Merchant onboarding has long been one of the most overlooked drivers of revenue performance in the payments ecosystem. While PSPs invest heavily in sales, underwriting, and implementation, the real financial impact often hinges on a simple question: How quickly does a new merchant begin processing? That timing quietly shapes portfolio growth, ROI, and the efficiency of your entire go-to-market engine.
To help answer that question, TSG recently launched the Executive Dashboard for its AIM platform. In addition to making it easier to benchmark key metrics, it introduced the new Activation Rate metric.
What is it?
An activation rate is the time, measured in days, it takes a merchant to transition from signing a merchant processing agreement and being approved by a Payment Service Provider (PSP) to beginning to process payments. On the Executive Dashboard, the activation rate is measured by comparing the merchant’s open date to its active date.
Why is it important?
The gap between a merchant signing and the start of transaction activity has major implications for a PSP’s bottom line. Sales cycles are already long and costly, and acquisition costs are often not recouped until after the first year of merchant activity. Each day a merchant is delayed in processing payments represents lost revenue and delays ROI on initial acquisition costs.
For example, if a merchant that processes $4M per year signs with a new provider but isn’t activated for 30 days, that represents ~$329K in deferred volume and hundreds of dollars in deferred net revenue.
This phenomenon, exacerbated by the thousands of merchants typically within a portfolio, creates a significant compounding issue over time, often resulting in millions of dollars in unrealized revenue annually.
What is the average activation rate?
Looking at a representative sample of the U.S. market, the average activation rate in November 2025 (over the trailing three months) was ~19 days. While directionally useful, this aggregate metric masks meaningful variation in onboarding effectiveness across individual portfolios.
Why are activation rates that long?
Several factors influence any particular merchant’s activation rate. The primary factor is complexity. Typically, the larger the merchant, the more back-end processes and extenuating contingencies exist that prevent effective onboarding of an enterprise-sized merchant. While the average activation rate across the board is 19 days, the average for a $50M+ annual-volume merchant is 59 days. SMB merchants ($100K-$1M in annual volume), by contrast, activate in an average of 16 days.
In addition to significant differences in merchant size, industry type also has a substantial impact on activation rate. Personal Services merchants are typically among the faster industry groups to onboard, with an average activation rate of 14 days, whereas merchants operating in more complex industry groups, like education or non-profit, take over 40 days on average to be activated.
How to address and benchmark activation rate
Addressing your activation rate can be a complex issue due to the lack of a one-size-fits-all solution and the varying factors that impact each merchant. SMB merchants in a portfolio may be impacted by delays in terminal shipping or initial installation, whereas eCommerce merchants could be impacted by overly complicated gateway configurations and plugin setup processes. Some variables may be entirely outside a PSP’s control, such as internal IT approval cycles at enterprise merchants or a seasonal merchant waiting to complete setup until closer to when they operate.
Activation rates are largely consistent over the long term, and strategic decisions taken to address excessive activation rates are largely structural. Using the new activation rate chart on the AIM Executive Dashboard is the simplest way to track your progress in reducing your activation rate over time and anonymously comparing it to the market, allowing you to track the progress of your remediation strategy in totality or by volume tier and/or industry.
We’d love to help, whether it is providing further clarification on tracking activation rates or offering guidance on tackling your strategic objectives for the year. Contact us today
Want to Learn More?
Check out this video that walks through all of the new features of the AIM Executive dashboard, including the new activation rate visualization.
Ready to dive in? If you’re not an existing subscriber, create an account in the TSG Portal with your business email address and immediately start an AIM trial to explore the new interface.