Best Practices in Merchant Onboarding and Monitoring

Merchant onboarding is one of the most important procedures most firms can face. As a result, there are many risks that can arise from this practice. Responsible firms will have protocols and best practices in place to ensure that merchants can be onboarded and then monitored as easily and as safely as possible.

Create an automated and frictionless process

Making use of automation for the onboarding process can be incredibly smart, as it means that a frictionless process can be created. With many digital merchants springing up who need to be onboarded quickly in order to meet their tight deadlines and margins, automation is key for helping out.

A correctly constructed and completely frictionless process can work to reduce the time involved with merchant onboarding from potentially days to bring it down to just a few minutes. This is valuable time gained back, a factor that cannot be ignored. From the point of view of both the merchant and the firm, the onboarding process should be a speedy and manageable process.

However, within this, risk mitigation needs to be highlighted. Any merchant onboarding process needs to be monitored constantly to ensure that all applicants are processed correctly so there are no major negative impacts if something is mishandled.

Gather actionable data

Anyone who is engaging with merchant onboarding and monitoring needs to ensure that they have a good collection of data to fall back on. Different aspects of each merchant should be monitored to ensure that the firm has a rich an insight into the merchant and their business as possible.

Amongst best practices here can be the leverage of data regarding key insights into important metrics like account validation, email addresses, IP addresses, and more. Though acquiring this data can be easy enough to do, it is the process and utilisation of it that will truly help to create the network needed for adequate monitoring practices.

Leverage appropriate analytics

Firms should always be searching for new ways in which they can effectively analyse and leverage the data that they are presented with. When onboarding merchants and other partners, and then by monitoring their further practices, there are many interesting pieces of information that can be learned.

Too many firms can gather this data but do nothing with it. This means that it is left with little infrastructure, and it can be very difficult to manage if someone has to dive back in to discover something. It is vital that firms take the time to organise this data as they collect it so they can dive in and make use of it whenever possible. Many aspects of transaction monitoring and other similar practices require you to have a complete picture of the target’s financial identity both past and present. Ensure that this data and analytics is adequately arranged so that you can draw on this historic data more effectively.

Expand the risks the firm monitors

Though there is a level of risk involved with merchant onboarding, firms need to prepare to greatly expand the risks that they monitor so that they can offer comprehensive protection and support to all they work with.

A key example can be found in transaction monitoring. There are many firms that under-focus on this area, though there are others that hyperfocus on it too. Firms need to make sure that they are monitoring their merchants closely to watch for evidence of money laundering and other financial crimes. They can then investigate and take appropriate sanctions where needed if they find them.

Ensure a comprehensive approach

Onboarding merchants should not be a task that is set up once and then left without analysis or further monitoring. All firms should be proactive here to ensure that they are only working with merchants who are willing to be diligent and provide data and reports when asked.

A good firm should have an automated system in place that has a good level of control to spot issues with onboarding without overly reporting false positives. To achieve this, a firm will have to return to their controls time and time again to monitor them and ensure that they are set up to match current markets and risks.

With these best practices in place, firms will be able to deal with risks as they arise whilst offering the competitive advantage that could help them to grow and further their own businesses. Merchant onboarding is a vital part of the life cycle of this type of company’s relationships, and it must be handled correctly.

Do you need assistance in establishing best practices for the merchant onboarding and monitoring within your firm? The experts at 123 Signed are waiting to help. Contact us today to find out more about our tools and how we can help you safeguard this crucial area.