In Part 1 of this three-part series, we did our best to convince you that paper checks are quickly becoming obsolete. Many businesses see the wisdom of transitioning to digital payment methods for B2B (Business to Business) and B2C (Business to Consumer) transactions. In Part 2, we'll explore the alternatives to paper checks.
Alternative payment methods
Customers want alternative ways to make payments. Businesses would like to make the whole payment process more accessible and appealing to their customers and more efficient for their staff.
For many businesses, the pandemic was the catalyst that finally prompted them to transform their AR processes to make it easier for customers to pay digitally. As check usage declines, the digital replacing them include:
EFT and ACH
Electronic Funds Transfer (EFT) is a process for electronically transferring funds from one bank account to another. These transfers can be performed across multiple financial institutions. EFT transactions take place online and do not require assistance from bank staff.
Automated Clearing House (ACH) payment is a type of EFT that moves funds between banks in the US. These transactions are run by the National Automated Clearing House Association (NACHA), a non-profit operating under the Federal Reserve.
ACH transactions can be credits (funds added to a bank account) or debits (funds deducted from a bank account). The transactions are gathered and processed in batches, usually three times each business day. Completing ACH transactions may take one to three business days, but same-day processing is a goal for credit transactions.
Credit cards, debit cards
It costs more to process credit and debit cards than it does to complete ACH transactions. But the processing time with cards is nearly instant. Also, with credit/debit transactions, there is no risk to the merchant of insufficient funds, a possibility with ACH transactions.
Suppliers may be hesitant to accept a high volume of credit card payments because of processing costs. However, there are ways to offset the fees. They can partner with an integrated payment processor offering . Interchange optimization allows merchants to qualify to pay lower rates when customers pay by credit/debit cards.
Virtual credit cards
A virtual card is a completely virtual version of a credit card. No plastic necessary. Virtual card issuers supply a temporary card number that buyers can use for online purchasing and bill paying. These virtual cards afford an additional level of security because they don't provide the user's personal information or bank account details. In case of a data breach, there is no sensitive material on file.
However, a is that someone has to manually enter the card details into your point-of-sale system or virtual terminal and confirm that the data is reflected in your ERP. Happily, some solutions allow . That makes accepting virtual credit cards easier for your accounting team.
Digital wallets
Digital wallets—or e-wallets—are online services or software apps that allow buyers to store their payment information securely. With digital wallets, customers can keep money on hand (virtually) for future purchases, perform transactions, and track payment history.
Online payment services such as Paypal offering a digital wallet feature can make the significantly more convenient by eliminating the need for endlessly entering the same account information for repeat purchases or recurring payments.
Streamlined payment processing, designed to scale
As you can see, various digital payment methods are available. But which will work best for your customers and your business? That's where the experience and expertise of a digital technology partner come in.
The right payment processing software can speed up and automate payments, reduce manual processes, accelerate cash flow, drive more revenue, and empower your crucial staff to perform more impactful activities, all while saving you money.
Our experts at Versapay transform AR departments to drive efficiency and cash flow by connecting you with your customers over the cloud. We are dedicated to making billing and payment easy for buyers and sellers.
In Part 3 of this series, we'll offer some suggestions for transitioning your B2B (Business to Business) customers to digital payment methods while still accommodating customers who prefer to pay by check.
Do you have questions for our payment processing experts? At Versapay, we are dedicated to helping you find answers. Versapay today.
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By Versapay, www.versapay.com
