, fill them out on their computers, and send them back with zero fuss. Digital MPAs also ensure that the information the merchant puts down is always completely legible — a big bonus if your ISO manually transfers data from applications to merchant onboarding portals that ultimately saves the merchant time by minimizing delays and update requests. 


Tip 2: Utilize Third-Party Underwriting Tools to Ensure Consistency in Merchant Onboarding

The underwriting process is the primary way wholesale ISOs and payment processors protect themselves from fraud and merchant bankruptcies — both of which can cause your ISO significant losses if you end up liable for refunding customers for unhonored or fraudulent sales. Unfortunately, manual underwriting is an extremely thorough process that takes a significant amount of time, focus, and research. Unsurprisingly, one of the biggest problems plaguing manual underwriting is inconsistency, driven by human underwriters looking to save time by taking shortcuts. 

Luckily, third-party tools exist that can perform a thorough, consistent underwriting process on each and every merchant. Third-party tools like Conformance Technologies Precomm Toolkit can put each new merchant onboarding application through 70 or more checks covering all the most important areas of due diligence, ensuring nothing is ever missed and returning results to a human decision-maker in a matter of minutes or even seconds. Utilizing third-party underwriting tools adds the consistency that is necessary to ensure no problematic merchants slip through the cracks while freeing up the enormous amount of resources the manual underwriting process typically consumes. 


Tip 3: Automate the Merchant Underwriting Process to Save Time and Increase Accuracy

One of the biggest problems with traditional merchant onboarding — even for retail ISOs with a minimal role in the overall process — is the need to manually transfer the information from merchant processing applications into the payment processors’ boarding portals. First, manual data transfer is a slow, cumbersome process, and it can take 30 minutes or more for even an experienced employee to complete merchant onboarding when handling the process traditionally. Manual data transfer is also extremely error-prone, as are all human processes, and typos have the potential to result in delays, denials, or costly errors when dealing with fee rate entry. 

To avoid wasted time and costly mistakes, your ISO should consider automating the entire process by adopting a tool like IRIS CRM’s TurboApp. TurboApp takes in a merchant’s digital MPA, configures itself based on the processor being applied to, and then automatically transfers the data from the MPA into each relevant field. The entire process takes seconds, and all the employee handling the application has to do is read over the fields in TurboApp to ensure accuracy, adjust the merchant’s rates if necessary, and submit. The system can also be configured to trigger automated underwriting through the PreComm Toolkit. 

With TurboApp, the entire merchant onboarding process can be completed accurately in as little as five minutes, even for inexperienced employees. The time and resources saved enable your ISO to increase your merchant onboarding capacity and reduce the size of your dedicated boarding staff so time and money can be redirected towards other revenue-generating activities. 


To see TurboApp in action or to find out more about how IRIS CRM can improve your ISO’s merchant onboarding process, schedule your free guided demonstration of IRIS CRM today.