Merchant Onboarding in India: A Simple Guide

MErchant Onboarding in india a simple guide

Merchant Onboarding in India: A Simple Guide

Many new businesses are rising and joining other businesses to increase their profit. The payments industry is also a growing business. The payments industry adopts efficient merchant onboarding practices to carefully onboard new merchants. It identifies good and bad merchants and quickly accepts only good ones in its system.

Onboarding is essential for any merchant acquirer and payment service provider. It allows you to get more secure transaction options, resulting in huge profits and growth for your business. Merchant onboarding practices also alert the company of fraudulent transactions.

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Merchant Onboarding Overview

Merchant Onboarding in India is a process that involves a payment industry that onboards a merchant or a vendor to their platform. In simple words, merchant onboarding is an activity through which new vendors or merchants are added to a specific payment gateway system. It verifies your business and helps you create an electronic profile for your business, including all essential details.

Merchant onboarding is significant as it helps payment service providers to detect fraud and ensure their reputation. Many PSPs organizations verify the business’s identity. This onboarding process must collect information about a new merchant using in-depth and accurate risk assessment to ensure seamless practices.

Many merchants who run online gaming or gambling platforms have a higher risk of being a fraud and have a criminal background. Checking the complete details about the merchants and their business requires more time and is tiresome. The PSPs must finish merchant onboarding quickly, so they don’t lose potential merchants. 

Merchant Onboarding Practices

Many payment service providers have automated onboarding processes, saving more time and money for both merchants and PSPs. Automation also enables seamless integration between the onboarding steps. Some merchant onboarding practices include:

● Merchant KYC Process

Performing a KYC procedure on the merchant ensures that the business exists and is currently operational. It also ensures that the account submission is authorized. This process involves the merchant providing a background verification, which may take some time to process.

However, speed up the KYC process thanks to the latest technology and advancements in digitization and automation. You can submit all the required documents for verification online instead of submitting their physical form. Automating the KYC process also saves manual work as most PSPs have API-based integrations that help merchants save time by directly submitting their applications to the PSP online platform.

● Prescreening

When a merchant applies for merchant onboarding, the acquirer conducts a pre-screening process. It is a quick process that ensures that merchants have everything in order. It helps PSP to detect and eliminate obvious fraudsters and scammers.

This process is the common first stage that many PSPs conduct. This process allows merchant and onboarding partners to get in touch and start the process from here.

● Business and Operational Model Analysis

The Merchant Onboarding Partner determines the level of risk when onboarding a merchant and performs the business and operational model analysis. It provides a simplified, transparent, and common view of any business. PSP uses this method to create strategies to effectively identify the type of organization. However, this practice is only done for high-risk merchants to avoid any.

● Web Content Analysis

This practice is another onboarding process that an onboarding partner conduct is web content analysis. During this process, the PSP looks at all the online content from their merchant website. They check their posts, videos, pages, and more to determine their online presence, weakness, strengths, and status. The onboarding partner team looks for the language used within a post and article.

● Merchant History Check

The onboarding partner closely examines the track record of your business and checks your personal credit history. This process involves the evaluation of an account of a merchant’s business. It ensures that the merchant has no red flags in their financial history and checks whether the business owner is a reliable borrower. Merchants must submit all their certifications and legal documentation to conduct their business to their onboarding partner.

● Credit Risk Underwriting

It is a process by which a lender checks an applicant’s creditworthiness. This process involves verifying the applicant’s assets, income, property details, and debt for approving a loan from a bank or lender. Credit risk underwriting helps in the merchant onboarding process as it allows PSP to decide whether an applicant is a trustworthy merchant or not.

● Information Security Compliance

A minimum set of the latest network security requirements ensures all transactions go smoothly. It is a part of the operational phase and protects the confidential data of the merchant. For example, if you are taking payments via the contactless method, your business will need information security compliance to secure the details of your customers. Once this practice is installed in your onboarding process, you can start accepting transactions via various contactless payment options from your customers. It will attract more customers to your business and increase your revenue.

Benefits of Merchant Onboarding in India

Here are the benefits of the Merchant Onboarding process in India:

What is Merchant Acquiring Business Products

Merchant-acquiring services are integral to the digital ecosystem that PSP provides to merchants. Some merchant-acquiring business products include BHIM Aadhaar Pay, Point of Sale, BHIM QR Code, and Internet Payment Gateway. These products allow you to accept payment from your customer much more quickly.

Merchant Risk Management

The Merchant Onboarding Partner uses appropriate countermeasures to determine the correct onboarding friction. Some companies like foreign exchange, online brokers, and gaming companies have a high risk of being a fraud or involved in money laundering.

The level of risk differs from merchant to merchant, and they must undergo different levels of due diligence checks. However, all merchants must undergo the standard verification set by the card network. Some standard verification includes KYC, KYCC, credit underwriting, and AML.

Merchant Monitoring

The onboarding partner also monitors their new merchant to ensure that they don’t change the nature of their business. The merchants must re-evaluate for risk if PSP experiences a sudden change in transaction amounts. Some merchant monitoring practices include spikes in activities, exceeding thresholds, Changes on the website like changes in links or products, and wrong media mentions.

Conclusion

Merchant onboarding plays a critical role in contributing to one’s revenue. You can also benefit from merchant onboarding practices. Start with submitting the merchant processing application (MPA). You can fill out this application online as it is much easier and faster than filling out the paper. The application contains all the information about the documents needed for the merchant acquiring services. Generally, the processing partner asks about these details, including banking, business, ownership, and more.

MIMOIQ has been providing excellent and fast merchant onboarding services to all types of businesses and helping them improve their online reputation and presence and attract more customers.

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Best Practices for Managing and Improving Merchant Onboarding

Merchant Onboarding

Best Practices for Managing and Improving Merchant Onboarding

The recent global health crisis has had an influence on a wide range of industries and geographies, not least the payments industry, which has seen an unprecedented transformation. Consumer purchasing habits have evolved to online shopping for products and services, resulting in the requirement for faster onboarding and better continuing merchant monitoring to reduce fraud and compliance risk for merchant acquirers. 

When it comes to onboarding new merchants, automation is critical in order to make a smooth transition from the previous time-consuming approach to a slicker, faster process that reduces friction for the new merchant. But what steps should merchant acquirers take to guarantee that they are prepared to meet this new challenge of changing the customer experience while limiting risk? 

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Automation of underwriting processes

It is critical for acquirers to provide a smooth merchant onboarding experience for their customers. With the epidemic hastening the general public’s shift to a more online approach, new smaller digital-only merchants are popping up all the time, with low margins and a need to be up and running quickly; for them, a swift onboarding procedure is vital. 

Before an underwriting decision can be made, the normal merchant onboarding process comprises a number of phases that must be completed, as shown in the creative below. This is typically a 3–5-day process. This process is too protracted, as previously said, given the current climate and the unique terrain of online-only micro-merchants. 

Digital automation can shorten the time it takes to underwrite a new merchant from days to minutes. However, if not done appropriately, this speed in decision-making can come at the expense of risk management and have a detrimental influence on the acquirer’s profitability. 

Collecting data that is both actionable and objective

Effective onboarding decisioning requires access to meaningful and objective data. To enrich their perspective of each applicant, merchant acquirers should use a combination of their own data, third-party data, and assessment services. The best strategy is to combine application data with external data from a growing industry of data suppliers who can provide essential insight and assessment on topics like bank account validation, email addresses, IP addresses, device IDs, and negative hotlists. Internal data from various sources is ingested, which eliminates human data entry and reduces judgmental underwriting decisioning while also ensuring consistency. 

Using analytics and algorithms

Acquirers should not only have precise and objective data, but they should also be able to analyze it using analytic models and procedures. The tools should allow the acquirer to import models, scorecards, trees, and tables, and they should be completely user-configurable. Acquirers frequently have historical data about applicants in addition to external data, but it is inaccessible owing to the sprawl of data. Rather than going through the pain of trying to centralize all referential data in a single data store, design a solution that allows you to take data from multiple sources and retrieve it when you need it. 

Effective risk management, tracking, and learning rates

Risk management should not be the primary consideration for merchant acquirers and their merchant customers during the onboarding process. Merchant acquirers’ portfolios have become riskier as a result of increased digitization and demand for innovative payment options. As new entities pop up and enter the system at breakneck speed, the barrier to entry into the digital/ecommerce economy has increased. Validating these new entities necessitates the use of more robust systems that can make use of both internal and external data. 

Acquirers should improve their ability to manage fraud and compliance risk by evaluating possible collusive or fraud-targeted merchant behavior, the chance of merchant attrition or insolvency, and current and prospective merchant profitability. 

There is an increasing requirement for merchant monitoring in real-time in order to spot aberrant merchant behavior in time to prevent losses. We also find a lot of value in linking pre-book (onboarding) performance/results with post-book (monitoring) outcomes in order to establish a faster learning loop and enhance both areas. In reality, many acquirers are looking to meet both of these demands with a single platform/capability to improve insight sharing. 

Ensuring that merchant monitoring methods are comprehensive

Risk management is a continuous necessity that does not end after a merchant is onboarded. The world of business moves quickly, and many businesses, particularly smaller, more flexible ones, must pivot or alter their course quickly to stay competitive. Their consumer profile may alter as a result of these developments. As a business grows, a merchant may need to expand into new markets or adjust the way they accept payments to accommodate a greater range of card types and payment methods. As a result, their risk profile may shift, leaving your company vulnerable.

Identifying potential changes in a merchant’s sales operations that could influence their risk criteria requires some type of ongoing monitoring. Keeping note of indicators such as surges in sales activity, surpassing payment thresholds, out-of-area or strange sales activities, and altering website products or connections can provide you with an up-to-date image of each merchant you work with and show any potential red flags. Keeping a lookout for their presence on punishment lists, as well as any unfavorable or adverse media coverage, will be essential.  

An effective merchant monitoring approach will be automated, leverage cutting-edge analytics, real-time urgency and flexible data ingestion, and be able to proactively alert acquirers to potential risks and double as a competitive advantage for attracting new merchants to their network. 

Technology that is 'plug and play'

It’s critical to get your relationship with your new merchant off to the greatest possible start. A quick and flawless automated sign-up procedure can help attract and secure new merchants to your payments firm, but if things go wrong once they’ve signed on the dotted line, all your efforts could be for naught. A key component of the merchant onboarding process is a faster merchant setup. It enables merchants to swiftly deploy the equipment and technology they require to accept payments right now. As a result, this step should be as simple and straightforward as signing up.

Your new merchant will be a happy customer if everything is ready to ‘plug and play’ right out of the box. If it’s difficult to set up and get ready to use, they’ll toss it in the back of the drawer before it’s even used – and your brand’s reputation suffers as a result. As a result, make sure that all of the software, training materials, and other information that the merchant will need to get up and running is preloaded or supplied with the device, so that your new customer has everything they need right away. 

Quicker go-live

Because of the ecommerce boom, the introduction of smart technology, and the pervasiveness of social media, today’s consumers demand fast access. This puts pressure on merchants and brands to be available to their customers 24 hours a day, seven days a week, which necessitates collaboration with service providers that can assist them in achieving this high level of service. Merchants, like customers, don’t want to wait weeks for a new potential payment provider to process their manual (or even paper) application. They expect to be up and running in a matter of minutes. Why not a merchant account if they can obtain this level of service with a commercial banking account?

To learn more about our advanced merchant onboarding solutions. 

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