As competition for clients intensifies and margins grow increasingly thin, many independent sales organizations are seeking ways to reduce costs, increase efficiency and stand out from competitors. One method gaining consideration is the use of digital signatures and contracts.
With digital contracts, ISOs and agents can reduce how long it takes to process merchant applications, decrease the amount of paperwork required for new accounts and cut costs, observers say. The method a merchant follows to complete the digital application typically varies by vendor.
“I personally believe that a few years from now paper will be the exception in signing up merchants,” says Adam Atlas, a Montreal-based attorney with Adam Atlas Attorney at Law. “How we are going to get from where we are now to where I think we will be somewhere down the road is really the challenge” because of possible opportunities for fraud that may arise from using digital contracts, he says.
Merchant-service providers overall have been slow to adopt digital contracts because often ISOs and agents are too busy growing their own businesses with the tools they have to explore new technology, says Atlas.
Those companies that have embraced the technology typically find it increases the speed with which they process merchant applications.
“We automated the process of getting an application not only from the merchant but cleared through underwriting,” says Mike Cottrell, vice president of business development at TriSource Solutions LLC, a Bettendorf, Iowa-based merchant-processing provider and ISO.
Though some agents that work for TriSource prefer to have merchants fill out paper applications, others with laptops and wireless Internet connections send the application information to merchants immediately during a meeting and complete it with them digitally onsite, says Cottrell. “It’s where the future is heading,” he says.
ISOs benefit from using online merchant-account applications instead of the traditional paper-based process because it reduces not only the amount of time it takes to process a contract but also the potential for errors, note some observers.
The paper-based process typically involves a merchant receiving a paper contract, filling out the necessary information and faxing it to the ISO, says Tom Gonser, founder and vice president of product strategy for DocuSign Inc., a Seattle-based provider of electronic-signature services.
Mistakes can occur during the traditional process, says Gonser. “Maybe they filled out the wrong boxes. Maybe they missed filling out a page,” he says.
Some potential clients also may change their minds in the time between the handshake agreement with the agent and when the client receives the contract, says Gonser. A day or two often may pass between when the merchant receives the contract and when it signs it. “That’s typically with a lot of business transactions,” he says.
With DocuSign’s electronic process, the company sends an e-mail to new clients that informs them the sales agent with which they are doing business would like them to fill out and sign a document digitally, says Gonser. The client clicks on a link in the e-mail and is directed to a Web page that displays a graphic representation of the person’s signature but not an exact replication. The representation serves as a substitute for a physical signature that the client must accept as his or her digital signature, he says.
Once clients accept the digital signature, they can view their contracts on the computer screen, says Gonser. Tags indicate where the client needs to “sign,” and the client can leave a digital signature by clicking on the areas indicated by the tags. Once finished, the client can print out a copy of the contract for the company’s records, save it to a company computer or store the contract electronically with DocuSign, he says.