If an independent sales organization wants to convert a merchant to the most current faster payment technologies, the ISO itself must practice what it preaches.
The onboarding process can set a bad tone for the relationship if it is too bogged down with paperwork. Automated onboarding systems can ease that burden while also demonstrating firsthand the value of a faster system.
"The irony of it is, if you are an ISO telling a merchant how to automate his business, and you show up with 30 pages of paper forms, that's really an inconsistent play on the presentation," said Brian Riley, principal executive advisor with CEB TowerGroup. "And that definitely goes on out there."
But ISOs have been stuck in a manual process for a long time, essentially because of their traditional role in the payments ecosystem, Riley said.
"One of the purposes of having an ISO is for the bank to get feet on the street and process a lot of small deals," Riley added. "So you see it a lot when they are approaching small merchants, that they deal with pages and pages of paper applications."
Linked2pay, an Oxnard, Calif.-based company, is taking aim at this problem through its Bank Centric Payments offering, which provides a digital dashboard for applications, with specific fields tied in with data analysis for quick validation and links to future payment services, said Richard McShirley, chief marketing officer for Oxnard, Calif.-based linked2pay.
Recent research has demonstrated a direct connection between customer onboarding and the ability for providers to cross-sell, retain and engage those customers in payments.
"Days go by with the approval process when using paper applications because the bank's underwriters have to validate everything on that application," McShirley said. "With digital onboarding, when the data is entered, like a Social Security number, it is being cross-checked and confirmed at that time."
When the applicant checks a box on the digital form to approve a credit check, the bank will receive the application in a dashboard with a credit score already attached, allowing the bank to immediately categorize what type of merchant account – corporate or sole proprietor — is being set up, McShirley added. "We use the same Big Data analysis engines that serve the financial industry," he said.
After the merchant account has been approved, the digital application is essentially attached to any other payment services the merchant wants to deploy. It makes the process much smoother for the merchant to move right into card payment acceptance, Automated Clearing House payments or remote deposit capture.
Various other providers have moved to a faster digital onboarding, with Square being a prime example.
But many of those companies thrive on easier card payment acceptance. Linked2pay is also banking on same-day ACH making its debut soon, as well as other bank technology features it can offer that would be attached to the merchant account application.
"With same-day ACH on the horizon, ISOs like the idea of adding that to their current services," McShirley said. "So many are having to bring in third parties that are not part of the card world and then write up a second contract, probably a paper contract, with someone else's brand and logo on it."
ISOs also can bring their own merchant accounts to deliver through linked2pay's process, allowing them to more quickly offer the newest payment technologies, McShirley said.
Banks are readily latching on to streamlined onboarding to help ease delays in the complex process of Know Your Customer and various other regulatory compliances. Increasingly, banks point to those delays as a source in slowing revenue, and diminishing client satisfaction and retention.
Software provider Pegasystems Inc. today introduced the Pega Client Lifecycle Management application to streamline and automate client onboarding on a global scale.
In the same manner as the linked2pay system, the Pega CLM provides an application dashboard for relationship managers and clients to complete the process and communicate across any channel or device.
The major difference is that linked2pay is concentrating on the ISO industry serving merchant accounts, and automatically attaching payments services to the process.
But any electronic onboarding process carries a security aspect that paper applications are missing.
"If you hand over a paper form to the underwriter, it's like saying good luck figuring out if everything in there is accurate," McShirley said. "When you fill out a data-rich electronic dashboard for onboarding, it inspects everything that was put in."