Merchant Onboarding: Securing Payment Service Providers

In the technology world, everything is becoming easy to use, from online shopping to using payment service gateways from third parties. Doing business is convenient and straightforward in this digital globe. The one process of this robust world is merchant onboarding from any place and offering services. The foundation of merchant onboarding is the process of streamlined customer compliance with regulations and using payment services. Moreover, adequate merchant onboarding ensures PSPs are starting business with a legal company. Additionally, customers can trust companies with compliance and secured financial traits. 

This article is an in-depth overview of the company and customizations in the merchant onboarding process to secure payment service providers

What is Merchant Onboarding?

Simply put, merchant onboarding is a process where the company partners with the business to forward their payment collection methods straight. This enhances the other business customers experience and assists them in secured payment methods. An adequate merchant onboarding method is needed to comply with law enforcement regulations and protect the companies’ reputations.

The highly regulated landscape of today’s companies demands that businesses comply with enhanced regulations, which can not be done without merchant onboarding. This ensures their customers’ data protection and secure transactions with guaranteed prevention from money laundering and terrorist financing. 

Key Role Holder in Merchant Onboarding 

To learn in-depth about merchant onboarding, companies have to ensure that they grasp essential points. Moreover, it is essential to understand the key roles holders in the merchant onboarding process and their importance during compliance with industry standards. All these essential parties work together to create a secure financial environment.

Merchants- These are companies that need payment service providers. They are the essential and primary partner during merchant onboarding. The main purpose of that merchant is to be legal and ensure the PSPs are starting a business and are legitimate. They establish a secure relationship with the companies, which can be online, retail, or in-store. 

Payment Service Providers (PSPs)- They are the other key partners of the business during the merchant onboarding. A digital platform offering financial transaction services to companies they must ensure the merchant they are onboarding is not involved in illicit activities and that the owner of the merchant is also legitimate. They also handle the technical issues of the payments, including authorizations, cross-checking, settlement, and store records. 

Payment Gateways- the apps and financial gateways that are created by merchants for a customer-friendly, user-friendly experience. These gateways can be the point of sale (POS), online store, and mobile app. They are responsible for securing the confidential information of customers including, cards, and personal information. 

Card Networks- Card networks such as Visa, Mastercard, American Express, etc., create their own policies to establish standards for card transactions according to the financial industry. They create a secure transaction method and handle business communication with merchants and banks. 

Adequate Measures During Merchant Onboarding 

For merchant onboarding, companies need to comply with various rigid regulations. Consequently, these obligations ensure PSPs onboard legal merchants and prevent money laundering and terrorist financing. Moreover, these steps depend on the company and the nature of the industry they are working in. Additionally, the merchant onboarding directive varies depending on the nature of the merchant industry and the country where they are registered. While the high-risk and low-risk approaches differ, the following measures are initially employed in every merchant onboarding:

Collecting information 

Payment service providers must gather the merchant’s required information. This information is essential to identifying the customer’s identity. It discloses that the company is legal and exists in the real world. It guarantees the PSPs that the merchant registered in a country with legal papers. 

Validate the Documents

After ensuring the merchant’s profile, the next step is to verify if the customer has submitted the original business records. This process involves verifying the company’s security features, including borders, signatures, fonts, and special features of the documents.

Validate the Data 

During merchant onboarding, businesses must validate the written data on paper by cross-referencing it with information from original store databases. Additionally, government and third-party registered databases secure the data of registered companies. This process ensures that the data matches the authentic information and prevents anyone from changing or counterfeiting it.

UBOs Verification 

Merchants have different owners, and the PSPs must verify the ultimate beneficial owners of the business before providing the services. This assists them in complying with international standards. They gather additional information about the UBOs of the online store or retail shop. They can collect records about previous transactions, names, addresses, and official government documents for verification.