Insights

When you embed payments into your software platform, merchant onboarding becomes part of your product.

Your customers may understand that a payment provider is involved behind the scenes, but they are unlikely to separate that provider’s experience from yours. If applying for payments is confusing, approval takes longer than expected or additional document requests arrive without explanation, the frustration can reflect directly on your software.

That makes merchant onboarding an important consideration when selecting a payments partner.

The best experience is not necessarily the one that promises instant approval for every merchant. It is the one that makes straightforward applications easy and can scale alongside your platform.

Merchant Onboarding Starts With Understanding Your Customers

Before designing an onboarding experience, your payments partner should understand who your customers actually are.

A software platform serving professional services businesses will have different requirements from one supporting subscription businesses.

How your customers accept payments matters too.

Are transactions primarily online? Do customers need card-present terminals? Is recurring billing important? Are payments collected immediately or well before a product or service is delivered? What types of businesses are using the platform today?

A strong payments partner should understand your customer base before the program launches, rather than discovering exceptions one application at a time after merchants begin signing up.

The Application Should Feel Like Part of Your Product

Software companies invest significant time simplifying user experiences. Payments should not suddenly introduce unnecessary complexity.

Merchants need to provide information so the acquiring institution can understand the business and meet its compliance obligations. Those requirements cannot simply disappear because payments are embedded.

The opportunity is to make the process easier to understand.

Applications should use clear language. Merchants should know what information they need before starting. Requests for supporting documentation should make sense in the context of their business.

Where appropriate, information already available within the software platform may also help streamline the experience rather than forcing customers to enter the same information repeatedly.

The objective is not to eliminate underwriting. It is to remove unnecessary friction around it.

Fast Is Valuable, Predictable Is Better

Software companies naturally want customers activated quickly. For straightforward businesses that meet established criteria, technology and automated decisioning can make onboarding significantly more efficient.

But not every application will follow the straightforward path.

A merchant may have an unusual business model or a particular industry may require supporting documentation before a decision can be made.

This is where the quality of your payments partner becomes more visible.

If an application requires additional review, you should know what is happening. Your team should not have to repeatedly contact different departments trying to determine whether an application is waiting for documentation or has already received a decision.

Speed matters, but predictability builds confidence.

Your Payments Partner Needs a Process for Exceptions

Automated onboarding works well until something falls outside the automated rules. Every growing software platform eventually encounters those situations.

The important question is what happens next. Can someone actually review the merchant’s circumstances? Is there an escalation path? Can your payments contact explain why additional information is required? Can unusual but legitimate business models receive an informed review rather than an automatic rejection?

This becomes especially important for vertical software companies. When your platform specializes in a particular industry, you may understand your customers’ businesses far better than a generalist payment provider does. If the provider lacks experience with that vertical, legitimate merchants can encounter unnecessary friction simply because their business models are unfamiliar.

Industry knowledge can therefore be just as important as onboarding technology.

Think Beyond the Approval Rate

A high merchant approval rate sounds attractive when evaluating payments partners. It should not be considered in isolation.

The objective is to onboard merchants that can be supported successfully over the long term. An account approved today but restricted or terminated shortly afterward creates a poor experience for your customer and potentially a larger problem for your software company.

Good onboarding therefore balances conversion with responsible underwriting.

Your payments partner should be able to explain what types of businesses it can support and help establish realistic expectations before merchants spend significant time completing applications.

A clear “this merchant does not fit the program” early in the process can be considerably better than an approval that creates problems later.

Visibility Becomes More Important as You Scale

When your platform has a small number of payment customers, individual applications can often be managed manually. Growth changes that.

Once you are onboarding merchants regularly, you need greater visibility into the portfolio.

Which merchants have started applications? Which are approved? Which require additional information? Are particular types of customers experiencing more onboarding friction than others?

This information can help your team identify problems in the customer journey and improve conversion over time. It can also reveal whether your payments infrastructure is keeping pace with the growth of your software business.

What works for your first group of merchants may not be sufficient when payments become a meaningful part of your platform.

Build for the Customers You Want Tomorrow

Your current merchant population should influence your payments strategy, but it should not be the only consideration.

Software platforms evolve.

You may enter another vertical or introduce new payment channel or even expand geographically. Your onboarding model needs room to evolve with those plans. This is worth discussing before choosing a payments partner.

Ask what happens if your merchant profile changes. Understand which industries the provider supports. Discuss which other capabilities can be incorporated as your product develops.

Changing payment infrastructure after you have built a large portfolio can be significantly more complicated than asking these questions at the beginning.

Evaluate the Experience Before You Choose a Payments Partner

Software companies often spend considerable time evaluating APIs and commercial terms.

Merchant onboarding deserves the same scrutiny.

Before choosing a provider, walk through the process from your customer’s perspective. Understand what information merchants will be asked to provide and how additional documentation is handled. Find out what happens when an application cannot be approved automatically. Ask what visibility your team will have into application status and who becomes involved when an exception needs attention.

Most importantly, determine whether the provider understands the businesses using your software.

The payment experience does not begin when the first transaction is processed. It begins when your customer decides to activate payments.

At KORT Payments, we work with software companies and ISVs to understand their merchant population before designing the payments program around it. That includes looking beyond the technical integration to merchant onboarding, underwriting requirements, exception management and the operational support needed as the platform grows.

When payments are embedded into your software, your payment provider becomes part of your customer experience. Choose one that treats it that way.