What do you think of when you hear the words, “bank payments”?
There may be a few different things that run through your mind. Ranging from “What are bank payments?” (we have a blog post about that here), to “Those sound complicated and weird” (which is what this post is about).
Today, I’ll be playing the part of ‘mythbuster’, and de-constructing 5 common myths about collecting payments automatically via bank payment. Unlike the famous TV show, I can’t promise any fiery explosions. But I can promise you’ll leave with some valuable payments know-how!
(Okay, maybe I’ll include 1 explosion. Make sure to stick around.)
Myth 1: Only Big Businesses Can Collect Bank Payments
Starting this list is the number-one thing that people are mis-informed about when it comes to collecting bank payments.
Most assume that something as complex-sounding (we’ll talk about that in a moment) as bank payments must only be available to big businesses.
This myth does have some elements of truth. If you walked into a bank and asked about bank payments, you might hear terms like “minimum transaction amounts”. Fact is, banks aren’t often set up to accommodate small businesses. So, as far as many banks are concerned, bank payments are reserved for large businesses.
That is, until third-party payment processors came along.
Now, pretty much any business or individual can use bank payments to collect payments automatically. Even if you only collect 1 payment per month, you can STILL use bank payments.
I wish I conducted business this way
Third-party payment processors set you up to collect banks payments via Automated Clearing House (ACH). The processors deal directly with the banks, so you don’t have to. It opens bank payments to businesses of any size, not just the big ones.
(If you’re interested in getting started with bank payments, I wrote a blog on that here.)
Myth 2: Bank Payments Are Confusing
The idea of collecting payments straight from your customer’s bank accounts sounds confusing at first glance. You need to connect to their bank account, get their permission, schedule the payments, and collect the payments. Trust me, I know that it might seem overwhelming.
Me, whenever I try to figure out… almost anything
Here’s the thing… bank payments are dead-simple.
Well, dead-simple when you use a third-party processor.
You see, while I have nothing against big banks, their software is often lacking in the user-friendliness department. Complicated, awkward, and expensive are a few adjectives that can be used to describe most banking systems. Besides that, you’re usually left on your own when questions or problems arise.
Use the right third-party processor, and these problems vanish. Clean software design, on-going support, and detailed help articles are the standard amongst quality payment processors. Even if you don’t feel like a tech-savvy person, the right processor will help you become an automatic payment pro!
Myth 3: Bank Payments Are Not Secure
When most people hear about businesses withdrawing money from a customer’s account automatically, they get concerned. After all, isn’t a business having that kind of access dangerous?
Not at all!
It’s important to remember that the business does not have access to the account directly. All the business has, is permission from the customer to debit the account within the confines of the payment agreement. If there was ever an issue with a payment, the customer is fully protected under payment law.
The information that customers give businesses in order to use bank payments, is the same information that’s available on checks. So, bank payments are not a security risk. In fact, with the protections provided by payment law, they’re often more secure than other payment methods.
Uh, not that kind of payment law
Myth 4: Bank Payments Are Expensive to Use
At this point, you might be realizing that bank payments are easier, more secure, and more attainable than you assumed. But, you’re curious about the cost. After all, it should cost a fair amount in fees to withdraw money from customer’s account, right?
To be honest, it is… and it isn’t.
If you went straight to your bank and tried to process bank payments through them, it most likely would be expensive. And that’s only if they’re able to deal with you, as many banks require hundreds or even thousands of transactions a month.
That’s not a slam on banks, it’s just the reality. Banks are designed to work with businesses that run large amounts of transactions. Their systems and policies aren’t designed with small businesses or solopreneurs in mind.
When you use a third party payment processor, you’ll find that bank payments can cost less than other payment methods, like credit cards. Because third-party processors submit huge amounts of transactions to the bank every month, they get you the best rates possible.
Don’t worry, being excited at this point is natural.
Myth 5: Automatic Payments Are A ‘Niche’ Payment Method
This is one I’ve heard a few times. Some believe that bank payments aren’t as popular as credit or debit card payments.
The numbers show that in 2016, the value of ACH payments climbed to over 43 trillion dollars in the US.
It was a lot of money, basically.
Okay, so lots of money goes through bank payments. But, that’s just a number. To make it more real, here’s some bank payments you might be using:
- Mortgage payments
- Rent payments
- Car payments
- Internet/cellphone/TV payments
- Utility bill payments
- Property tax payments
- Netflix subscription
- Gym membership
Bank payments are a trusted way to collect payments and fees for goods and services across almost every industry. Far from ‘niche’, bank payments are the way for businesses, organizations, and even governments to collect payments.
I hope this article was able to clear up some misconceptions you may have had about bank payments.
When you get down to it, collecting bank payments in your business can be easier, cheaper, and more convenient than collecting cash, checks, or cards.
Find the right third-party payment processor, and you’ll be on the way to payments bliss before you know it.
If you have any questions about bank payments, or if you’d like to see a blog post covering a certain payment topic in the future, drop me a line at email@example.com.
Oh, and because I said I’d deliver explosions: