Merchant Onboarding & Managing Risk
Introduction
Lopay (lopay.com) offers UK Small-Medium sized enterprises (SMEs) a high-quality Point of Sale (PoS) app and payment acceptance solution. At the time of writing, over 10,000 UK businesses use Lopay to accept payments with approximately 500-1000 businesses signing up each week.
Lopay partners with Stripe (Stripe.com) to process payments and each Lopay customer is onboarded onto a managed Stripe Account (Stripe Connect). Stripe is a Payment Facilitator who manages the onboarding of businesses, including Know Your Customer (KYC), business and beneficiary identity checks, and sanctions checks.
Risk
All business owners assume a certain amount of risk when accepting payments for goods and services. There are many sources of payment risk (such as compliance, credit, fraud risk, and so on) to consider in any approach to risk management. It's often helpful to think about the components of payment risk in two broad categories of transaction risk (fraud and disputes) and business risk (creditworthiness)
Stripe & Lopay have a variety of solutions to help manage both transaction and business risk. The actor responsible for this risk is Stripe, who contractually shifts this responsibility to Lopay, who is responsible for all recoverable balances on Lopay accounts managed by the Stripe platform.
Each area of risk is broken down for clarity below.
| Business risk screening and monitoring | Lopay & Stripe conducts credit and fraud assessments during onboarding and on an ongoing basis to mitigate risk and reduce risk of loss. |
|---|---|
| Business risk interventions | Stripe and Lopay automates interventions against risky businesses to optimize exposure and reduce (or avert) credit risk, fraud risk, and risk of loss. There are numerous interventions that Stripe & Lopay might take, but common interventions include: changes to capabilities (such as pausing or slowing payouts, pausing processing), implementing reserve requirements, suspending, or deactivating accounts. |
| Risk of loss | Lopay assumes risk of loss for unrecoverable negative connected account balances due to credit and fraud risk. Unrecoverable negative balances attributable to credit and fraud losses incurred from connected accounts and transaction risks aren't deducted from your platform. |
| KYC and Compliance | Via Stripe, Lopay provides KYC screening to onboard connected accounts for payments and conducts risk-based onboarding screens to simplify platform adherence to evolving compliance regulation. You're responsible for making sure that Payments KYC requirements are sufficient for meeting their business objectives and relevant industry regulations. Stripe screenings include Identity verifications, Risk-based KYC and AML checks for individuals and businesses, Sanctions screening, MATCH (Member Alert To Control High-risk businesses) list checks, Secure credit card data tokenization for PCI compliance, Money transmitter licenses (MTL) in the US and e-money (EMI) license in the EU, Prohibited business checks |
| Transaction risk screening and monitoring | Lopay & Stripe have active risk screening and monitoring solutions to understand changes in credit or fraud risk of connected accounts over time |
Contact and Queries
Lopay Support at [email protected]
References
[1] Stripe Risk