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Digital payments are booming, with transaction values expected to reach $14 trillion by 2027 — yet clunky onboarding still kills 68% of merchant applications. Despite the surge in demand, outdated merchant onboarding processes continue to stand in the way. Worse? Misalignment between Sales, Compliance, and Operations bleeds revenue — delays stall deals, compliance bottlenecks sink conversions, and manual processes take 3–7x longer than automated ones. In the end, many merchant acquisition hurdles come down to onboarding, and despite the clear case for change, many businesses overlook where revenue leakage begins.
The truth is, inefficiencies in the B2B onboarding flow — often hidden in plain sight — can cause significant damage to the bottom line. Mastering the merchant onboarding process is essential for unlocking sustainable growth, creating a smoother, more rewarding experience for both customers and businesses.
If you’re wondering how much money your onboarding inefficiencies are costing you, our ROI Calculator can make the hidden losses visible.
Key Takeaways
- Manual workflows and disconnected systems are top merchant onboarding challenges that create friction in onboarding and delay the B2B onboarding flow.
- Poor sales and compliance alignment results in missed SLAs, slower approvals, and merchant onboarding experience breakdowns.
- Client onboarding issues like repetitive documentation requests frustrate merchants and lead to high drop-off rates during the merchant acquisition journey.
- Lack of cross-functional onboarding teams and clear onboarding best practices causes missed revenue opportunities and scaling limitations.
How Merchant Onboarding Challenges Lead to Lost Revenue
Merchant onboarding challenges such as delays, friction, or lack of clarity do not just create minor setbacks. For sales teams, they quietly derail otherwise qualified prospects, leaving hard-won deals stuck in limbo or gone altogether. It is a hidden leak in the funnel that drains revenue and undermines months of relationship-building. Every stalled application means missed quotas, shrinking pipelines, and frustrated reps who know the deal was theirs to win.
But when onboarding flows smoothly, sales gains more than efficiency. They gain predictable conversions, stronger momentum, and the confidence that every closed deal can actually cross the finish line.
When the Merchant Onboarding Process Blocks Growth
- High abandonment rates: Prospects are likely to abandon an onboarding flow that takes too long.
- Extended cycle times: Legacy onboarding often takes days. Traditional acquirers need on average 3–7 days to approve a merchant, whereas modern PayFacs complete onboarding in 5–15 minutes.
- Lost revenue: Poor onboarding leads to lost opportunities, while even small improvements can bring notable new revenue.
Common Merchant Onboarding Challenges and Bottlenecks
- Manual processes & paperwork: Many platforms still rely on paper forms, PDFs and email approvals. Without a unified portal, each step is disjointed and error-prone.
- Repetitive data requests: Filling out the same information twice (or more) frustrate merchants and erode trust. Complex forms and unclear instructions quickly become deal-breakers, turning qualified prospects into lost deals.
- Complex Compliance Checks: KYB and UBO vetting are mandatory but slow. Overzealous fraud filters also reject legitimate applicants, adding friction in onboarding and damaging the experience.
- Disconnected systems: Siloed teams create bottlenecks. A Mastercard study notes that lack of a digital front-end and multiple back-end handoffs dramatically slow onboarding.
Impact on Sales and Commissions
Every stalled or lost merchant application cuts directly into profit and commission. For example, if a typical contract is worth $100,000, even one lost deal represents a significant missed opportunity. Multiply that across a few deals each quarter, and the losses quickly snowball. Worse, stalled prospects rarely wait around. They often turn to competitors who offer a smoother onboarding process.
Tackling client onboarding issues head-on is one of the most effective ways to reduce friction in onboarding and free up sales teams to better navigate merchant acquisition. Even a modest improvement, like a 5% rise in completed applications, can translate into hundreds of thousands in additional bookings. By introducing onboarding best practices and strengthening sales and compliance alignment, businesses can improve efficiency across the board.
The Top 5 Merchant Onboarding Challenges (And How to Solve Them)
Merchant onboarding is a vital yet often challenging process for sales teams. Despite the rise of digital tools and automation, many businesses still struggle with the same obstacles that slow things down, ramp up operational costs, and frustrate both teams and merchants alike. Below, we’ll dive into the key hurdles sales teams face, explore the impact they have, and discuss ways to overcome them.
1. Incomplete or Delayed Documentation
The Issue: A major bottleneck in merchant onboarding is the submission of incomplete, outdated, or incorrectly formatted documents. Merchants often send essential files — such as business licences, IDs, or tax information — that don’t meet the required standards or have already expired. Some acquirers won’t accept documents older than six weeks, catching merchants off guard and stalling the process.
The Impact: This results in back-and-forth communication, wasted time, and growing frustration on both sides. Not only does it extend onboarding times, but it also exposes businesses to unnecessary risk. Traditional, paper-based, or multi-step onboarding processes make things worse by triggering duplicate document requests and further slowing progress.
The Solution: Reducing documentation delays starts with digitisation and smart validation. Recommended actions:
- Use smart forms with field-level validation
- Implement expiry and formatting checks with OCR
- Send automated alerts for missing/incomplete files
- Offer multilingual upload instructions and support
2. Manual Tasks Bottlenecks
The Issue: Merchant onboarding often involves a patchwork of manual tasks like document reviews and identity verification to data entry and internal handovers. These tasks pile up quickly, especially when dealing with varying regional requirements or multiple acquirers. Without automation, teams are forced to rely on time-consuming processes that lead to slow approvals and inconsistent experiences, particularly in high-volume or high-risk markets.
The Impact: Manual bottlenecks don't just slow things down — they create inefficiencies that cost time, money, and trust. Delays frustrate both merchants and sales teams, while errors caused by repetitive tasks or manual reviews increase the risk of lost opportunities. Start-ups and high-risk verticals are the most volatile, where slow onboarding can mean stalled growth, misrouted applications, or missed revenue. Over time, these inefficiencies pile up, leading to lost deals, lower commissions, and a weaker pipeline.
The Solution: Streamlining onboarding means removing manual touchpoints wherever possible. Recommended actions:
- Introduce task routing and workflows based on risk profile
- Apply dynamic, risk-based review tiers
- Localise onboarding flows with pre-built templates per region
- Centralise task monitoring to flag delays or rework early
3. Sales vs. Compliance Misalignment
The Issue: Sales teams are under pressure to onboard merchants quickly, while compliance teams focus on making sure every regulatory box is ticked. Without clear alignment on KPIs, SLAs, or workflows, expectations clash. Sales teams may promise speedy onboarding based on one acquirer’s process, only for compliance to flag late-stage issues that throw timelines off course.
The Impact: This misalignment leads to missed deadlines, regulatory setbacks, and added costs. Consent orders — which arise from regulatory breaches — can take years to resolve and cost businesses millions. Moreover, the strain between sales and compliance damages internal relationships, erodes merchant trust, and undermines long-term business outcomes. Sales and compliance alignment is key to easing these tensions.
The Solution: Mastercard emphasises the importance of decision engines that codify compliance policies into automated workflows. So, instead of working in parallel silos, sales and compliance collaborate within shared dashboards. These tools allow sales to see where a merchant is in the customer journey and avoid overpromising timelines, while compliance can flag high-risk accounts early before time is wasted. Recommended actions:
- Share a live onboarding status dashboard between teams
- Implement unified SLA metrics across departments
- Use rules-based decision engines to remove subjectivity
- Host regular syncs to review policy changes or issue patterns
4. Siloed Systems and Data Gaps
The Issue: When CRMs, onboarding portals, and compliance tools don’t integrate, teams are forced to re-enter data manually, leading to errors and inefficiencies. Without proper communication between systems, critical information can become fragmented or inaccessible, creating further delays in the process.
The Impact: Siloed systems can make onboarding more costly. Merchants often assume previously accepted documents are still valid, but without seamless internal communication, it’s easy for crucial data to be overlooked or missed. Additionally, missing information — like business plans or processing histories — can make risk assessments more difficult, particularly for start-ups. Optimising the onboarding workflow is essential for reducing these inefficiencies.
The Solution: To fix this, Mastercard recommends end-to-end onboarding solutions with API-based integrations. When integrated properly, onboarding platforms can auto-pull relevant data from external sources like business registries or past merchant records, cutting down the time spent gathering and verifying information. Recommended actions:
- Connect all tools via API or use a single onboarding platform
- Create a unified merchant profile to centralise data
- Integrate third-party data sources to pre-fill fields
- Track document and status history for full auditability
5. Poor Communication Hurts the Merchant Onboarding Experience
The Issue: Clear, consistent communication is a must, yet many merchants complain about slow responses, a lack of proactive updates, and repeated requests for the same documents. Merchants often feel ignored and left in the dark about the status of their application or what’s needed next. The silence creates stress and uncertainty, which is even more problematic in regions with language barriers, like APAC.
The Impact: This confusion sparks frustration, drives merchants to abandon applications, and increases support tickets. In high-risk sectors, sales teams often fear that pushing for changes could disrupt fragile relationships with payment providers. Poor communication slows the process, breaks trust, and turns qualified opportunities into lost deals.
The Solution: Fixing communication gaps starts with transparency and proactive engagement. Mastercard recommends using merchant portals where clients can track their onboarding status, view document checklists, and get real-time updates. Visa similarly emphasises setting clear expectations early in the process. Recommended actions:
- Offer a self-service merchant dashboard with live status updates
- Automate progress alerts and checklist reminders
- Provide onboarding timelines and guidance at the start
- Localise content and support for key regions
Acceleration Strategies: Improving the Onboarding Experience
Sales leaders can recapture leaks by pushing for digital-first onboarding. Key solutions include:
- Digital-First Workflows: Move to an end-to-end automated process. McKinsey reports that using digital ID and verification can cut onboarding costs by ~90%. In practice, businesses adopting AI-driven platforms compress merchant onboarding to just 5–15 minutes are able to slash per-merchant processing costs significantly.
- Real-Time Data & Autofill: Use smart forms connected to live data sources. Autofill pulls verified details (e.g., company name, address, ownership) directly into the application, speeding up completion and reducing errors that cause delays.
- Integrated Platforms: Use a unified system with open APIs. One API pulls data from multiple jurisdictions, syncing CRM, payment, and compliance workflows. Seamless integration ensures no prospect falls through the cracks.
- Continuous Monitoring and Metrics: Track key onboarding metrics (e.g., time-to-approval, abandonment rates) in real-time. Dashboards show pipeline leaks, so teams can act quickly and keep the process flowing smoothly.
By tackling these bottlenecks head-on, sales teams can protect their pipeline and revenue. A smooth onboarding process leads to fewer lost deals, quicker closures, and more accurate forecasts — all of which directly boost both team commissions and overall company growth.
Yet, achieving this level of efficiency isn't the responsibility of just one department. It requires collaboration across all teams, each playing its part in adopting onboarding best practices to ensure the process is as fluid and effective as possible. Cross-functional onboarding teams need to work together to achieve success and improve the merchant onboarding experience.
The Cost of Sales and Compliance Misalignment in Merchant Onboarding.
Delays in approval SLAs disrupt momentum, with merchants approved by sales but stuck in compliance limbo often abandoning the process. For compliance, rubber-stamping risky merchants to appease sales can lead to regulatory scrutiny. For the business, inefficient merchant onboarding raises customer acquisition costs (CAC) and lowers lifetime value due to preventable drop-offs.
To address these challenges, it’s crucial to unify systems to minimise manual handoffs, align KPIs like compliance speed alongside sales quotas, and automate checks such as real-time KYC via API. By addressing merchant onboarding challenges, businesses can streamline processes and enhance efficiency. Onboarding isn’t a “team sport” — it’s an orchestrated operation. The key to seamless scaling lies in how well these functions collaborate. Achieving sales and compliance alignment is essential, as when this orchestration falters, sales teams feel the impact first.
Turning Merchant Onboarding Challenges into Opportunities
Merchant onboarding doesn’t have to be a slow, frustrating process. By tackling these challenges head-on, sales teams can turn a cumbersome process into a competitive edge. Here are a few strategies:
- Streamline communication: Keep merchants informed with regular updates to prevent frustration and drop-offs.
- Automate processes: Automation reduces human error and accelerates document verification and compliance checks.
- Align teams: Establish clear workflows and shared KPIs between sales and compliance to bridge the gap between speed and thoroughness.
- Integrate systems: Connect CRMs, compliance tools, and onboarding portals to cut down on duplication and ensure consistent data.
By implementing these strategies, sales teams can reduce friction, improve efficiency, and foster stronger, more trusting relationships with merchants—ultimately improving their merchant acquisition efforts and achieving onboarding best practices.
Conclusion:
Merchant onboarding challenges can be overcome with the right approach, and a unified platform is key to achieving smooth, scalable, and compliant onboarding. By establishing strong SLAs and embracing onboarding best practices, businesses can ensure faster integrations and reduce friction in onboarding. The future of payments isn’t just about speed—it’s about creating a frictionless onboarding experience that drives market growth.
Digital-first businesses that adopt seamless, automated processes will be better positioned to capitalise on the $14 trillion digital payments boom. The real question isn’t whether to streamline, but how quickly you can act to stay ahead of the competition.
