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Secure payment processing is crucial in an emerging digital world. Merchant onboarding is an integral part of payment processing for businesses using digital payment methods. This process efficiently streamlines the payment process.

Merchant onboarding integrates a business with a payment service provider (PSP), keeping transactions safe. It minimizes the risk of fraud, delayed transactions, and non-compliance penalties. Corporations need to plan and implement the business onboarding process to avoid potential risks and threats.

What Is Merchant Onboarding?

Merchant onboarding is the signing of a new business for a payment platform. The approach behind this process is operational efficiency in the industry and risk management. An onboarding process with an improper plan causes delays in transactions, fraud, and other financial crimes in the future. This ultimately hits back at the business's credibility, and it may face hefty fines.

In today's competitive market, a well-executed payment land space is required to build transparent business-to-business (B2B) financial relations. This enables the safe and timely acceptance and processing of electronic payments.

What Documents Are Required For Due Diligence During Onboarding The Merchant?

There are documents and materials that businesses need to ensure before onboarding a merchant. Gathering this information smooths the payment process and reduces the chance of potential risks. The required list of documents and materials are following:

  • Business registration to verify the business's legal existence, including the articles of incorporation, certificates of formation, and other relevant documents.
  • Tax identification numbers
  • Ultimate beneficial owner (UBO) details include documents pertinent to directors, beneficiaries, and shareholders, for example, passports, IDs, or driving licenses.
  • Financial statements such as cash flow statements and income statements for in-depth analysis.
  • Bank account information includes bank name, address, account number, and routing number.
  • Business licenses, permits, and certification in the relevant industry.
  • Information about the business' online store, website, mobile, and description of the products and services.
  • Statements of the payment processing history, chargeback rates, and other relevant data.
  • Evaluation of the intended nature of business, previous projects, and future plans.

What Are The Benefits Of KYB During Merchant Onboarding Solutions?

In recent years, the onboarding of merchants needs to be more safe and secure. KYB procedures offer verified onboarding of the companies to become partners. The benefits of KYB during merchant onboarding are as follows:

Risk Management

While onboarding the merchant, knowing your business helps identify potential risks. It involves the investigations of the merchant transaction sizes and intervals. The volume of transactions for the network and the merchant is estimated. Identifying the merchanting operating sector, industry, and region is quite important.

Furthermore, high-risk sectors include online brokers and foreign exchange. These sectors have high love transactions and are more exposed to financial crimes. Investigating them through merchant onboarding checklists, including AML and CTF regulations, is necessary. This investigation helps in executing appropriate mitigation strategies to combat such risks.

Regular Monitoring

Constant monitoring is an integral part of KYB while onboarding the merchant. Since the ultimate beneficial owner (UBO) status can change after onboarding, there is a continuous need to check the ownership structure. This monitoring also includes the financial and legal status of the business.

Also, adverse media screening helps by checking the news archives, social media posts, or any other information about the business against the databases. By doing so, potential risks are identified, which prevents financial loss.

Counter Money Laundering And Terrorist Financing

Money laundering and terrorist financing are critical threats to corporations. During merchant onboarding, it is necessary to ensure that companies comply with AML and CTF regulations. This will lead to secure transaction methods and keep risks away.

Final Thoughts

Corporations need KYB procedures during merchant onboarding to ensure financial security. AML and CTF compliance ensure healthy financial relations, which ultimately results in high credibility in the market. A business can get all the benefits mentioned above through KYB verification during merchant onboarding. The detailed investigation of merchants before onboarding and ongoing due diligence after onboarding give businesses peace of mind.

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