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For payment providers , merchant onboarding is a critical revenue driver, yet it's often hampered by universal pain points. The root cause of slow or failed onboarding is rarely a single technical issue. Instead, it’s typically caused by organisational silos and a fragmented technology infrastructure.
When teams operate in isolation, they rely on disconnected systems, painfully stitched together with the digital equivalent of sticky tape and string: email threads and shared spreadsheets. The result is a poor merchant experience. Applicants are bounced between departments, asked to re-enter the same details, and left waiting for weeks. This frustration directly fuels merchant abandonment.
The cost is staggering. Operationally, it means higher overhead and bloated staffing. As Daniel Sheahan, CEO of MVSI notes, “The biggest challenge is cost investment. In people, processes, and technologies. This investment is a delicate balance; under-resourcing leads to failure at scale and brand damage, while over-investment wastes precious capital.”
Strategically, it creates dangerous compliance gaps. But most critically, it drives a haemorrhaging stream of merchant abandonment. Fragmented systems are universally recognised as one of the biggest barriers to agility and scalability.
You can patch this with point solutions, but that won't fix the architecture. If you want to scale sustainably, you need to start by investing in a unified platform; modern merchant onboarding, designed for an automated onboarding process.
Key Takeaways
Sustainable scaling requires a foundational shift in strategy, technology, and culture. Success hinges on executing these three pillars in concert:
- Eliminate merchant friction: Dismantle organisational silos and radically realign incentives around the merchant journey, prioritising instant onboarding over internal productivity metrics.
- A seamless credit risk engine: Adopt a product-centric, modular platform where new and unforeseen merchant types are enabled through configuration, not custom code.
- Modern AML compliance tools: Embed policy as code into a centralised control plane, allowing you to share data transparently where the law permits, and protect it automatically where it doesn't.
What is the True Cost of Scaling Your Merchant Onboarding Process?
Arriving at scale isn’t just a technical challenge; it's fundamentally a financial one. The decision of how much to invest in people, processes, and technology is a critical calculation that can make or break a payment provider's growth ambitions.
The high cost of under-investment in merchant onboarding:
- The Strategy: Many organisations intentionally under-invest in their digital onboarding solutions, viewing it as the safer financial path.
- The Risk: This becomes a critical vulnerability during periods of rapid growth or major product launches, creating gaps in your merchant onboarding processes.
This leads directly to failure at scale and brand damage, as Sheahan warns, citing a client example: “Their old merchant onboarding process fell flat on its face and they had a lot of disgruntled customers. They eventually got through them, but I’m sure they lost a tonne of them along the way.” The cost of under-investment is ultimately measured in abandoned merchants, lost revenue, and long-term reputational harm.
The burden of over-investment
- The Problem: Investing too much in the wrong areas means a significant waste of money and resources in your merchant onboarding process.
- The Cause: Pouring capital into fragmented solutions, whether through extra headcount to manage manual processes or point solutions that create new problems such as data silos.
This leads to bloated operational overhead, without achieving scalability. A miscalculation of capital strains the bottom line and inhibits the agility needed to compete, locking payment providers into inefficient cost structures that are difficult to unwind. The path to scalable merchant onboarding requires navigating this investment paradox. Sustainable growth isn’t found in either extreme but through strategic investment in a unified foundation that optimises both cost and performance from day one.
How to Build a Frictionless and Automated Merchant Onboarding Process
The core failure lies in siloed process design. Data collected by one team becomes another’s manual input, creating significant merchant friction. Critical intelligence slips through the cracks, causing blind compliance spots even the best AML compliance tools can’t fix. What outwardly looks like a process of managed handoffs and approvals is actually an assembly line of friction points that systematically slow time-to-revenue, inflate error rates, and degrade the merchant experience, ultimately leading to higher merchant attrition.
This siloed approach is a direct result of each business unit requiring its own tools, processes and people, inevitably designing for disconnection rather than a unified customer journey. These inefficiencies hit the bottom line, whether through the cost of additional resources or lost revenues from abandoned merchant applications.
The secret to robust compliance and risk management is “automation, automation, and automation”. Manual, case-by-case onboarding cannot keep pace with today’s volumes or regulatory complexity. Automated merchant onboarding transforms compliance from a bottleneck into a growth enabler, allowing acquirers to process thousands of applications at speed without sacrificing accuracy or regulatory rigour.
How organisational silos increase merchant attrition and compliance risk
This isn’t a talent problem; it’s an architectural one within the merchant onboarding process. Institutions are pouring ever more resources into their defence, investing heavily in AML compliance tools. UK spending on financial crime compliance hit a monumental £38.3 billion in 2023, yet outcomes fail to improve proportionally. This misdirected investment means that legitimate, low-risk merchants who clearly meet policy are subjected to excessive paperwork and frustrating delays in their merchant applications, while the sophisticated, high-risk actors slip through unchecked.
These gaps create a toxic cycle. Compliance teams are blamed as barriers to growth, morale drops, and sales teams feel blocked. The result is a culture of conflict instead of collaboration. The problem is so prevalent that regulators have taken note, warning that entrenched silos create significant pain points for scalability and agility.
Implementing a customer-centric merchant onboarding journey
The antidote is a radical shift to a journey-centric, end-to-end design. The entire merchant onboarding process needs to be mapped to the merchant’s experience, not to your internal org chart. As McKinsey advises, organisations should minimise functional silos: “keeping functional silos as dominant decision-making units may lead to optimizing individual processes and touchpoints, but not the end-to-end customer journey”.
In practice, this requires two fundamental and simultaneous shifts:
- A Metrics and Incentives Revolution: You need to stop measuring success by internal metrics. The real measure of health is the merchant’s experience. Time-to-first-transaction, drop-off rates at each stage, conversion velocity—these are the KPIs that reveal whether your process is an engine for growth or a primary cause of merchant attrition.
- Cross-Functional Ownership: This isn't just about better meetings; it's about restructuring accountability for the entire business onboarding journey. Dedicated cross-functional teams should be empowered to shepherd a merchant from initial application straight through to full activation.
Choosing the right scalable merchant onboarding software for your business
This customer-centric approach requires modern, unified merchant onboarding software. The essential technical foundation for scalable merchant onboarding includes a single source of truth and data, real-time processing capabilities, and a central work-flow engine. These aren’t optional components; but essential pillars that eradicate duplicate data entry, eliminate unnecessary manual checks, and provide the clear, immutable audit trail regulators demand.
This shift fundamentally changes how you buy tech. Don’t just buy for features; buy orchestration capabilities. Demand that platforms demonstrate how they let you compose and modify complex journeys to create a truly automated onboarding process that eliminates the need for manual reviews. During vendor evaluations, insist on seeing a live, end-to-end merchant journey with zero manual handoffs.
For a detailed breakdown of how to choose the best merchant onboarding software, see our guide: What to Look for in an Onboarding Platform: The Essential Checklist for Acquirers and PSPs.
Real-world proof: Scaling across nine countries in months, not years
One European acquirer operating in nine countries and managing 15 brands transformed their onboarding by moving to OnBoard by MVSI’s unified platform. Within three months they achieved compliance across multiple regulators, from the FCA in the UK to MAS in Singapore. By contrast, similar acquirers relying on siloed systems have spent years trying to reach the same outcome, with far higher costs and slower growth.
Building a Future-Ready Merchant Onboarding Infrastructure: Products and Fraud
Streamlining your existing process for today's merchants is just the foundation. The next, greater test of your infrastructure is scaling to accommodate not just more volume, but entirely new forms of business that didn't exist yesterday. This requires a product-centric mindset. “The world is moving so rapidly,” says Sheahan. “The concept of paying and being paid is changing at a rate of knots every single day, from multi-currency to crypto and even carbon credits.”
The notion of a homogenous intake is a relic of the past. The data confirms this shift is already reshaping the market:
- McKinsey’s 2024 payments analysis finds the entire value chain is fragmenting under a proliferation of new rails and players.
- Platforms and marketplaces are no longer niche; they now process a staggering 30% of all global consumer purchases.
- Specialty point-of-sale solutions have already captured over half of all SME transaction volume in the US.
This means payment providers’ daily intake is wildly diverse. A coffee shop using a basic POS, a subscription SaaS business billing overseas customers, and a complex DeFi app could all arrive in your queue on the same morning. Each merchant requires its own contracts, a unique automated risk assessment, verification rules, pricing, and ongoing monitoring requirement.
Meanwhile, the idea of value is being rebuilt from the ground up. Tokenised assets and digital currencies are moving from theory to transformation, with stablecoins and cryptocurrencies noted as transforming payments globally with a tipping point expected soon.
Beyond new products and payment types, acquirers also face increasingly sophisticated fraud threats. Criminal networks are using AI-driven tactics and cross-border teams to probe onboarding systems for weaknesses. As Daniel Sheahan notes, every new product release is quickly tested by fraudsters looking to exploit gaps. Without the right infrastructure, acquirers are forced to slow processes and add manual checks, raising costs and frustrating merchants. With a unified, automated platform like OnBoard by MVSI, fraud prevention is built in at scale, allowing acquirers to stay ahead of evolving threats without sacrificing speed or customer experience.
How a product-centric architecture enables automated onboarding
The answer lies in adopting a product-centric, modular architecture. This approach allows a merchant onboarding platform to adapt instantly to new jurisdictions, product lines, brands, or risk profiles through configuration instead of costly development projects. The core benefit is flexibility: Instead of relying on lengthy and expensive coding projects, teams can integrate new requirements seamlessly with fully configurable rules and workflows.
For example, launching support for a new method like crypto would simply require the compliance team to configure risk profile and documentation checklist in minutes. This change can be made instantly, without pausing other onboarding processes or requiring developer assistance.
Why an API-first approach is non-negotiable for scalable merchant onboarding
This configurability requires an API-first, microservices-based design. This architecture is essential for building a scalable merchant onboarding platform that can adapt to future needs. Each functional component—identity verification, watchlist screening, document collection, fraud scoring—operates as an independent, reusable building block connected through APIs.
API-first architecture is critical. It enables acquirers to access verified data in real time while merchants are still engaged. This speeds onboarding, reduces abandonment, and provides regulators with immutable proof. Enabling you to dynamically change their process to suit—without slowing them down. This real-time data access becomes a major advantage for customer experience during merchant onboarding. By pulling data instantly from original sources while the applicant is active, organisations can make immediate decisions, request additional information without delay, and create a seamless, efficient process that reduces abandonment.
Furthermore, an API-first design provides crucial future proofing. When regulators themselves acknowledge new payment innovations and urge AML frameworks to adapt to real-time, instant rails, your system doesn't need a devastating, expensive rebuild. It simply requires a new, compliant logic module for enhanced automated risk assessment to be slotted into the existing orchestration layer.
The benefit is twofold: you can innovate faster and deploy regulatory updates almost instantly. This innate adaptability is what separates a true growth engine from obsolete legacy infrastructure.
How to Navigate Contradictory Compliance and Privacy Regulations
Even after breaking down silos and moving to a product-focused setup, payment providers still face one last, unpredictable challenge: regulations pulling hard in opposite directions. In recent years, financial crime rules have tightened worldwide, but so have data-privacy laws and consumer protections.
Alarmingly, these regimes are increasingly on a collision course, creating a web of contradictory obligations. Regulations are being enacted that directly oppose one another, leaving acquirers caught between competing compliance and privacy demands. On one avenue, anti-money laundering and fraud regulations demand ever-more extensive data collection, sharing, and perpetual monitoring. On the very next street, privacy laws like the GDPR and CCPA mandate data minimisation, strict user consent, and purpose-limited processing.
This conflict creates immense pressure systems designed for instant onboarding, as they’re forced to navigate opposing requirements in real time. You’re being given an impossible, mixed message: “collect everything for security” versus “only keep what you absolutely need.”
Balancing API compliance tools with data privacy regulations
This isn’t a theoretical problem; it’s a daily operational nightmare for compliance officers and product teams.
- The European Union provides a perfect case study. The push for transparency via the Fifth AML Directive, which mandated public beneficial-ownership registers to expose money launderers, ran headlong into the EU’s highest court. In a landmark 2022 ruling, the court struck down public access, finding that unfettered disclosure “constituted a serious interference with the rights to […] personal data”.
Globally, standard-setters echo this paradox. FATF explicitly revised Recommendation 2 to “ensure compatibility of AML/CFT requirements and data protection and privacy rules”, all while continuing to drive countries toward broader data collection and sharing mandates. The result is a landscape of legal contradictions where a payment provider might be obliged to report a client’s transactions, while concurrently being required to delete or minimise that same data under a separate privacy statute.
Solving the compliance bind with automated risk assessment
You can’t navigate such a complex, contradictory grid with a patchwork of point solutions and manual oversight. It requires compliance to be engineered directly into infrastructure, not bolted on as an afterthought. Policy must become code.
In this architecture:
- Every data access event is automatically logged with full, immutable context, who accessed what data, for what purpose, and under which legal basis.
- Smart workflows enforce privacy by design from the ground up. Data fields can be automatically masked or purged once their specific legal purpose is fulfilled, and access is gated by sophisticated consent and permission flags.
Critically, a unified, API-first architecture allows components like KYC checks or sanctions screening to be updated independently. This means that when a new regulation or guidance is issued, the change can be implemented once in a central policy engine and propagated instantly and consistently through all APIs and workflows across the entire organisation, enabling a thorough automated onboarding process.
Conclusion: Laying the Foundation for Scalable Merchant Onboarding Success
Onboarding isn’t just a utility to be patched; it’s a core strategic function that fundamentally dictates your ability to grow, innovate, and compete. The payment providers who will capture the next decade of growth are not those who simply go faster, but those who stop managing isolated silos and start building integrated, intelligent, and inherently adaptable systems.
The secret to scaling is simple in concept but unforgiving in execution: it all hinges on the foundation. Investing from day one in a unified, automated, and API-first stack is how you scale with structure, not sprawl. It’s how you launch new services in weeks, not months. It’s how you convert more customers, not lose them to merchant friction.
OnBoard by MVSI provides payment providers with scalable merchant onboarding software required to grow effectively. It unifies configurable workflows, API-first architecture, and automated compliance controls within a single source of truth. By eliminating manual reviews and fragmented systems, OnBoard accelerates time-to-revenue, reduces operational overhead, and delivers a seamless merchant experience. With OnBoard, payment providers can expand into new markets, support diverse products, and meet regulatory demands with confidence, turning merchant onboarding into a foundation for sustainable growth.
Book a demo of OnBoard’s merchant onboarding platform.
