How does merchant underwriting work?
The merchant applies with company and ownership documents, its website, products, expected volumes and often previous processing statements. The provider runs KYB, checks the merchant category code and the website, and estimates the risk that it will be left paying for refunds, chargebacks or undelivered orders. Stripe’s documentation says its underwriting reviews the business model, billing practices, product usage, processing history and financial stability, and that businesses taking payment far in advance of delivery pose a higher credit risk. Card schemes add a mandatory check: Mastercard describes MATCH Pro as a system its acquirers must use, queried with the details of the merchant and its principal owners before a merchant agreement is signed.
What are the possible outcomes?
Approval, approval with conditions, or decline. Conditions can include a rolling reserve, a processing limit, delayed settlement or a request for more documents. Stripe’s documentation says acquirers must screen applicants against Mastercard’s MATCH and Visa’s VMSS databases of terminated merchants, and that a listing generally disqualifies a merchant from processing with Stripe. As an illustrative example: a store selling annual subscriptions processes 200,000 euros a month. An acquirer approves it with a 10% rolling reserve, holding back 20,000 euros of each month’s sales, because customers pay up to a year before the service is fully delivered.
What are the trade-offs?
Underwriting takes time, and each new provider repeats it with its own risk appetite. A merchant declined by one acquirer may be accepted by another on different terms. Approval is not permanent either: terms can change when volumes, products or dispute levels do.
Where does Omno use it?
Omno does not acquire or underwrite merchants. Each connected PSP onboards the merchant under its own rules, and the set of providers is configured per merchant account. Once several routes are live, routers with order of preference and weights spread traffic across them, and reporting compares success metrics per PSP.