If you’re a modern software provider, offering embedded payment processing is a must — especially if your clients include small- and medium-sized businesses. By offering built-in payment processing, you are able to monetize every transaction that flows through your software and unlock new revenue streams. All while delivering a seamless, all-in-one user experience.
When payments are embedded directly into your platform, merchants can:
- Accept payments and track analytics from a single dashboard
- Minimize disruption and build trust by allowing clients to accept payments within your software — with no third-party detours
- Save time and money by consolidating their software and payments under one provider (you!)
But embedding payments, especially into software-as-a-service (SaaS) platforms, is just the first step. To drive adoption and maximize revenue, you need a smooth and efficient onboarding process that gets merchants up and running and processing payments fast. How will they sign up? What payment methods will they have access to? How will payouts and account management work?
This blog is the first in a four-part series where we’ll break down the key merchant journeys every SaaS platform should consider — starting with the critical first step: onboarding.
What Is Onboarding in Payments?
Onboarding describes everything that happens between the time a potential payments user fills out a sign-up form and the time they’re finally approved to start processing transactions. It’s a critically important step in payments — especially because it’s where risks are caught and either weeded out or priced in, minimizing exposure and ensuring profitable payment operations.
What Happens Behind the Scenes When a User Is Onboarded?
Behind the curtain, onboarding a software user to payments is a complex process that can be broken up into a few key steps:
Step 1: Your user visits your sign-up form and fills out the necessary fields, including their business and personal information, their basic financials, their credit information and more. The submitted information is sent securely to your payment processing partner to be vetted.
Step 2: The user’s information goes through a deep risk assessment process called underwriting. It involves doing potentially 100+ checks and verifying all of the relevant information to determine the user’s risk level and ensure they’re not too risky to serve.
Step 3: An approve or decline decision is made. If the user is approved, they’ll be issued a merchant account and a merchant identification number, or MID, that their future payments will flow through. They’ll also be set up with any additional value-added services they opt into, like fraud management or advanced security tools.
This process can occasionally take some time in high-risk or complex cases. But, for the majority of sign-ups, a decision should be turned around within a day, or even in a few hours, to get the user selling (and you earning) as quickly as possible.
Why Is Onboarding So Important to Payments Monetization?
Why is proper onboarding so important, and how can it impact your ability to monetize the payments flowing through your software?
- It sets the tone for your relationship: Because sign-up and onboarding are step one, a bad experience immediately starts your payments relationship off on the wrong foot. That can set a negative tone and impact the perception of future service
- It’s a potentially significant pain point for your users: Proper underwriting and fast onboarding require your users to accurately submit a substantial amount of data. If the process isn’t designed well and doesn’t remove friction, it becomes a huge headache for the user — and one they might walk away from
- You have a lot of competition: If there is one thing your users don’t lack in payments, it’s choice. Getting their payments directly from you offers users additional convenience, but if the sign-up process is too slow or too difficult, there is no shortage of fast, convenient options they can turn to. Frictionless onboarding is critical to staying competitive
- Your payments profitability depends on it: Without proper onboarding, risky or even malicious merchants could slip through the cracks. Users could also end up paying too little in fees to offset their risk
The onboarding journey is the starting point of the overall payments journey and also one of the most complex parts of payment processing. Anything that adds friction can cause significant headaches and reduce profitability. As a result, the whole process needs to be locked down tightly, and you need a partner that has deep expertise in onboarding and underwriting.
How To Integrate Frictionless Onboarding Into Your User Experience
Underwriting and approval decisions are handled in one of two ways:
- If your processor is also your acquirer, then underwriting and approvals go through them
- If your processor and acquirer are separate, then the acquirer will handle underwriting and approvals before passing the information along to the processor
In either case, your job in the onboarding process is to accurately collect your users’ information and transmit it securely to your partner. How you integrate the sign-up process into your environment is up to you, and, generally speaking, you have three choices: no-code, low-code or full-control API.
No-Code, White Label Sign-Up:
No-code sign-up enables you to take a pre-made form hosted by your payment processing partner, skin it with your own branding, and then send the link to your users. It’s by far the fastest, easiest way to start signing up users. The downside is you have no control over the form itself, and users have to leave your environment to interact with it.
Low-Code Embeddable Sign-Up:
Low-code sign-up uses pre-written code snippets that you plug directly into your environment. Embedding a sign-up form enables you to quickly start onboarding users within your own platform and significantly limits the amount of work it takes to get up and running. It represents a compromise between the speed of no-code and the control of custom.
API-Driven Custom Sign-Up:
Custom sign-up connects you to your payment processing partner through an API. This option puts you in full control over how you build sign-up into your software and maximizes flexibility. It also enables you to tap into more advanced features, like dynamic pricing and the ability to reuse data you’ve already collected to save your users time.
Ultimately, your decision to go with a no-code, low-code, or API-driven onboarding solution will depend on your level of expertise, your platform and how much control you want over the user interface. Remember, you don’t have to be locked into one decision forever — you can always work with your partner to add a more technical component to your tech stack when you’re ready to evolve your offering.
What Comes Next?
Onboarding is the first of four critical journeys you and your users will embark on when you monetize software payments. It plays a huge role in your relationship with every payments user and can impact the quality of your service, the ease of your operations and your overall profitability.
To find out more about onboarding and the other three critical payments journeys, keep an eye out for the next part of our series, and don’t forget to reach out to a member of our team.