How to prepare your software users for merchant underwriting

As a software company getting ready to or thinking about embedding payments into your platform, there is much to consider. One point of consideration is the merchant underwriting process and the onboarding experience you’re creating for your customers. What’s involved in merchant underwriting is not always clear to merchants from the beginning, further complicating the tedious process. We’ve equipped you with everything you need to know to properly prepare your software users for this important milestone to create a more seamless experience.

What does the merchant experience look like?

Merchant underwriting is a risk evaluation that every merchant must go through before they can accept electronic payments. For more information on what merchant underwriting is, check out our blog: The essential elements of merchant underwriting for software companies.

Below is an overview of what a typical merchant underwriting process may look like.

Step 1: Gather documentation

Your merchants will need to gather all necessary documentation and submit their merchant account application. In the next section, we touch upon these specific documents.

Step 2: Review application

The underwriter will review your merchant’s submitted application. The time it will take for them to complete their review may depend on a variety of factors, and it can take a few days up to a few weeks.

Step 3: Follow up

The underwriter will reach out if they require any other information or clarification from the merchant. It is common for underwriters to ask for more documentation at this point in the process.

Step 4: Application decision

The payment processor will approve or reject the application. Applications may be rejected due to falsified or inconsistent information provided on the application, sales of prohibited or high-risk items, or known links to fraudulent or risky activities.

Step 5: Onboarding and implementation

The merchant onboarding and implementation begins. For software companies who choose to work with Worldpay and Payrix, we will be there to guide you through the entire process, so you can do the same for your merchants.

The documents needed for merchant underwriting

A big point of friction during the merchant underwriting process is when your customers do not have the correct documentation ready and available to complete their application. To avoid this common frustration, it’ll be important to set clear expectations with your merchant and ensure that they have the following documents available when beginning this process.

In addition to the application form, for each tax ID or Social Security Number associated with a merchant business, they should provide the following documents:

• Last three bank statements
• Last three merchant processing statements
• Last two years of income statements and balance sheets
• A copy of a voided check or bank letter
• Driver’s license or state/federally issued ID
• The URL of your website (for eCommerce businesses)

Note – this is not a comprehensive list but should give you a general idea of what may be needed.

How Payrix and Worldpay set software companies and their merchants up for success

With a clearer understanding of a typical merchant underwriting process and the documentation needed, we can empathize with you on how tricky this process can be for you and your merchants. But it doesn’t have to continue like this.

The industry standard for merchant underwriting can take a few days up to a few weeks. However, for our Payrix partners, we use innovative technology, machine-learning, and automation to streamline the underwriting process, alleviating the pains traditionally associated with the merchant boarding experience. Our approach and tools speed time-to-revenue and drops the number of fields a merchant needs to fill out to apply for merchant payment services. This enhancement allows your merchants to receive an underwriting decision and begin transacting on your platform immediately.

Whatever payments model is right for you: referral payments, PayFac-as-a-Service, or PayFac, Payrix and Worldpay is here to help guide you through the process and set clear expectations for your merchants as it relates to merchant underwriting, PCI compliance, implementation, and more.

Looking for more information on Embedded Payments? Check out our helpful guide: Complete Guide to Embedded Payments.