The pressure to be able to transact online was intense before COVID-19 hit. Now it’s irresistible. National and regional lockdowns and an enduring reluctance to venture out has pushed digital commerce well beyond the tipping point. The technology and operating models are there now to enable the largest to the smallest and most remote businesses to take payments online. Customers want it, businesses want it, and software providers want to be able to provide it. So why is onboarding to payments platforms such a pain and why does it take so long?
Let’s be clear: online merchants are not experts in payments. They are experts in flowers or healthcare, education or information – whatever the service or product they trade in. Nor, typically, are the software providers that build the online platforms and apps that businesses sell through.
The world of payments has a lexicon all of its own and runs via processes that are both invisible and, to be frank, of no interest to people outside the industry. Acquirers? Card Issuers? Merchant IDs? Merchants don’t know about all that, and they don’t want to know about it. They just want to trade. And software providers just want to help them, whether that’s through a website for a vintage record store, a contract management system or a digital accounting platform.
But, conventionally, it is precisely these multiple components of the payments system that present obstacles to businesses getting their online trading going easily.
First, you need the integration – building a payment acceptance model into an app or website. Then you need an acquirer – an institution that accepts and holds the payment for the merchant, such as Barclaycard or Worldpay. And which acquirer you choose is important because you want to ensure that your customers have the choice of payments options that suit them, and those options are changing all the time.
Typically, it takes 4-10 weeks, sometimes longer, for acquirers to accept a new merchant and give them a Merchant ID (MID), the unique code that travels with any payment information and ensures they money ends up in the right place. For acquirers, the focus is very much on safety and validation, not speed. There are a lot of forms to complete and, understandably, a lot of ‘Know Your Customer’ (KYC) checks to go through in order to establish the merchants’ bona fides and minimise the risk of fraud and money-laundering. Those are regulatory requirements so there’s no way around them, but for the merchant the delay can be excruciating.
But it’s not over when that MID finally does come through. In accepting a new merchant, acquirers often put severe restrictions on the relationship in order to protect themselves from risk. They may, and often do, retain a percentage of each transaction for a period – further adding to the pain of onboarding.
So, that’s the conventional way of doing things. But new models are emerging that aim to take some of that pain away and to dramatically accelerate the process.
One approach is for the software providers to shoulder the burden of onboarding themselves and establish acquirer relationships of their own through a new breed of payment provider known as a payment facilitator. These organisations have invested in technology to automate the onboarding and risk assessment processes, reducing them to minutes rather than weeks.
That’s how Pay360 Evolve works. Instead of the merchants going through a laborious onboarding process, Evolve works as a Payments Facilitator, sitting between the software provider and the rest of the payments infrastructure, and operating in effect as a proxy acquirer. Pay360 by Capita, with more than 20 years’ experience in the industry, has the acquirer relationships and the ability to provide merchants with access to multiple payment channels. Using Evolve, the software providers go through the integration process themselves, just once, and then they are ready to get their customers, the merchants, up and running in payments terms in a matter of hours. That’s one simple onboarding process opening up trading for as many customers as the software provider wants to support.
Onboarding no longer needs to be slow and painful if software providers take a new perspective and recognise that, by building payments into their own offerings, they can change the whole onboarding experience for their customers. By embracing the payment facilitator model, they can open up a whole new set of opportunities, both to deliver enhanced services and also to attract new revenues: turning pain into gain.