In order to provide a great customer onboarding experience, merchant acquirers should first consider improving the underwriting process. This webinar challenges merchant acquirers to go beyond the “status quo” in payments by first unpacking the challenges of the risk process, before building an incredible customer experience. With the ETA’s Risk Guidelines as a guiding principle, Recombo CEO, Mike Gardner takes attendees through the necessary steps to understand the modern merchant, provide the tools to improve customer experience, and critically examine the underwriting process.

1. Building An Effective Customer
Experience within the
ETA Risk Guidelines
Presented by Mike Gardner, Hosted by the ETA
September 9th, 2015

2. Mike Gardner
CEO,
Recombo
Mike Gardner is the CEO of Recombo, the makers of Agreement Express, a SaaS platform
that automates onboarding and underwriting for the financial services industry. As a 20-
year veteran of the software industry, Gardner has evolved Agreement Express into a
solution trusted by top global acquirers like Cayan, Global Payments UK, Digital River, and
Mercury Payments and Fortune 500 financial institutions.
As a thought-leader in the risk and underwriting space, Gardner specializes in enabling
organizations to build a roadmap to improved underwriting and risk processes. With
Recombo, he’s on a mission to make every customer experience easier than the last for
customers and organizations alike. Gardner has spoken on panels and presented sessions
with the Merchant Acquirers Association, PYMNTS.com, and now the ETA.

3. THE CUSTOMER EXPERIENCE

4. Audience Poll Question
Q: What is currently preventing your organization
from achieving a great customer experience?
We have too many paper forms
and manual processes
We underwrite manually
Our customer experience is the best
I don’t know

5. In merchant onboarding an
extraordinary client
experience begins with a
great underwriting process

6. Now that I’ve got your
attention,
let’s begin

7. What you will learn today:
1. What your underwriting process can do to positively, or
negatively, influence the customer onboarding
experience
2. What to consider when developing an automated
underwriting roadmap
3. The data required to make good underwriting process
adjustments
4. How your underwriting team can contribute to your
growth strategy

8. Underwriting governs your client experience
Most organizations today are underwriting with people, doing a largely
manual assessment, to determine if merchants fall into a “bucket” of
Pass, Fail or Monitor.
As organizations move to more advanced, rigorous and automated
underwriting, they risk adding more hurdles for the merchant.

9. The more complex
your underwriting
requirements, the
more your
onboarding
experience will reflect
that complexity
Complexity Drives Inconvenience

10. Audience Poll Question
Q: How straightforward are your underwriting
requirements?
Very quick and straightforward
Somewhat straightforward
Complex
I don’t know

11. You’re not working in a vacuum
As you design your underwriting process you
are designing your customer experience
• Nice to have instead
of necessary
• Difficult to gather
instead of at hand
• Challenging to
execute instead of
easy
• Hard to sell

12. • The ETA (Electronic Transactions Association) is the
trade association representing the payments market.
In 2014 they published a 109 page document
providing guidelines for merchant and ISO
underwriting. It is important to note that the ETA
does not set policy for its members, it provides
recommendations. Members are not required to
adhere to the guidelines provided.
The ETA Risk Guidelines

13. Underwriting Objectives
• Identity
– Know the identity of the merchant and business owners
• Validity
– Confirmation you know the business the merchant is really in
• Legitimacy
– Ensuring the business is bona-fide business
• Financial Acceptability
– Determining if the merchant fits the financial constraints of
the firm
• Risk Level
– Evaluating the level of risk associated with the merchant
Qualify
Score

14. Start Off Right
• Define your Statement of Intent and use it as your base filter:
Organizations applying the ETA guidelines are expected to have a
“statement of intent”.
– Declare who you’re planning on doing business with and why and bias your process to
move them through quickly
– Be clear about which types of companies, areas of business, and marketing practices you
absolutely won’t do business with and knock them out fast
• Understand the difference between Restricted vs. Prohibited Merchants:
There is a material difference between a Prohibited Merchant (a merchant
that should be blacklisted) and one who is Restricted.
– Don’t treat restricted merchants like they are criminals

15. Minimum Viable Process
• Your Statement of Intent as your base filter:
– Bias your process to move your target merchants through quickly
– Knock out merchants you don’t want, fast and efficiently
– Hide the complexities in the back-end process, not in the front-end onboarding
• Categorize your Restricted Merchants appropriately:
– If they just require more frequent monitoring then don’t add more data
collection to the onboarding
– Simplify your requests for merchant information and consider the form factor
of the source information you’re requesting

16. Don’t get ahead of yourself
Statement of Intent Process Flow
Evaluation Criteria
Assisted Scoring
Increased Automation
Automated
Underwriting

17. Get to process flow and evaluate
Process Flow
Evaluation Criteria
Assisted Scoring
Increased Automation
Automate the flow to create a
consistent, auditable process
Codify each data-point into a
weighted numeric value
Tune and adjust automated score
values to match manual evaluations
Monitor and adjust while replacing
manual feeds with automatic

18. Good Process Flow Hygiene
• The ETA recommends firms employ an
underwriting process that has the following
attributes:
• Timelines (SLA’s) for underwriting evaluation are established
• High Risk or Restricted Merchants are evaluated by more
senior staff (escalation) as appropriate
• Title and/or Position of ALL approvers are captured during
underwriting
• Escalation processes/criteria are documented
• The underwriting process is documented and auditable, as
well as standardized as much as possible.

19. Why follow the ETA Guidelines?
• What’s really good about the guidelines
– Comprehensive
– Create a defensible framework
– Safety in numbers
• What’s the challenge with the guidelines
– Not easy to fully automate
– Directional in nature but not prescriptive
– Danger of over specification of the risk model

20. How can you leverage underwriting to achieve
growth goals?
20

21. Once you begin to collect scores you will begin
to develop a profile of your merchant applicants
Too Risky to do
Business With

22. Do you have the data you need
to achieve the goals you’ve set
for your organization?

23. You must monitor and understand the
distribution of your underwriting
Risk Tolerance is set too high
OR
Sales is being too conservative
Risk Tolerance is set too low
OR
Sales is being too aggressive

24. Date New Applications Pass Fail Review
This Week 200 171 19 30
Last Week 220 80 140 50
30
200
17119
Common Underwriting Data

25. Date New Applications Pass Fail Review
This Week 200 171 19 30
Last Week 220 80 140 50
100 075
Distribution Data Is Critical

26. 30
200
17119
Good Data Guides Good Decisions

27. 100 030
Distributions Position Our RED Line

28. 100 075
Impact of Improved Auto-Decisioning
When We Want To Lower Costs

29. 100 075
Impact of Accepting Higher Risk
81
Or Increase Sales

30. 75 75 75
Probably too conservative Probably too aggressive
Or Change Our Sales Behavior

31. To Get A
Distribution
You Must
Score
Everything

32. Each
Category
and Sub
Category
Must Be
Given A
Weight

33. Codification Is Straight Forward
• Range or Qualitative Scores are controlled by tables and
then set as dropdowns
• Value scores are normalized by: equations:
Max, Min
Point of Indifference
Linear or Logarithmic

34. Next Steps:
• Complete Pre-
Work
• “Rough out” the
scorecard with
the appropriate
Scoring Elements
• Estimate weights
• Setup
appropriate
testing scenarios

35. Summary:
• A well thought through underwriting process is
absolutely essential to designing a fantastic onboarding
process
• Ask yourself, if the information isn’t necessary for
underwriting purposes should we be collecting it during
onboarding?
• Define your Minimum Viable Process for underwriting
and evaluate if you should have more than one
onboarding experience
• Consider if you are collecting sufficient data to make
decisions for growth, or cost reduction

36. To learn more about Rapid Customer
Onboarding, and how it impacts and shapes
underwriting in the payments market, visit us at
www.recombo.com , follow us @agreexp on
Twitter, or contact me directly at
mgardner@recombo.com
Come by booth 1519 at Money 20/20 and meet
our team!

37. Download Your Copy of Our Digital Guide:
Building Your Roadmap to Underwriting Automation
Download Here