Automated merchant onboarding process: saving time while improving security

Why is onboarding merchants a strategic priority?

Merchant onboarding plays a decisive role in marketplace performance. A fast, efficient process allows sellers to get up and running quickly — the sooner a merchant is onboarded, the sooner they can offer their products and generate sales for the platform.

A smooth onboarding experience also supports seller acquisition. If the onboarding process is complex or time-consuming, merchants may abandon it altogether and turn to a competing platform. Conversely, a simplified procedure reduces abandonment rates and improves conversion rates.

Finally, optimised onboarding becomes a real competitive advantage. Marketplaces that offer a seamless onboarding experience not only attract more sellers, but also foster loyalty among their partners. They strengthen their market position by guaranteeing a smooth, secure user experience.

The risks of poorly managed onboarding

An ineffective onboarding process doesn't just lead to a poor user experience — it can also expose a marketplace to significant risks.

• Fraud and money laundering : Without rigorous merchant identity checks, platforms become vulnerable to fraudulent activity. Malicious users may exploit gaps in the process to conduct illicit transactions or divert payments.
• Regulatory non-compliance : Legal obligations regarding identity verification (KYC – Know Your Customer) and the fight against money laundering and terrorism financing (LCB-FT) are strict. Non-compliance can result in financial penalties, or even operational suspension.
• Manual errors and inefficiency : Onboarding based on manual checks requires repeated exchanges between the platform and the merchant. These interactions slow down the process, drain internal resources, and delay time-to-market for sellers.

Onboarding automation: a lever for efficiency

Automated onboarding enables marketplaces to accelerate merchant integration while reducing friction. With intelligent systems, documents and information are processed in real time, eliminating the delays caused by manual checks.

An optimised user journey also lightens the workload of the support teams. By reducing the number of interactions required with marketplace teams, merchants can complete their registration independently without being hampered by time-consuming exchanges.

Marketplaces can also rely on intelligent workflows to guide sellers through the document submission process. These systems tailor the onboarding stages to the merchant's profile and activity, requesting only the essential information required by current regulatory requirements. This avoids unnecessary steps and speeds up the process.

Optimised compliance through automated controls

The integration of official databases enhances the reliability of controls. Marketplaces can immediately verify the authenticity of submitted documents by cross-referencing merchant information with commercial registers, international sanctions lists, and of Politically Exposed Persons (PEP) database.

Automation enables risk scoring based on multiple criteria—such as background, sector of activity, and country of origin. This system helps evaluates a merchant's reliability before validation, thereby limiting risks related to fraud or non-compliance with regulations.

By automatically aligning onboarding with anti-money laundering and counter-terrorist financing (AML/CFT) requirements, marketplaces reduce their exposure to sanctions and legal risks.

Enhanced security against fraud

Artificial intelligence and machine learning provide powerful tools for detecting and combating fraud. Marketplaces can use anomaly detection algorithms to identify suspicious behaviour, such as inconsistent information or attempts to bypass security measures.

Biometric verification and facial recognition provide an additional layer of security. By matching an ID document photo with a real-time selfie, these technologies confirm that the merchant is who they claim to be.

Finally, automation allows new merchant data to be cross-checked against known blacklists and fraud databases. This step helps prevent malicious actors from entering the platform, safeguarding the integrity of the marketplace ecosystem.

Thanks to these innovations, automated onboarding delivers fast, compliant, and secure experience driving growth while minimising risk

What tools are needed for high-performance automated onboarding?

Verification API integration

Marketplaces can rely on specialised APIs to automate and secure merchant onboarding. These solutions enable fast, reliable processing of submitted information, reducing the risk of fraud and manual errors.

• KYC APIs: automate identity verification and proof of address, ensuring that each merchant is who they claim to be. These APIs use official databases and document recognition technologies to detect any anomalies.
• Banking APIs: instantly validate bank account details to prevent data entry errors or fraudulent account use. This verification is crucial to ensure secure transactions on the marketplace.
• Risk assessment APIs: Generate reliability score to new merchants based on their history and sector of activity, identifying any red flags (e.g., presence on fraud lists). This allows marketplaces to adjust their level of vigilance and proactively manage potential risks

Electronic signatures to simplify procedures

Integrating electronic signatures into onboarding eliminates paper constraints and accelerates contract validation.

• Marketplaces offer merchants a seamless, fully online experience by removing the need for physical exchanges. Registration becomes faster and accessible from any device.
• Electronic signatures provide legally binding proof of the merchant's commitment. They enhance transaction security by confirming each party's identity and consent.
• With immediate validation of contractual documents, merchants can start doing business more quickly without waiting for physical documents to be sent and processed.

A centralised dashboard for monitoring onboarding

To optimise registration management, a dedicated dashboard allows compliance and support teams to track application progress in real-time.

• These tools provide full visibility over onboarding status, identifying merchants who are validated, on hold, or require specific action.
• With access to detailed statistics and reporting, marketplaces can analyse performance metrics such as average onboarding times, conversion rates, and bottlenecks.
• Automated reminders help follow up with merchants who have incomplete files. By sending automatic notifications for missing documents, platforms increase the likelihood of completing onboarding without manual follow-up.

How to set up effective automated onboarding?

1. Define an optimised merchant path

Automated onboarding must be both fast and compliant with regulatory requirements. The first step is to structure a simplified path for merchants, reducing the number of steps while complying with legal requirements.

• A long or complex onboarding journey can discourage sellers and increase abandonment rates. It's essential to ask only for the necessary information and automate processing whenever possible.
• Provide clear explanations and guided support at every stage. For instance, merchants should understand why a document is required and how to provide it correctly.
• The user experience must be fluid and intuitive. The onboarding interface must be optimised for mobile use, as many merchants operate from smartphones.

2. Selecting the right technology partners

For ensuring the process's security, compliance, and efficiency. Choosing the right technology is key to ensuring a secure, compliant, and efficient onboarding.

• It's essential to choose solutions compliant with European regulations, including GDPR (data protection), PSD2 (payment security), and AML/CFT (anti-money laundering and countering the financing of terrorism) requirements.
• APIs must be flexible and scalable to support marketplace growth and adapt to evolving regulatory frameworks.
• Integration with other marketplace management tools (CRM, ERP, payment systems) is key to ensure seamless interoperability, and avoid fragmented data silos.

3. Educating and supporting merchants

Even with an automated process, merchant support remains essential to ensure successful adoption.

• Providing educational content such as guides, tutorials, FAQs and videos helps merchants understand regulatory requirements and each onboarding steps.
• Responsive, multi-channel customer support (live chat, email, phone) to assist merchants in completing their registration when issues arise. A multilingual support service is also a valuable asset for international marketplaces.

4. Test and continuously improve the process

Merchant onboarding should never be static—it must evolve based on user feedback and shifting market demands.

• Track key metrics like average activation time, validation rate, abandonment rate to identify friction points and optimise the merchant journey.
• Collect merchant feedback through surveys and testing to enhance both the interface and onboarding steps.
• Regularly update processes to stay aligned with new regulatory requirements and technological advancements, ensuring the onboarding experience remains efficient, compliant, and secure.
   

With solutions like verification APIs, electronic signatures, and real-time tracking tools, marketplaces can offer sellers a seamless and secure onboarding experience. An efficient process helps attract more merchants and strengthens trust and transparency across the ecosystem.

At Lemonway, we support marketplaces with compliant, innovative payment solutions, integrating automated processes for fast and secure onboarding.

Want to optimise your merchant onboarding? https://www.lemonway.com/en/contact