Merchant onboarding process: steps, technology & best practices
September 16, 2025
11 min
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Bringing a new merchant onto your payment platform is the first step in building trust and setting the tone for your partnership. Done well, merchant onboarding creates a smooth path to payment acceptance. Done poorly, it can cause delays, compliance issues, fraud, or even lost business.
This guide breaks down what merchant onboarding is, the key players involved, the process step-by-step, and best practices to make it faster, safer, and more merchant-friendly.
What is merchant onboarding?
Merchant onboarding is the process by which a payment service provider (PSP), payment facilitator, or acquiring bank registers, verifies, and sets up a new merchant to accept and process payments through its platform.
It's the journey from interest to activation – from a merchant saying, "We want to accept payments," to being live on the platform and ready for customer transactions.
On the surface, onboarding appears technical. In reality, it's a multidimensional workflow that ensures a business is legitimate, compliant, and safe to transact with.
The key players in merchant onboarding
Merchant onboarding isn't handled by PSPs alone. It's a coordinated effort between multiple players. Here are the parties involved:
- Merchants. They're the businesses looking to accept payments. They initiate the process by submitting an application, which includes business registration, ownership details, and financial documentation. To be approved, they must prove their business is legitimate and financially sound.
- Payment service providers. PSPs oversee the onboarding workflow. They collect and verify merchant information, set up accounts, and connect businesses to the wider payments ecosystem. PSPs also ensure merchants comply with card scheme rules, security standards, and regulatory requirements.
- Compliance and risk teams. These teams validate the merchant’s identity and legitimacy through Know Your Customer (KYC), Know Your Business (KYB), and anti-money laundering (AML) checks. Whether handled in-house or outsourced to third-party providers, their job is to flag risks before they become liabilities.
- Banks and card networks. Acquiring banks underwrite merchant accounts, process card transactions, and assume financial risk on behalf of the merchant. Card networks like Visa and Mastercard don’t interact with merchants directly, but their rules shape every aspect of onboarding. From security protocols to transaction monitoring, they ensure consistency and compliance across the ecosystem.
Issuing banks – the ones that approve customers' card payments – aren't involved in onboarding itself but step in once transactions go live.
What information do PSPs collect during merchant onboarding?
To decide whether a business is safe to work with, PSPs collect a range of details about the merchant and its owners. This data helps assess legitimacy, financial stability, and risk. Key information usually includes:
- Business details: legal name, address, registration number, country of incorporation, industry category, and website.
- Ownership and management: names, roles, and backgrounds of company owners and directors, including ultimate beneficial owners (UBOs).
- Personal identification: government-issued IDs for principals, sometimes with address verification, to run individual KYC checks.
- Compliance and licensing: proof that the business is legally allowed to operate, such as tax IDs, regulatory licenses, or permits in restricted industries.
- Financial information: bank account details for settlements, financial statements to show stability, and transaction history or chargeback rates if available.
- Business model insights: a description of what the company sells, how it sells, and where. This helps PSPs gauge risks such as money laundering or fraud.
Documentation required for merchant onboarding
Merchants must provide documents confirming their legal registration, operational licences, and financial stability. Commonly requested items include certificates of incorporation, tax identification numbers, government-issued IDs for business owners and directors, proof of address, and bank account details.
In regulated industries, additional permits or licences may be necessary, along with financial statements or processing records that demonstrate transaction volumes and chargeback rates.
Having this documentation ensures you can trust what the merchant has reported and onboard them with greater confidence.
Merchant onboarding process step-by-step
Most PSPs follow similar merchant onboarding steps. Let's examine each one closely.
Filter out red flags
Before deep checks begin, a light-touch review filters obvious mismatches. Validate that the business exists, check the website, and make sure the business is clear about what it does and operate above board. It's also the moment to clearly communicate document requirements and set expectations.
Verify merchant identity and documents
Once past pre-screening, the merchant submits their application. This is where the heavy lifting begins: gathering business details, owner identities, compliance documents, and financial statements. You'll use this information to run KYC/KYB checks and verify legitimacy. Automated tools can scan IDs, cross-check business registrations, and flag suspicious details.
The question being answered here is simple: ‘Do we really know who this merchant is, and are they who they claim to be?’
Access risks
Risk teams evaluate the merchant’s financial stability, industry profile, and business model. Based on the findings, PSPs assign risk tiers, request reserves, or set volume limits. For example, an online clothing store may be fast-tracked, while an iGaming platform undergoes deeper due diligence.
Activate accounts and get ready to transact
Once approved, PSPs create merchant accounts, sign service agreements, and begin integration. For a small online store, this might mean copy-pasting a checkout snippet. For larger merchants, it could involve complex system integrations. Either way, the goal is to ensure payments can flow smoothly from day one. Before going live, test transactions are run to confirm everything works as expected.
Train and go live
Before processing real transactions, merchants need guidance. Training might include learning how to navigate your dashboard, manage refunds, interpret reports, or handle disputes. Some PSPs provide hands-on support during the first transactions, ensuring merchants feel confident and supported. A smooth go-live experience reinforces trust and sets a positive tone for the ongoing relationship.
Monitor continuously
Onboarding doesn't end when the first payment clears. Watch for unusual transaction patterns, rising chargebacks, or regulatory red flags. Also, re-verify documents and update compliance requirements regularly. This proactive oversight protects both your PSP and the merchant, allowing issues to be caught early before they escalate.
Common challenges PSPs face during merchant onboarding
If you want to improve your merchant onboarding, here are some challenges to be aware of:
- Misaligned expectations. Merchants often expect 'instant onboarding' because that's what fintech competitors promise. But if a PSP's process involves more thorough checks, the difference can feel like unnecessary friction. Without clear communication, even a perfectly reasonable delay can damage trust.
- Integration complexity. For some merchants, onboarding isn't just about compliance; it's also a technical process. A large merchant with custom systems typically require extensive support to integrate APIs, gateways, and settlement accounts. When technical and compliance timelines don't align, the entire onboarding stalls.
- Cross-border blind spots. Merchants expanding internationally face different tax regimes, licensing laws, and banking standards. PSPs must ensure compliance in multiple jurisdictions simultaneously, which adds complexity and increases the risk of missing a local requirement.
- Hidden high-risk behaviours. A merchant may look low-risk on paper but operate in ways that increase exposure later, such as poor refund policies or weak fraud controls. Without deeper qualitative checks, PSPs risk onboarding seemingly safe merchants who later become liabilities.
Merchant onboarding best practices: building trust and reducing risk
Successful onboarding isn't just about ticking compliance boxes in a merchant onboarding checklist. It's the foundation of your relationship with merchants, and the smoother it is, the faster they can start generating revenue for both sides. Here are a few practices to help you make the journey smooth and stress-free for your merchants.
Make the experience digital & guided
If onboarding feels like endless paperwork and back-and-forth emails, merchants will get frustrated. By providing an online portal with guided forms, secure document upload, and clear progress indicators, PSPs can simplify the journey. Some providers go further by giving merchants access to a test dashboard right away, keeping them engaged while the compliance checks run in the background.
Strengthen compliance with layered verification
No single verification method can catch every risk. You can cross-check business registrations with official databases, validate identity documents through AI-driven tools, and screen owners against AML and sanctions lists. Biometric or liveness checks provide an extra layer of security when needed. By running multiple checks in parallel, you ensure stronger compliance while keeping the process efficient.
Automate the workflow
Onboarding processes are often slow, error-prone, and difficult to scale. Merchant onboarding automation is the fix. APIs can instantly pull data from government registries, parse ID documents, or run fraud screenings – tasks that would take hours if done by hand. Automation cuts errors, keeps compliance consistent, and frees your team to focus on tricky cases instead of repetitive tasks. For PSPs, it means scalability. For merchants, it means a smoother, faster start.
High-quality resources and support
Good docs make all the difference. Clear guides, short video tutorials, and a solid knowledge base help merchants know exactly what to do. Pair that with quick, friendly support – whether it's chat, email, or a dedicated manager – and you remove confusion, speed up go-live, and keep merchants confident throughout the onboarding process.
Merchant onboarding with Corefy
For PSPs using Corefy’s white-label infrastructure, onboarding is smooth and structured. Automation does the heavy lifting, while tailored tools and personal support give you confidence every step of the way. While most capabilities are designed for your internal use, they make it much easier to onboard merchants confidently.
- 24/7 knowledge base: access detailed manuals and tutorials to help your team confidently navigate the platform and support merchant onboarding. For extra clarity, we also provide a checklist of key questions – ideal for teams unsure what to ask merchants.
- Personal education sessions: our Onboarding Team delivers live configuration sessions tailored to your setup – ideal for double-checking before onboarding merchants. Recordings are shared for reference or team training.
- Postman integration support: use our preconfigured queries to verify core payment flows. Need something more specific? We’ll prepare a custom Postman collection so your developers can test only the flows you care about – cards, APMs, payouts, tokenisation, and more – saving merchant integration time and reducing errors.
- Hands-on merchant launch support: we have an option to set up a temporary chat with your first merchants during the integration period and provide a personal Postman collection. This makes launches much faster and ensures questions are resolved instantly, without requiring deep platform knowledge or sending every issue to support.
- Platform news: we proactively share updates and new features so you’re always ready to offer the latest capabilities to your merchants.
We’re not just a platform you use. We’re a partner that helps you grow, starting with the very first merchant you onboard.
Olena Domaieva
Lead Onboarding Manager at Corefy
To sum up
Merchant onboarding sets the tone for your entire relationship. Done well, it builds trust early and clears the path to live payments. The key is making the process feel effortless for merchants and fully controlled on your side.
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