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2.0 Merchant On-boarding Policy

Our Merchant On-Boarding Process is simple, secure and robust to ensure thorough assessment, evaluation and judgment of our prospective partner merchants for availing our services.
Two independent teams finalize the On-Boarding process:
  • Merchant Operations Team
  • Risk Management & Legal Affairs’ Team
These teams work independently making their own assessments and evaluations after receiving individual sets of data that is collected from the prospective Merchant.
After the individual assessments are done and a ‘Green Check’ is issued by both teams, the evaluations and assessments are then exchanged between the teams to cross check the other teams evaluation method and if proper process was adhered to, simultaneously mitigating any probable bias and discard any ‘Objectionable Merchants’ that are either (or have in the past) carrying out business operations that do not 100% comply and adhere to the enforced laws of the land or conduct businesses that have a high degree of risk that could possibly lead to cheating or defrauding people and invariably leading to any legal disputes
Our assessment and evaluation processes followed have been diligently drafted primarily on the guidelines and rules framed by the RBI (vide Notification DPSS.CO.PD.No.1810/02.14.008/2019-20 Dt. 17/03/2020), advice and counsel of our banking partners and renowned consultants, prevailing industry best practices and our own zeal to provide our Merchants and Customers a safe, trusted, reliable and a secure platform to allow exchange of payments all across. These assessments, evaluations and processes are updated from time to time as per the regulatory guidelines formulated and enforced.

3.0 Merchant Registration – Phase 1

3.1 Step 1

Prospective Merchants are requested to create an account on our Sign-up page to receive a temporary and restricted access to our dashboard. Once the Prospective Merchant verifies the credentials through the email received, they may proceed to the next step.

3.2 Step 2

Sign-up Form; Our Merchant Registration Form is the second step in our Merchant On-Boarding Process. This form collects the basic information regarding the Prospective Merchants Business, constitution, contact details, etc.

3.3 Step 3

After the Sign-up Form is processed by our team, we contact the Prospective Merchant via the provided contact details and complete the e-KYC formalities.

4.0 Assessment and Evaluation – Phase 2

Merchant Evaluation & Risk Assessment:

A simultaneous process of evaluating and assessing the Prospective Merchant as well as a detailed risk assessment of the Prospective Merchant’s based on variety of factors including but not limited to the business details, model and functioning, shareholders and business owners, domain check, DNS Check, website evaluation and checking for ‘Restricted Business’ activities, security checklist as mentioned in KYC list, cross checking against banking and credit authorities, etc. is undertaken to provide efficiency, remove bias and cross-verify the assessments of each team.
This policy covers background and antecedent checks of the merchants, to ensure that such merchants do not have any malafide intention of duping customers, do not sell fake / counterfeit / prohibited products, etc. The merchant’s website shall clearly indicate the terms and conditions of the service and time-line for processing returns and refunds
In case Finacus is maintaining an account-based relationship with the merchant, the KYC guidelines of Department of Regulation (DoR), RBI is applicable. Thus, to this extent, The Know Your Customer (KYC) / Anti-Money Laundering (AML) / Combating Financing of Terrorism (CFT) guidelines issued by the Department of Regulation, RBI, in their “Master Direction – Know Your Customer (KYC) Directions” updated from time to time, shall apply mutatis mutandis to Parties. There would not be a requirement to carry-out entire process of KYC (in accordance with the KYC guidelines of DoR), in cases where the merchant already has a bank account which is being used for transaction settlement purpose
Further Documentation (if needed):
Additional documentation and clarifications if required are sought from the prospective partner merchant.
Interim Discussions & Approval:
Interim Discussions & Approval: Once the documentation has all been submitted and a preliminary check conducted with a ‘Green Check’ is received, discussions are now entered into with the Prospective Merchant seeking clarifications and concluding any discrepancies (if any). At this stage, if all goes well, an interim decision is being rendered to the Prospective Merchant in regard to the payment options being offered to the Prospective Merchant.
Final scrutiny and approval: Once all discussions in regard to the payment options and integration are completed, the Prospective Merchant is then required to execute an in-house mandatory Legal Agreement along with a comprehensive list of KYC documents (physical copy) to be provided to support the details provided by the Prospective Merchant duly authenticated and signed as true-copy by the Authorized Signatories.
Furthermore, a third-party check of all Directors, Promoters, Shareholders and top management of the Prospective Merchant is conducted against government sanctioned lists, enforcement lists, credible diverse media, public court records, geography specific research, third party contributors, client requests, etc.
In addition to this, an explicit undertaking in the following format is also sought from the authorized signatories wherein the Prospective Merchant specificallyprovides an undertaking on the product and services being provided and payment sought through our Payment Gateway.
After all our evaluations are done, a complete application form is sent to the partner banks to release the MID’s after conducting their own Due Diligence on the Prospective Merchant as they deem fit.

5.0 Activation of Merchant Account – Phase 3

Once the MID’s are received and a ‘Green Check’ is received from the Legal Affairs’, the Prospective Merchant is intimated via e-mail and their access on the dashboard is ready to be integrated on the Partner Merchant’s Website and start with its transactions
5.1 Take Notice
If any partner merchant is found to be availing our services for a business/operation that is categorized as ‘Restricted Businesses’ (as per section below) and/or any product or service, which is not in compliance with all applicable laws and regulations whether federal, state, local or international including the laws of India, the partner merchant will be subject to pertinent legal proceedings and with immediate effect the services rendered to the partner merchant will be terminated.
5.2 Restricted Businesses
Following is a list of categories which are banned for accepting payments online. If any of the merchants is found accepting payments on the following categories, then it would be heavily penalized along with the termination of services.
  • Adult goods and services which includes pornography and other sexually suggestive materials (including literature, imagery and other media); escort or prostitution services; Website access and/or website memberships of pornography or illegal sites;
  • Alcohol which includes alcohol or alcoholic beverages such as beer, liquor, wine, or champagne;
  • Body parts which include organs or other body parts;
  • Bulk marketing tools which include email lists, software, or other products enabling unsolicited email messages (spam);
  • Cable descramblers and black boxes which includes devices intended to obtain cable and satellite signals for free;
  • Child pornography which includes pornographic materials involving minors;
  • Copyright unlocking devices which include mod chips or other devices designed to circumvent copyright protection;
  • Copyrighted media which includes unauthorized copies of books, music, movies, and other licensed or protected materials;
  • Copyrighted software which includes unauthorized copies of software, video games, and other licensed or protected materials, including OEM or bundled software;
  • Counterfeit and unauthorized goods which includes replicas or imitations of designer goods; items without a celebrity endorsement that would normally require such an association; fake autographs, counterfeit stamps, and other potentially unauthorized goods;
  • Drugs and drug paraphernalia which includes illegal drugs and drug accessories, including herbal drugs like salvia and magic mushrooms;
  • Drug test circumvention aids which include drug cleansing shakes, urine test additives, and related items;
  • Endangered species which includes plants, animals or other organisms (including product derivatives) in danger of extinction;
  • Gambling which includes lottery tickets, sports bets, memberships/ enrolment in online gambling sites, and related content. Skill-based games can be allowed on a case-to-case basis.
  • Government IDs or documents which includes fake IDs, passports, diplomas, and noble titles;
  • Hacking and cracking materials which includes manuals, how-to guides, information, or equipment enabling illegal access to software, servers, website, or other protected property;
  • Illegal goods which include materials, products, or information promoting illegal goods or enabling illegal acts;
  • Miracle cures which include unsubstantiated cures, remedies or other items marketed as quick health fixes;
  • Offensive goods which include literature, products or other materials that defame or slander any person or groups of people based on race, ethnicity, national origin, religion, sex, or other factors;
  • Encourage or incite violent acts; or Promote intolerance or hatred.
  • Offensive goods, crime which includes crime scene photos or items, such as personal belongings, associated with criminals;
  • Pyrotechnic devices, combustibles, corrosives, and hazardous materials which includes explosives and related goods; toxic, flammable, and radioactive materials and substances;
  • Regulated goods which include air bags; batteries containing mercury; Freon or similar substances/refrigerants; chemical/industrial solvents; government uniforms; car titles; license plates; police badges and law enforcement equipment; lock-picking devices; pesticides; postage meters; recalled items; slot machines; surveillance equipment; goods regulated by government or other agency specifications;
  • Securities which include government bonds or related financial products;
  • Tobacco and cigarettes which includes cigarettes, cigars, chewing tobacco, and related products;
  • Traffic devices which include radar detectors/jammers, license plate covers, traffic signal changers, and related products;
  • Weapons which include firearms, ammunition, knives, brass knuckles, gun parts, and other armaments;
  • Wholesale currency which includes discounted currencies or currency exchanges;
  • Live animals or hides/skins/teeth, nails, and other parts etc. of animals;
  • Multi-level marketing collection fees;
  • Matrix sites or sites using a matrix scheme approach;
  • Work-at-home approach and/or work-at-home information;
  • Drop-shipped merchandise;
  • Any product or service which is not in compliance with all applicable laws and regulations whether federal, state, local, or international, including the laws of India;
  • The User providing services that have the potential of casting the payment gateway facilitators in a poor light and/or that may be prone to buy and deny attitude of the cardholders when billed (e.g., adult material/ mature content/escort services/ friend finders) and thus leading to chargeback and fraud losses;
  • Businesses or websites that operate within the scope of laws which are not absolutely clear or are ambiguous in nature (e.g., web-based telephony, website supplying medicines or controlled substances, website that promise online matchmaking);
  • Businesses outrightly banned by law (e.g., betting & gambling/ publications or content that is likely to be interpreted by the authorities as leading to moral turpitude or decadence or incite caste/communal tensions, lotteries/sweepstakes & games of chance);
  • The User who deals in intangible goods/ services (e.g., software download/ health/ beauty Products), and businesses involved in pyramid marketing schemes or get-rich-quick schemes;
  • Any other product or service, which in the sole opinion of either the Acquiring Bank, is detrimental to the image and interests of either of them / both of them, as communicated by either of them/ both of them to the User from time to time. This shall be without prejudice to any other terms & conditions mentioned in these Terms of Use;
  • Mailing lists;
  • Virtual currency, cryptocurrency, prohibited investments for commercial gain, or credits that can be monetized, re-sold, or converted to physical or digital goods or services or otherwise exit the virtual world;
  • Money laundering services;
  • Database providers (for tele-callers);
  • Bidding/auction houses;
  • Activities prohibited by the Telecom Regulatory Authority of India; and
  • Any other activities prohibited by applicable law.

5.3 Baseline checks before a Merchant is onboarded

Merchant onboarding practices is a 6 step procedure including the following steps:
  • Prescreening
    The pre-screening process for new merchants is conducted during the earliest stages. Then, when a merchant applies, the acquirer quickly checks to ensure everything is in order. This isn’t an extensive procedure, but it can be useful in eliminating obvious scammers or fraudsters.
  • Merchant KYC Process
    A key element for adding a new merchant account is ensuring the business entity is legitimate. The business must exist, be up and running, and the account sign-up must be authorized. In this step, the merchant will need to provide background verification.
Even though this process can take some time, recent advancements in automation and digitization have helped to streamline many aspects of KYC. Instead of physically submitting dozens of documents, most payment processors have API-based integrations that allow merchants to submit their applications directly through their online environment.
The KYC process is essential for two reasons: first, it provides the information required by law; second, it can help reveal any further due diligence requirements that may be necessary. Incorporating fraud checks and individual ID requirements into the merchant identity assessment makes it easier to identify anonymous, questionable accounts.
Below are thelistof documents required from the merchants as part of the KYC process:
  • PAN Card / Form 60 of the proprietor/Trustees/Firm
  • GST Registration Certificate (if applicable for proprietor)
  • Business Registration Certificate (e.g., MSME, Shop Act License)
  • Trust Deed
  • Trust Resolution
  • List of trustees & signature
  • Bank statement or canceled cheque with business name
  • Business Address Proof
  • Board Resolution for authorized signatory
  • List of beneficiaries to the trust/firm
  • Photo IDs of all the trustees (Aadhar/Driving License/Passport/Election Card)
  • FSSAI License (for food-related businesses)
  • Import Export Code (IEC) (for international businesses)
  • Udyam Registration for MSMEs
  • Darpan Registration (NGOs)
  • Client Agreement
Merchant History Check
When a PSP is evaluating a company for a merchant account, they’ll closely examine the merchant’s business’s track record as well as people’s personal credit history. This is to ensure that they are a reliable borrower and that their company doesn’t have any red flags in its financial history. Sometimes, they may need to submit documentation to verify their credit history.
Business and Operational Model and Web Content Analysis
Depending on the level of risk determined during due diligence, a business and operational model analysis might be required. The requirements can differ based on the PSP or acquiring bank but are typically only done for high-risk merchants. The onboarding acquirer might also conduct a web content analysis to check the web presence and content for compliance.
Information Security Compliance
After a merchant has gone through the provisional stage, they’ll enter the operational phase. All transactions must adhere to the latest network security requirements to ensure everything goes smoothly. Once compliance has been guaranteed, one can start accepting sales and processing payments. PCIDSS for infrastructure and PADSS/PCISSS for the application, ISO27001 is a neccesity.
Credit Risk Underwriting
Credit risk underwriting for merchants includes determining if they meet the payment risk standards. This helps payment facilitators, banks and processors decide if they can trust the merchant to make payments.

5.5 Merchant Monitoring

Merchant acquirers or PSPs must maintain risk management after onboarding a new merchant. If a merchant changes the nature of their business, or if there’s a sudden change in transaction volume or amounts, that merchant needs to be re- evaluated for risk. A shift in risk criteria could mean that the merchant is already doing damage, so it’s crucial to complete this process quickly.
Merchant monitoring practices must include checks for:
  • ✓ Exceeding of thresholds
  • ✓ Spikes in activities
  • ✓ Changes on the website like changes in products or links
  • ✓ Including people on the sanction list
  • ✓ Unusual cross-border activities
  • ✓ Wrong media mentions
Automation in monitoring has been largely successful, but there’s a problem with false positives. It’s challenging to get the matches, so most people think it’s still better than not having automation. There are also issues when merchants start selling in new markets or offering new products, as the technology doesn’t always catch up. Consequently, the industry is becoming more challenging to compete.
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