Gone are the days when a merchant would be happy to sit in person with an ISO or payments processor for hours, answering the same questions and waiting a week or more to get an approved merchant account.
“That just isn’t acceptable anymore,” Carl Churchill, managing director of U.K.-based firm technologi, told PYMNTS in an interview. He added that digital onboarding is no longer a nice-to-have in the payments industry but a mandatory requirement for payment businesses aiming to grow and scale their merchant base.
The company, which Churchill founded in 2015, offers bank and payment customers a suite of services and has been delivering digital end-to-end merchant onboarding solutions to over 200,000 merchants each year. The financial technology firm supports 11 different acquirers and a number of ISOs across Europe as well as others across the U.S. and Asia-Pacific (APAC) regions. It originates nearly 40,000 digitally signed merchant applications monthly.
Present in 15 countries across Europe, the company processes about 40% of all merchant account applications that come from its U.K. home. Still, the U.S. is by far its biggest growth market, according to Churchill, where over 1 billion transactions were processed over the last 18 months through the company’s recently launched payments processing and settlement platform.
Also on the roadmap is growth in the Asia-Pacific (APAC) region, which Churchill plans to pursue in 2022 because of the significant growth potential it sees in that region.
As Churchill said, “the common thread across all of these payments businesses is the need to simplify and automate their merchant onboarding journey.”
Ditching Legacy Technologies for New Digital Tools
Evolving consumer needs for convenience and on-demand services have triggered a major shift in merchant expectations, Churchill said. Many traditional payment businesses resist abandoning the status quo to meet the demands of their end customer — the consumer.
The explosion of FinTech firms that can deliver the digital experiences that today’s customers need has made it even more challenging for these more established payments businesses, often sitting on legacy technologies to support anti-money laundering (AML) and credit risk teams that “crunch numbers and deliver responses over days and weeks,” he explained. A situation made worse for the merchant when the answer isn’t a yes.
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A paper-based process with big teams of people doing manual AML and credit risk checks, he said, gave them a feeling of control over the process — each yes and no was based on their decisions, their rules, their underwriting criteria.
Yet, the payments businesses that are getting traction and growing are those that have moved past the inertia to deliver what the customer wants without feeling like they’ve just “annihilated their AML policy and increased their credit exposure.”
Navigating the Fragmented EU Region
The European market where technologi currently operates may be united in name and trade and currencies but remains very fragmented from one country to another, Churchill said, regarding payments, payments technology and merchant services.
In the U.K., for example, “data is plentiful” and there are various third-party sources that can validate merchant data documents and even images at the time of boarding. In Ireland, however, that data isn’t readily available, and payments businesses are left to find their ways of validating individuals and principles.
The Nordic region, on the other hand, has government-driven services like Bank ID that make it easy to validate merchants, while Germany has a video identification requirement for the merchant boarding process to satisfy its local AML regulations.
That makes it important for solution providers with multiple presences across the region to have a detailed understanding of the various local variances in AML measures to onboard merchants in a regulated compliant way.
It’s where Churchill feels technologi has an edge over competitors, acting as “part solution provider and part consultant” in coaching businesses on how to achieve their digital onboarding ambitions in any given country and in an automated and digital way.
Not Just How, but Who You pay
With emerging opportunities in the alternative payment processing space, like the payment facilitator and the marketplace models, Churchill said digital onboarding is only “the tip of the iceberg.”
He added that FinTechs in payment facilitation and aggregators linked to marketplaces are seeing spectacular growth because people are buying and paying more and more online and expecting that digital fulfillment experience which is the standard now.
According to Churchill, the U.S. is probably three or four years ahead of Europe in terms of these emerging opportunities, and more so the U.K. Still, he predicts they will catch up because of the significant shift in the market predicted in the next couple of years.
He concluded by saying that while there are a lot of interesting elements around the way people make payments, the innovation will come from “who people pay.” Five years ago, he would have never thought it would be possible to securely store card details in the car and pay for updated satellite maps, for example, but he said that day is coming and it’s already here in some cases.
“It’s going to be a combination of more flexible payment methods and more opportunities for people to pay for goods and services through people that they would never have imagined before,” he said, adding that while the pandemic has accelerated its business, “the next few years in payments across the European region will probably be the most notable that we’ve seen in the last 10 years.”