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Revamping Merchant Onboarding: How Banks Are Shifting Their Strategies
As regulatory guidance continues to evolve, banks are finding themselves at a crossroads where opportunity meets challenge in the world of merchant acquisition. With pressure to grow and comply, the conversation is shifting toward a nuanced understanding of risk appetite and merchant onboarding. Kyle Becker, Vice President of Bank Strategy and Partnerships at Maverick Payments, emphasizes this delicate balance in the recent PYMNTS interview.
Breaking Away from Cautionary Practices
For years, the bank’s approach to merchant acquisition was hindered by caution fueled by fear, uncertainty, and doubt. Becker reflects, "Merchant acquiring has often operated under layers of inherited caution," resulting in blanket bans rather than thoughtful evaluations based on data and controls. The turning point came in 2025, when regulators shifted focus away from reputational risks, enabling banks to prioritize safety and soundness.
Understanding Risk Appetite and Its Implications
Risk appetite statements are key instruments that help banks define their acceptable exposure levels across different merchant categories. Becker pointed out that these documented statements provide a framework for consistent decision-making, ensuring that expectations are clearly communicated to underwriting partners. This clarity allows banks to be more strategic in their choices of merchant industries, streamlining the onboarding process.
Leveraging Technology for Swift Merchant Onboarding
Embracing technology is revolutionizing how banks approach risk management and onboarding processes. Traditional, manual practices are being replaced by automated systems that make know your customer (KYC) and know your business (KYB) checks efficient. With tools like artificial intelligence and real-time transaction monitoring, banks can significantly reduce onboarding times from days to mere minutes, all while maintaining stringent oversight. As Becker notes, technology-led onboarding represents a shift from fear-based assumptions to an auditable, documented approach.
The Need for Coordination in Risk Management
Despite the push for automated onboarding, Becker warns against solely prioritizing speed without thorough third-party risk management (TPRM). He describes TPRM as a structured evaluation process that helps banks ensure alignment with their risk appetites and operational capabilities. This "dating period" between banks and partners includes validation of underwriting policies, risk assessments, and compliance checks.
Adapting to New Trends in Payments
The future of merchant services is increasingly leaning towards innovative payment models like Pay-by-Bank, which cuts out multiple intermediaries and enhances profitability for banks. By enabling direct account-to-account payments, this model supports better merchant relationships and increased deposit growth while complying with regulatory expectations.
Collaborative Efforts: A Path Forward
As Becker concludes, establishing strong partnerships and utilizing technology is crucial for banks navigating the challenges of merchant acquisition. The goal isn’t just to maintain stringent standards but to shift to continuous, data-driven oversight that benefits both banks and merchants.
As owners of businesses generating between $2 million and $10 million in annual revenue, it’s essential to stay ahead of these trends in banking and payments. By understanding the evolving landscape of regulatory guidance and technology, you can make informed decisions that will lead to growth and success.
Call to Action: To thrive in a fluctuating financial environment, consider reevaluating your payment solutions and strategies today. Let technology take the lead, streamline your processes, and deepen merchant relations by choosing the right tools for success.
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