OF all the tasks financial executives could hand over to automation, checking business documents and compliance requirements came out on top, scoring 4.4 out of 5, according to an internal industry poll by IDfy Technologies (Philippines) Inc. and Mastercard Inc.
During ‘The Anatomy of Merchant Trust’ roundtable in Manila, executives from the banking, fintech and payments sectors discussed how financial institutions can make it easier to verify and onboard micro-sized, small-scale and medium-sized enterprises (MSMEs).
The focus on document checks reflects a broader challenge facing financial institutions as they try to bring more businesses into the digital economy while keeping fraud and compliance risks in check, executives said.
According to those who participated in the poll, traditional merchant verification remains fragmented, often relying on paper-based checks and physical audits that can slow down onboarding and make it harder for institutions to assess smaller businesses with limited credit histories.
For IDfy, this condition can lead to broad risk policies that exclude legitimate merchants from formal financial services.
‘Because traditional merchant identity verification remains fragmented and unverified at the micro-level, it trickles down to ecosystem-wide trust issues that compel institutions to enforce rigid, blanket risk policies,’ the company said.
The poll revealed that participants see automating document verification and compliance checks could allow banks and fintech firms to assess businesses more quickly while applying risk controls based on individual merchant profiles.
The issue extends beyond getting a business through the door. As digital payments expand, financial institutions also face threats such as forged documents, deepfakes and fraud committed after a merchant has already been approved.
This has increased the need for continuous monitoring rather than relying solely on checks conducted during onboarding.
‘Merchant trust is no longer a one-time verification exercise-it is a continuous lifecycle,’ IDfy Philippines Country Head Raghuraman Chandrashekhar said.
Chandrashekhar said financial institutions need to move away from fragmented onboarding processes and combine identity verification with alternative data and real-time monitoring as digital payments grow.
‘The future of financial inclusion depends on enabling MSMEs to be onboarded quickly and safely at scale,’ he added.
The need for better verification also ties into the financing gap faced by smaller businesses, many of which lack conventional credit records.
Financial institutions are increasingly looking at alternative information, including digital payment records, utility payments and transaction histories, to assess the creditworthiness of merchants.
These records can also be used in lending models that increase credit limits as businesses build a stronger transaction history.
The industry estimates that such approaches could help expand formal financing to more than one million underserved merchants nationwide.
Moreover, digital payments have continued to gain ground in the Philippines, with Bangko Sentral ng Pilipinas data showing that digital payment channels such as QR Ph have surpassed 57 percent adoption.
Mastercard Philippines Country Manager Jason Crasto said merchant trust would require closer coordination among banks, payment providers, fintech companies and technology firms as more businesses move into digital transactions.
‘As more businesses participate in the digital economy, the industry needs to strengthen collaboration across banks, payment providers, fintechs, and technology stakeholders,’ Crasto said.
‘Each stakeholder brings unique capabilities, perspectives, and expertise to the table. Through stronger public-private collaboration, shared intelligence, and advanced risk solutions, we can build a more secure, scalable, and inclusive digital ecosystem that empowers Philippine MSMEs to grow with confidence,’ he added.