The risk landscape for underwriting and onboarding is getting more complex by the day as the technological waves that drive innovation are also arming bad actors with new tools.
In our webinar “Merchant Onboarding Best Practices for an AI-Powered Future,” expert panelists offered a pragmatic look at how artificial intelligence is reshaping the future of merchant onboarding and underwriting, and how to adapt without compromising speed or security. Keep reading for the key takeaways, and then watch the webinar replay.
May 16, 2025 | by LegitScript Folks
Merchant Onboarding is Being Disrupted by Both AI Fraud and Market Pressures
AI isn’t just transforming onboarding — it’s also weaponizing fraud. Generative tools are now being used to create hyper-realistic fake documents, synthetic identities, and deepfake photos that can pass for real during ID verification. And criminals aren’t stopping at fake people, they’re also generating entire e-commerce websites in seconds to set up transaction laundering operations.
But it’s not just the fraud that’s changing, it’s the overall landscape of the payments industry. Merchant onboarding systems built in the early days of e-commerce are now struggling to keep up with a fast-paced and complex environment that includes:
- An increasing number of payment facilitators entering the market
- High customer expectations for quick approvals and a good user experience
- An explosion of new, high-risk verticals (like telehealth and med spas)
- Global expansion and the jurisdictional complexity it brings
Traditional, manual onboarding processes just can’t scale in this environment. Learn more about the basics of onboarding in LegitScript’s merchant onboarding FAQ.
Four Must-Haves for Modern Merchant Underwriting
According to John Rad, Senior Product Manager at LegitScript, a successful merchant onboarding solution in today’s market needs to deliver on four fronts:
- Speed: Merchants expect approvals in minutes. Lengthy reviews kill conversions.
- Accuracy: False positives block legit merchants. False negatives invite fraud.
- Scalability: Your team shouldn’t have to grow at the same rate as your portfolio.
- Adaptability: Tools must evolve as quickly as fraud tactics and regulations do.
LegitScript built its merchant onboarding solution with those principles in mind, pairing real-time AI insights with 15+ years of proprietary risk data and a seamless user interface that consolidates everything risk teams need to make decisions.
LegitScript’s onboarding solution includes:
- Advanced AI-powered website analysis
- Historical data checks of merchant activity
- Accurate MCC detection
- Integrated KYB checks
- Seamless integration into persistent merchant monitoring
Thorough KYB and Centralized Data
John first discussed how LegitScript built its onboarding solution around its areas of expertise, then described how the company saw an opportunity to partner with identity verification company Persona on one critical aspect: know your business (KYB) checks.
In the webinar, Persona Product Architect Andrew DiMattina described Persona as bringing best-in-class KYB capabilities — including global business registry checks, adverse media screening, tax ID verification, and more. The company’s flexible building-block platform allows businesses to customize identity checks based on geography, industry, and risk tolerance.
Combining Persona’s KYB capabilities with LegitScript’s expertise in analyzing merchant websites, assigning MCCs, detecting transaction laundering, and uncovering nuanced content risks, the partnership provides a valuable risk profile that helps payments companies action merchant applications quickly and accurately.
Having all of this information centralized into one dashboard helps risk teams eliminate the silos that plague manual workflows. Instead of flipping between spreadsheets, databases, and browser tabs, underwriters get a unified risk profile.
How to Onboard Telehealth and Healthcare Merchants
One topic that got special attention was LegitScript’s Healthcare Merchant Certification — a growing need given the continued boom in telehealth and the rise of popular drugs like GLP-1s. This certification streamlines onboarding for high-risk healthcare merchants, helps ensure compliance with Visa and Mastercard requirements, and reduces risk for payment providers.
LegitScript Certification supports seamless healthcare merchant onboarding and monitoring for merchants with MCCs 5122 and 5912. Our partnership empowers payments companies to:
- Rapidly and safely onboard merchants operating in high-risk areas with confidence
- Stay ahead of evolving regulations with real-time insights
- Collaborate on compliance and policy issues to address emerging challenges
- Meet key card network requirements by ensuring merchant jurisdictional compliance
Looking Ahead at Onboarding
In a landscape where fraudsters are innovating as fast as regulators can write new rules, being proactive is no longer optional. The future of merchant onboarding is already here—and it’s moving fast. The presenters closed the webinar with these final thoughts:
- In the same way the internet and e-commerce revolutionized payment processing in the late 1990s, artificial intelligence is set to do the same in the coming years.
- AI is accelerating and complicating fraud, but it also offers solutions for managing and mitigating merchant risk.
- In an era in which identities are harder than ever to verify, fast and thorough KYB is becoming more critical than ever.
- The ideal onboarding solution offers speed, accuracy, scalability and adaptability.
Ready to future-proof your onboarding process? Reach out to LegitScript and explore how our AI-powered solutions can help you mitigate risk while accelerating growth.
Smarter Onboarding for Payments Leaders
In this in-depth guide, you’ll learn how payment service providers, ISOs, and acquiring banks can modernize their merchant onboarding workflows to reduce fraud, speed up approvals, and maintain compliance in a rapidly evolving landscape.
