Underwriting 101: What Is Underwriting and Why is it Important?

Underwriting in the payments industry is the process of assessing and verifying potential customers – including adherence to banking, brand, and governmental rules – to protect consumers from entities that want to engage in fraud or other illegal activities by accepting credit card transactions. This is essential to maintaining a safe payments ecosystem and safeguarding everyone’s money and well-being.

Before a payment facilitator or other payments company can onboard a new customer (referred to as a merchant) and allow them to begin accepting electronic payments, they need to first ensure that the merchant is a legitimate business that does not engage in any sort of illegal activity.

This guide will walk you through all the basics of underwriting, from collecting merchant information to required checks, best practice, and onboarding the new merchant.

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