Improving the merchant onboarding experience

We talk often about how we create a “seamless and frictionless” merchant onboarding experience. But what does seamless and frictionless really mean? First let’s take a look at the old way, which we can confidently say is far from frictionless.

Integrated Payments 1.0 (Legacy Processors & ISOs)

For decades, legacy processors and ISOs were seemingly the only option for setting up a merchant processing account. Under this model, each merchant must register directly with a processor/bank in order to be underwritten and approved for their own merchant account. The process is often manual and typically very drawn out taking a week or longer. Banks require a lot of information to make their underwriting decisions, with many detailed requests, fields, and supporting documents that your merchants might not readily know or have easily available.

What’s more, it’s also frequently a paper process, requiring merchants to sign documents and scan or fax them to the banks — yes, we said FAX. It can be multiple pages, with different addendums and forms that only add confusion. If you’ve ever worked with a bank, you know how cumbersome they can be, and how little they seem interested in streamlining anything to make it easier on their customers.

Once the paperwork is done, the manual process continues. Human beings (with a tendency towards human error) complete data entry and verifications as part of the underwriting process. This information may be reviewed by multiple underwriters, and can take days or weeks to complete — if nothing goes wrong. A single transposed number or typo in an address can slow the process down even further, leading to more faxes and emails back and forth. All of this to say it’s far from “seamless and frictionless.”

Integrated Payments 2.0 (Payment Facilitation or “PayFac”)

Contrast that to the PayFac approach that we use here at Tilled. The PayFac model was pioneered by a few companies you may have heard of, Stripe, Square and Braintree. Under this new model, the PayFac serves as the Master Merchant. That means that the bank doesn’t need to be involved in the initial underwriting process.

To become a PayFac, a company must go through a very long and arduous process (think years and millions of dollars) to prove to their sponsoring bank that they are capable of underwriting merchants, monitoring for fraud, and handling chargebacks when they come. Only then can they design their own process/technology to approve and underwrite sub-merchants below them.

This provides an opportunity for a “seamless and frictionless” merchant onboarding process by:

• limiting the amount of fields and information required from the merchant
• creating a “digital first” process with a modern UI and UX experience
• allowing all verifications and checks to be completed digitally — and instantly

No voided checks, no scanning and faxing, no manual data entry leading to typos and errors. To be approved your merchants just need to input a few pieces of easily available information and they’ll be accepting payments immediately.

Friction vs Frictionless Merchant Onboarding

For a software company in 2020, user experience is everything. Providing your customers with the modern user experience they’ve come to expect is likely a high priority for your business.

If signing up for your core software doesn’t require paper applications, scanning, and faxing, why should signing up for your integrated payment processing solution be any different?

Additionally, the integrated payments 1.0 model creates needless friction by requiring vastly more information than its 2.0 counterpart. With traditional merchant accounts, banks may ask for details on prior transaction history or copies of processing statements. Ask any merchant for the last three months of their processing statements, and watch their face. They don’t just have the statements lying around, creating needless phone calls, emails, and frustration to acquire them.

Every extra piece of information you ask for is one more chance they won’t follow through. If it’s painful to sign up for your payment processor, that means it’s painful to sign up for your software.

Tilled gives you the flexibility to get up and running quickly with our white label hosted onboarding tool. You can also fully customize the merchant onboarding experience leveraging our APIs. Our entire process was designed with simplicity in mind. With no physical paperwork, printing, or faxing required, your customers can be processing payments through your software in a matter of minutes.

Seamless and Frictionless Merchant Onboarding

As a modern software company, one of your goals from day one has been to make it easy for your customers to sign up for your service. With Tilled, it will seem as though you’ve brought the experience your customers are used to with Stripe, Square or Braintree in-house. Our software creates a seamless, instant merchant onboarding experience for your customers, making it even easier for your company to make sales and add value for your customers.

We understand this mission and we are here to do everything we can to help you achieve your goals. Isn’t it time to Get Tilled and learn what PayFac-as-a-Service can do for your business?