By Tom Byrnes, SVP, Marketing, PayiQ

After a sale is closed, the key to success is quickly assessing and onboarding the new merchant and processing them. Initiating processing is the lifeblood of every payments business, but what should be a routine, standardized process is frequently anything but smooth with most traditional processors.

Application Headaches

The first onboarding step is usually the merchant application. Since merchant sophistication varies widely, it’s all too common to receive applications that are missing basic fields like a routing number, Federal ID tax number, or even the right Social Security number. This requires you to have someone call the merchant back and track down the missing information so the application can be submitted.

Underwriting Complexities

Underwriters want bank statements, creating yet another “ask” to the merchant. But this is also far from a standard set of requirements. Some may want one to two months of statements, while others want to see a far greater set of documentation, such as three or more bank statements plus a copy of the merchant’s business license.

While it takes time for an ISO to develop a solid understanding of each underwriter’s requirements, it’s natural for the merchant to view the whole process as disruptive and painful.

Risk Assessment Problems

Next, you have to assess your merchant while maintaining balance across a spectrum of risk factors. Each processing bank has a different risk appetite, so ISOs must carefully assess a new merchant’s profile before submitting an account.

Some processors may be concerned with direct financial risk while others may be more focused on the long-term impact of reputational risk. Financial risk can cover everything from merchants who offer “future sales” like timeshare deals, drop shipments that are fulfilled later, annual memberships that auto-renew, or multi-level marketing programs. Reputational risk categories include adult, cannabis, vape-based products, some gun sales, and any drug that is not FDA-approved.

Although those lines are clear, payments resellers often find that they must still do extra due diligence on a day-to-day basis to protect themselves.

No matter how you break it out, risk assessment is both a key to a payments reseller’s success and a major operational burden. But what if there was another way of approaching this challenge?

Cloud-Enabled Automated Onboarding and Risk Assessment

Cloud architecture has been around for at least 20 years and has virtually redefined most technology sectors over the course of the last decade. Unfortunately, payment processing and many of the day-to-day operations of an ISO have been stubborn holdouts during this change.

Cloud-enabled processing changes the entire game by enabling the rapid deployment of automation across back-office processing tasks. Now you can instantly assess risk scores by SIC code upon submission—streamlining the underwriting process and allowing accounts to begin processing immediately.

The cloud standardizes operational processes like risk assessment, merchant applications, and underwriting. This makes it easy to apply machine learning tools to automate these processes completely. It’s an approach that’s designed to use the latest in technology to streamline the operational heart of every payment reseller’s business, allowing a renewed focus on what matters most: eliminating the bottlenecks that delay revenue recognition.