Skip to content

Are You Losing at Merchant Acquisition and Onboarding?


May 23, 2021 | Jonathan Pryer

We say this a lot: If you can’t onboard your merchants in a few minutes, one of your competitors probably can.

When it comes to onboarding, software providers were some of the biggest disruptors in this space, both regarding boarding time frame, with companies like Square and PayPal hitting 5 minute onboarding times while traditional acquirers took 3-5 days — and also boarding cost per merchant. That same survey found that a lot of companies can’t even be sure of their merchant onboarding cost due to lack of analytics capabilities. Ouch.

The cost advantage largely comes from automated processes, which companies like Square do very well. To set up Square, for example, you rarely need to talk to a human being; a small business owner can just do it and begin taking payments. (There is a counter-argument that some merchants using Square want more customized options and don’t always like the automated nature of the onboarding process, but increasing success activity in the space seems to validate its popularity.)

Non-traditional acquirers typically automate onboarding, underwriting, service requests, and fulfillment. This level of automation contributes to the reputation they’ve gained being quick and simple. It’s worth it to note that traditional acquirers will usually have adjudication upfront in their boarding process which can extend the onboarding timeframe; many of these digital upstarts don’t do adjudication until merchants process a certain volume.

Companies with high growth models often need these time and cost advantages, so increasingly they need to navigate off legacy systems for merchant onboarding. Such was the case with Klarna, a European-based (but international business) invoice-based payments for online merchants company with 45 million users.

Klarna needed to off-board a legacy system for a faster, rules-based system allowing for real-time credit risk analytics. Because of their growth model, they not only needed something flexible — but they needed something that would integrate with pre-existing systems and processes for more comprehensive rates of adoption.

Merchant onboarding tools are ultimately designed to simplify KYC, AML, and other onboarding processes. The goal is three-fold:

  • Quicker onboarding
  • Higher compliance
  • Lower cost

At that three-way intersection, the solution needs to be flexible enough to fit fast-growing businesses. Automated workflow and standardization helps here, as does easily-configured adapters to simplify integration.

One of the goals with successful onboarding should always be business-level control and agility. Simply put, you can create and test a series of rules quickly within the platform (or do the same with processes), and experiment with what works before you deem one of them final. User experience and integrations can also be manipulated. The goal is for you to be in control of your business and data, which is often the opposite feeling in working with more legacy merchant onboarding systems.

Merchant onboarding has become a big topic of late — most recently making headlines with food delivery startup Mercato — an NYC startup that has nailed merchant onboarding with their grocers, allowing some smaller chains to compete with Amazon. (Disrupting the ultimate disrupter.) It’s important to get merchant onboarding right, because minutes vs. days for a merchant can reflect tons of lost revenue for them (and ultimately you).