What is the current SaaS landscape?

In today’s digital era, the Software as a Service (SaaS) market is continually evolving and expanding, positioning itself at the forefront of technological transformation. SaaS solutions have reshaped the way businesses operate by enhancing flexibility and scalability across industries. The SaaS market has been propelled by benefits such as reduced costs, streamlined operations, increased accessibility, and has penetrated virtually every business sector, from startups to multinational corporations. The robust demand for SaaS solutions is being driven by their ability to increase productivity and foster innovation. 

Amidst an increasingly digital global economy, this dynamic landscape is expected to continue its growth trajectory, further emphasizing the revenue opportunity SaaS companies have by expanding their software offering through technology advancements. In order for payment providers to keep up with the SaaS evolution, a streamlined merchant onboarding experience into your payment integration is essential for new user adoption and usage.

What is merchant onboarding?

Merchant onboarding is a crucial process that allows businesses to accept payments, particularly credit card transactions, from their customers. It involves a series of steps designed to ensure that the merchant is legitimate, compliant with necessary regulations, and poses an acceptable level of risk.

What does the merchant onboarding process involve?

There are traditionally several steps within the merchant onboarding process including:

1. Pre-screening: This initial step involves collecting basic information about the merchant to assess the potential risk.

2. Identity Verification/Know Your Customer (KYC): The merchant provides proof of identity and address to comply with anti-fraud and anti-money laundering regulations.

3. Merchant History Check: The payment processor reviews the merchant’s credit history and business track record to ensure reliability.

4. Business and Operational Model Analysis: For high-risk merchants, a detailed review of the business and operational model is conducted.

5. Web Content Analysis: If applicable, the merchant’s online presence is analyzed for legitimacy and compliance with relevant regulations.

6. Information Security Compliance: The merchant must demonstrate adherence to information security regulations, such as the PCI DSS.

7. Credit Risk Underwriting: The final step involves assessing the financial risk associated with the merchant based on various factors, leading to approval if the risk is deemed low.

Where does automated payments onboarding come into play?

Automated payments onboarding refers to the utilization of technology to streamline and expedite the process of integrating a new client into a payment system or service. This process involves gathering necessary information through hosted application pages, performing background checks, setting up payment gateways, and ensuring regulatory compliance, all in an automated fashion.

In a traditional or manual setup, payments onboarding can be labor-intensive, time-consuming, and prone to human errors. It might involve extensive paperwork, negotiation, manual data entry, and a long waiting period for approval and setup.

The core advantage of automated payments onboarding is the significantly improved efficiency and speed it offers. It reduces friction in the onboarding process, providing a smooth, seamless experience for both the service provider and the client. This improvement can be particularly beneficial for SaaS platforms, where user experience, rapid service delivery, and operational efficiency are crucial for success.

At the heart of this relationship SaaS platforms aim to provide seamless, convenient, and efficient services to their customers. To fulfill this, SaaS platforms often include built-in payment functionalities, which need to be set up and activated for each customer. This is where automated payments onboarding comes into play.

Furthermore, since the onboarding process is automated and can include logic to ensure users are entering valid data points, it minimizes the risk of human error and ensures higher accuracy and compliance with financial regulations. This can enhance the reliability and trustworthiness of the SaaS platform, while increasing the adoption and usage of your platform’s payment integration.

8 key benefits of automated payments onboarding.

While keeping up with the trends in tech feels somewhat obligatory, automated payments onboarding offers your business and users a range of real mutual benefits that can help take your software to the next level.

1. Increased Adoption & Usage: Automated onboarding creates a faster and frictionless experience when new users sign up for your software. Increasing the speed at which payments are adopted and used.

2. Faster Verification & Approval: With far less need for  human interaction and rate negotiation, the painful process of signing up for payments is reduced. This means applications are getting completed faster and merchants are approved quicker. 

3. Enhanced User Experience: First impressions are everything. With a seamless and straightforward onboarding process, customer satisfaction can be increased. A seamless transition into using the service ensures that users are less likely to encounter issues, leading to a lower churn rate and higher customer retention.

4. Streamlining Compliance: In the world of payments, compliance is key. With automatic onboarding, it’s much easier to help customers meet the necessary compliance standards, reducing the risk of fines or legal issues.

5. Scalability: Manually handling the payment onboarding of a large number of customers is impractical and inefficient. An automated system allows the platform to easily scale up without requiring additional resources.

6. Reduced Costs: By automating the onboarding process, a SaaS company can greatly reduce the costs associated with manual labor. The time saved can be redirected towards more important tasks, further improving productivity.

7. Simple Integration: Automated payment systems can be easily integrated with other platforms, systems and new products, making it possible to implement a more comprehensive service to your customers.

8. Flexible & Reliable: Automated systems can operate 24/7 without breaks and allow the user to sign up at their own pace, making them more flexible and reliable than manual processes.

Overcoming Challenges When Implementing Automated Payments Onboarding

Challenge 1: While automated payments onboarding provides significant benefits, it can also present potential challenges. One of the primary concerns is the reliability of the automation process itself. 

Solution 1: It is crucial to perform regular audits and tests to identify and correct any errors in the automation process while working with a partner that also takes a proactive approach. This helps to maintain the integrity of user data and ensures the system complies with all necessary regulations.

Challenge 2: Additionally, there’s the risk associated with cyber threats. While automation solutions typically come with high security standards, they still can be targeted by hackers. 

Solution 2: To mitigate cybersecurity risks, investing in robust security measures, such as advanced encryption methods, two-factor authentication, and regular system updates, is essential.

These challenges and solutions are the reasons to be closely evaluating and understanding a potential payment partner’s systems and support structure is crucial. At Clearent by Xplor, we provide transparency, support, and education to ensure that your needs are met and the solution works for you and your users.

Wrapping it up.

The merchant onboarding process is a vital aspect of any business that aims to accept payments. The steps involved, from pre-screening to credit risk underwriting, ensure that the merchant is legitimate, compliant, and poses an acceptable level of risk. However, the traditional process can be time-consuming and prone to errors.

This is where the power of automated payments onboarding comes into play. It offers a streamlined, efficient process that not only enhances the merchant’s experience but also improves operational efficiency for the software provider. It’s a win-win situation for both parties involved.

In the SaaS landscape, where user experience and rapid service delivery are paramount, automated payments onboarding can be a game-changer. It can significantly enhance the user experience, foster stronger customer relationships, and ultimately drive business growth.

In the end, the goal is to provide a seamless, convenient, and efficient service to your customers. And with automated payments onboarding, you’re one step closer to achieving that goal.

Want to learn more about the importance of leveraging an Automated Onboarding Solution?

Watch the recording of our latest webinar“Why Automated Payments Onboarding Matters”.

Article by Clearent by Xplor

First published: May 26 2023

Last updated: March 15 2024