How do pre-authorized debits work?
Pre-Authorized Debits work over a computerized network through Payment Canada’s federally-secured Automated Clearing Settlement System. This network connects all of Canada’s financial institutions.
When you have an account set up with a processor, the first step is to collect a Pre-Authorized Debit agreement from your customer. This will outline the payment terms and give you the proper authorization to initiate payments.
Next, you can set a transaction schedule based on the agreed upon payment terms. Payment instructions are sent to the bank one day in advance of the process date. The details are then exchanged within the Automated Clearing Settlement System and the appropriate funds are withdrawn from your customers bank account, and deposited to yours.
What are Pre-Authorized Debits (PADs)?
What are the advantages of Pre-Authorized Debits?
What kind of businesses are best suited to use authorized debits?
How do pre-authorized debits work?
Are pre-authorized debits secure?
How do I start accepting pre-authorized debits?
What is an authorization and why do I need it for pre-authorized debits?
How long do pre-authorized debits take?
What to know about pre-authorized debit rejections.
What are the advantages of Pre-Authorized Debits?
There are 3 significant advantages for businesses to collect payments through Pre-authorized debits.
Number one, they are automated. PADs can be scheduled in advance so you never have to worry about getting paid. On the scheduled dates, payments will be withdrawn from your customer's bank account.
Number two, the business gets to initiate the payments. As a business owner, you never have to wait on customer initiated payments and you won’t have to chase them down for being late. This will result in improved cash flow and a much better relationship with your customer.
And the third advantage of collecting pre-authorized debits is cost savings. Most PAD processors charge a flat rate per transaction, not a percentage like credit cards. This can save you hundreds, or even thousands of dollars every month.
What are Pre-Authorized Debits (PADs)?
What are the advantages of Pre-Authorized Debits?
What kind of businesses are best suited to use authorized debits?
How do pre-authorized debits work?
Are pre-authorized debits secure?
How do I start accepting pre-authorized debits?
What is an authorization and why do I need it for pre-authorized debits?
How long do pre-authorized debits take?
What to know about pre-authorized debit rejections.
What kind of businesses are best suited to use pre-authorized debits?
Pre-Authorized Debits work best for businesses that collect ongoing payments from the same customer. Whether you collect recurring payments on a set schedule or variable amounts from time to time, PADs are a great fit.
A few examples of businesses with recurring payments on a set schedule include: fitness centres — for membership fees, daycares— for monthly dues and Property managers — for rent payments.
There are some cases, however, where the amount of the transaction fluctuates and the timing is not always consistent. Accountants or digital marketing companies are a great example of businesses that use PADs to process variable amounts based on the number of hours they’ve worked.
Unlike Interac or credit cards, pre-authorized debits do not clear instantly and they are required to be scheduled at least 1 business day in advance. This means that Pre-Authorized Debits are not a great choice for businesses that don’t have an established relationship with their customers such as retail or e-commerce.
What are Pre-Authorized Debits (PADs)?
What are the advantages of Pre-Authorized Debits?
What kind of businesses are best suited to use authorized debits?
How do pre-authorized debits work?
Are pre-authorized debits secure?
How do I start accepting pre-authorized debits?
What is an authorization and why do I need it for pre-authorized debits?
How long do pre-authorized debits take?
What to know about pre-authorized debit rejections.
What are Pre-Authorized Debits (PADs)?
Pre-Authorized Debit or PAD is an electronic payment method that allows your businesses to withdraw money directly from your customer’s bank account.
The term pre-authorized refers to an agreement between your business and your customer. In the agreement, the customer gives permission for you to withdraw money from their account based on the terms outlined. This can work for recurring payments on a set schedule, or variable amounts too.
What are Pre-Authorized Debits (PADs)?
What are the advantages of Pre-Authorized Debits?
What kind of businesses are best suited to use authorized debits?
How do pre-authorized debits work?
Are pre-authorized debits secure?
How do I start accepting pre-authorized debits?
What is an authorization and why do I need it for pre-authorized debits?
How long do pre-authorized debits take?
What to know about pre-authorized debit rejections.
Work Nicer Coworking and Rotessa
https://vimeo.com/329046393
"What I love the most, is that we never have to talk about money, we never have to talk about billing, we only ever talk about value and relationships."
Work Nicer coworking has been using Rotessa to process their payments since 2015. At their core, they believe in community and have since grown to be Alberta’s largest coworking community with outposts in Calgary and Edmonton. Now, with over 400 members, community is the catalyst for better business. We love that!
5 Reasons You Should Be Switching to Bank Payment Collection (Right Now)
Collecting cheques, messing around with cash, getting crushed by huge credit card fees. Uggghhh. Does payment collection really have to be such a pain? Nope.
Should you switch to an easier, less stressful, more affordable way to collect recurring payments? Yep.
1. Bank Payments Are Faster Than Cheques
I’ll level with you – cheques are lame. I’m sorry to say it, but it’s true. They’ve been faithful companions for thousands (actually) of years, so it’s time to give them a break.
Let them retire in peace.
These days, cheques are a pain to deal with. First of all, you have to wait for your customer to give you a cheque. That alone can be a…unique struggle. Your customers are busy people, and they don’t want to make a trip just to drop off a cheque.
So, you end up calling them. And emailing them. And building signal fires that say, “Please drop off your payment”.
It isn’t over once you get your cheque. Even after it’s in your hand, you need to make sure your customer correctly filled it out. Mistakes can be made when writing a cheque, and if there is one…it’s back to your customer for a new one.
Not great.
Now you have the cheque, it’s filled out correctly, all that’s left to do is deposit it at the bank. Simple, right?
I don’t want to be too hard on cheques, but they’re not the easiest payment method anymore.
2. Bank Payments Are Easier Than Cash
Cash suffers from some of the same frustrations as cheques when it comes to bank payments.
As with cheques, you still end up waiting on your customer. And like cash, your customers have busy lives too. It can be easy to forget to drop off a payment on time, which makes life more stressful for you. And just like cheques, it’s not over when you receive the payment.
You still need to take that money to the bank, and who wants to carry stacks of cash with them?
3. Bank Payments Are Cheaper Than Credit Cards
Credit cards. Now that’s a pretty modern method of payment, right? Right! However, it comes at a cost. Credit card payments can be downright expensive to collect. Most processors charge a monthly fee, a per-transaction fee, and then fees up to 2.99% ON TOP of the per-transaction fee and monthly fee. Yikes.
Not good at all.
By comparison, bank payment processors often charge only a monthly fee. No per-transaction fees, no percentage nonsense, just a monthly fee.
An affordable monthly fee, in most cases.
When you’re looking for a bank payment processor to handle your bank payments, make sure you shop around on price. You’ll find that bank payments are one of the most affordable ways to collect recurring payments.
4. Bank Payments Make Bookkeeping Easy
Some people love accounting and bookkeeping, and some don’t.
Like Hawaiian pizza.
Whether you love bookkeeping or not, reducing your time spent bookkeeping is a good thing. The less time you spend doing your books, the more time you can spend doing other things.
Like growing your business.
Because bank payments are electronic, the payment records you need are just a few clicks away. Instead of wrestling with stacks of paper, everything is handled electronically. Plus, when tax time comes the electronic nature of bank payments makes it easy to get the information you need.
You can forget about wondering if certain customers have already paid for the month. Payments are updated in real-time, so you know the exact state of your customers accounts.
5. Bank Payments Are Made to Make Your Life Easier
Running a business is challenging enough. You don’t need extra stress, especially when it comes to getting paid.
Bank payments are designed to make your life easier.
From signing up your customers, to collecting your payments, everything is a snap. That’s why small businesses are choosing bank payments for their recurring payment collection.
It makes life easy.
Want to learn more about bank payments? Contact us! No sales pitches, we promise.