Let’s cut straight to the real question.
What on earth are bank payments, and how do they work?
I’m glad you asked! Here’s the short, sweet, plain-English answer…
Bank payments are a way for you to collect payments from your customers debit account. If you pay a mortgage, loan, or subscription from your bank account automatically, you’re probably using bank payments!
Bank payments are electronic, which means no more messing around with cash, cheques, or credit cards. The money travels through the secure financial system, no physical payment methods required.
Why is this better?
That covers what a bank payment is, but why are they better for recurring payments?
- It’s easier than traditional payment methods
- No expensive credit-card fees
- No more trips to the bank just to make cash and check deposits
- Payments are withdrawn and deposited to you automatically
- It drastically cuts down on paperwork
- No worrying about your customers forgetting to pay
- Gives you more time to actually run your business (or even relax)
More time to relax sounds good, right?
Okay, bank payments sound awesome right? They aren’t just another way to collect payment, they’re a way you can transform your payment collection.
Who Uses Them?
Short answer: businesses, organizations, and even individuals. Bank payments are an industry-standard way to collect recurring payments.
In the United States alone in 2016, the value of ACH payments (the technology that powers bank payments) totalled over 43 trillion dollars. If those were Big Macs, you could stack them to the moon and back over ten thousand two hundred (10,200+) times. Yes, that’s a strange comparison. Yes, I did the math.
Burger math: The tastiest math around
How Does It Work?
You might be thinking, “That sounds great, but how does it actually work? Strange magic?”
It’s a fair question.
Thankfully, there’s no strange magic involved with bank payments. Just a lot of secure payment technology.
Your first step is to decide how you want to process your bank payments; through a bank or with a third-party processor. Something we’ve often heard from our customers is that banks don’t usually deal with smaller businesses. If that’s the case with your bank, you’ll need to find a third-party payment processor.
When you’ve found a payment processor, you need to enter an agreement with your customer to debit their account automatically. That agreement is your permission to withdraw money from their account. These agreements can be done on paper, or electronically.
After the agreement, you need to get your customer’s transit, institution, and account numbers. The easiest way to do this is with a void check.
Once that’s done, you can schedule the payments and set the amounts for your customers.
On the dates you select, your chosen payment processor sends a request to your customers bank. In that request is all the information about the payment.
The banks communicate with each other, and if everything is in order the payment will be transferred!
Once that’s done, the payment is deposited into your account. No paperwork, no headaches.
Congratulate yourself – you earned it!
Is it right for you?
At this point, maybe you’re wondering if bank payments are right for you.
If you need to collect recurring payments, yes they are!
There are a wide range of third-party payment processors on the market, giving almost anyone the ability to use bank payments. Here are just a few of the businesses that use our service at Rotessa:
- Accountants and bookkeepers
- Telecom companies
- Daycares and childcare
- Security companies
- IT companies
If you’re getting tired of the headache of collecting payments, take a look at bank payments. You may just find the relief you’ve been looking for.
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