Digital onboarding is a phrase that we hear a lot but do not know very much about these days. It points to the process of acquiring new customers and users in a fast, secure and modern manner, completely online and remotely. Acquiring new customers as fast as possible is vital for every sector due to customers demand for easy access. If a company has an outdated and sluggish onboarding process, then the potential customer can easily find another company to work with who does their job better than the former. 

Optimizing the onboarding process not only increases the chance of acquiring new customers but it also reduces the cost of the process for companies. But before we go into more details about the benefits of digitalizing the onboarding process, let’s first understand the types of boarding and the difference between digital customer onboarding and digital merchant onboarding.

Types of Onboarding

On-Site Onboarding: The traditional method of onboarding in which a customer or a user has to go to the company’s physical location and fill documents and prove his identity.

Semi-On-Site Onboarding: In this type of onboarding, companies offer documents in the digital format, but applicants must fill them and show up in the physical location to hand them in.

Digital Onboarding: The process of becoming a customer or a user is completely done online and all documents and necessary checks are carried out through a digital device. This method is the fastest way to complete an application process.

Customer Onboarding & Merchant Onboarding

Customer Onboarding

Digital customer onboarding also known as Know Your Customer (KYC) or Know Your Client is widely used in the financial sector, especially in insurance and banking. The process includes identification and verification of the customers identity, meaning that it proves that the client is actually who he says he is. The verification process can take different forms such as sending an e-mail, a text or through video identification, but it is always automated and done through a digital device. A person can easily become a customer of a bank or an insurance company and open an account, get a credit card or even get approved for a loan in minutes thanks to digital onboarding.

According to Forrester 66% of customers believe that the most important thing for a good online customer experience is optimizing the time that is being spent. Another study by the Oracle shows that 89% of customers start doing business with a rival company after a poor customer experience. These statistics show how important it is to shorten and optimize the onboarding process and the possible outcomes if a company fails to do so.

Merchant Onboarding

Banks and Payment Facilitators (PayFacs) have to acquire new merchants constantly to increase their processing volume. Although e-commerce has been booming for the last 15 years, especially during the pandemic, there are still some obstacles to generating high profit from onboarding new merchants.

First obstacle is the lack of knowledge on the merchant side. Many of the merchants do not know how the process works or think that it will take too long to apply and to get approved. So, they choose to work with the first third party service provider that promises an easy and fast application process without considering the quality of the service that is actually being provided to them.

Second reason is that onboarding a new merchant can become very costly if new methods and technologies are not used. A traditional merchant onboarding process requires physical papers being examined, manual lookups, data entry and spreadsheets to track the process which all takes time and labor force. These factors create a significant cost and decrease the profitability of acquiring new merchants. Moreover, most of the time, this manual process ends up in subjective decisions which can create a risky portfolio in the long run.

Then the question becomes inevitable; How can banks and PayFacs transform their merchant onboarding process in such a way that the application process decreases and the profitability of onboarding new merchants increases?

Digital Merchant Onboarding; Fast, Secure and Cost Effective

Digital merchant onboarding allows companies to decrease the time spent on processing the applications and reply merchants as fast as possible. This not only decreases the possibility of potential customers choosing rival companies during the application process but it also decreases the cost by outsourcing and automizing. 

PCI Checklists’s “Onboarding Security Scans” decreases merchant onboarding time down to only 5 minutes. Only thing that the bank or Payfac has to do is to write the URL of the applicant’s website to PCI Checklist’s user friendly panel and click scan. Even this simple act can be eluded if the bank or PayFac decides to carry out an API integration with PCI Checklist. After that, PCI Checklist’s system, designed with cutting-edge technology, carries out controls and provides a report including more than 70 checkpoints and screenshots starting from the initial step of adding an item to the basket all the way to the payment screen.

This report, generated in 5-10 minutes, gives banks and PayFacs not only technical data of the website but it also shows the purchasing experience provided by the applicant’s website. Using PCI Checklist, banks and PayFacs can combine additional documents with this report and create their own onboarding archive. 

Considering that not all of the onboarding applicants are Business-to-Consumer (B2C) websites applying for a virtual POS, PCI Checklist enables banks and PayFacs to digitalize the onboarding process for Business-to-Business (B2B) websites as well. Banks and PayFacs can provide a test username and password together with the applicant’s URL and use PCI Checklist’s Onboarding Security Scan service for their whole portfolio.

Banks and PayFacs can also decide on who to onboard based on scores generated by PCI Checklist’s Onboarding Scan. In addition to checkpoints and screenshots, Onboarding Report also features a security score ranging between 0 and 100. Banks and PayFacs can decide on a certain score as a threshold and do not onboard applicants with a score lower than that. This helps banks to reduce the subjectivity to a minimum in decision making regarding who to onboard. PCI Checklist’s Onboarding Security Scan has a continually growing user base and has been used more than 4300 times to scan a website and decide on whether to onboard and to decide on the appropriate merchant discount rate. 

According to the Verisk Financial, traditional onboarding process can cost companies around $35–100 and take up to 6 days. It is possible to lower this cost by nearly 90% and decrease the time to only 5 minutes. Considering the security and objectivity aspect as well, it is apparent for all companies that digitalizing the onboarding process is the logical choice.