In recent years, the shift towards digital payments has transformed how consumers and businesses handle transactions. While credit and debit cards have traditionally dominated, there’s a growing interest in a new payment method: payment by bank, also known as open banking.
This alternative leverages direct bank transfers to enable secure, efficient transactions, bypassing the traditional card networks and their charges. With enhanced regulations and consumer protection, this payment option is poised to become a significant part of the payment landscape.
What is Payment by Link / Bank?
At its core, payment by bank allows customers to pay directly from their bank account rather than using a credit or debit card. This direct bank transfer method has gained momentum as a viable alternative due to regulatory changes and innovations that ensure security and streamline the payment process. For businesses, payment by bank offers an appealing alternative, promising both cost savings and operational efficiency plus immediate cash transfer to the business.
Why Should Businesses Consider Payment by Bank Now?
The push towards payment by bank is not just about keeping up with digital trends but also responding to shifts in consumer confidence and regulatory frameworks. Until recently, there was limited and varied (dependent on who you banked with) protection for consumers if something went wrong during a bank transfer. However, recent regulations introduced by the Payment Systems Regulator (PSR) in the UK now guarantee the first £85,000 of funds transferred, ensuring that both the sender and receiving banks share responsibility in case of fraud or misdirection. This protection brings bank payments closer to the security customers expect when using credit and debit cards, making it a safer and more appealing choice.
In addition to security, this method offers a lower-cost alternative for businesses, especially those with high transaction values. Card fees, particularly for commercial cards, can be expensive. Payment by bank reduces these fees, and can also help free up resources that businesses can allocate elsewhere.
The Practical Benefits of Payment by Bank
- Cost Savings: Payment by bank can significantly reduce processing fees. For instance, instead of paying around £2.50 per transaction, businesses might pay as little as 50p on a typical £100 commercial transaction. These savings accumulate quickly, especially for companies with frequent and high value transactions.
- Streamlined Payment Processing: By automating the payment process, businesses can improve the efficiency of their accounts receivable collection process. Monthly statement messages can include links that direct customers to an online payment page, making it easy and secure for them to settle accounts. Reminders by text and email for overdue payments can also be automated, reducing the time and resources spent on manual follow-ups.
- Enhanced Customer Experience: With payment by bank, customers enjoy a faster, smoother checkout experience. They can use their mobile devices to make payments directly, reducing the need to input card / account details. This ease of use is particularly valuable for small business clients who often make payments on the go.
- Modernised Systems and Processes: Businesses adopting payment by bank can rethink and modernise their payment infrastructure. By offering customers more flexibility and optimising manual interactions, companies can reengineer their processes for a better customer journey and a stronger overall payment experience.
- Broader Appeal Across Industries: This payment option isn’t limited to any one sector. Businesses that manage large volumes of trade accounts, wholesalers, such as builders’ merchants, can benefit from the efficiency gains. Meanwhile, retail companies can also leverage payment by bank to enhance customer satisfaction, expand service and reduce costs.
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The timing couldn’t be better for businesses to explore payment by bank. Consumer confidence in this payment method has grown thanks to recent regulatory protections, and customers are increasingly looking for modern, seamless payment options. For businesses, this method offers a competitive advantage, enabling them to expand and optimise their payment options while simultaneously reducing fees and increasing efficiency.
How ERA Group Can Help
ERA Group is here to support businesses in adopting payment by bank. We understand the complexities involved and offer expertise to ensure a smooth transition to this modern payment option. From helping clients understand the benefits to implementing tailored payment solutions, ERA Group works with businesses every step of the way. We offer a holistic approach, assisting clients in integrating payment by bank seamlessly into their systems, reducing costs, and enhancing the customer experience.
For businesses ready to embrace a smarter, more efficient way to handle transactions, payment by bank is part of the answer. ERA Group is here to make the transition easier and more beneficial than ever.
