December 20, 2016
Technology and buying behaviours both change. Cloud-based rentals via recurring payments are popular where we used to see physical products. Think Blockbusters versus Netflix, or Spotify versus CD retailers. With the drive of digitalisation and accessibility come different payment options to accommodate mass content, but with no ownership.
Where else will we find recurring payments? Well, as an example, credit agreements remain sought-after. These allow consumers to pay instalments, sometimes two years from the date of purchase. People choose to pay rent and bills by Direct Debit. Our two examples models collect payments in different ways; or rather, by different networks: these are Direct Debit (or Standing Order) and Continuous Payment Authority. Let us define these terms.
Direct Debit – A bank pulls clients’ funds from their account via a Bacs clearing scheme. The recipient collects digital funds on a monthly, quarterly, or yearly basis. With a Direct Debit, the recipient can adjust the value and the date of transactions. A client should complete a Direct Debit Mandate form to begin payments.
Standing Orders – Whilst like Direct Debits in principle, there are practical differences. A Direct Debit gives another entity permission to collect funds from your account; conversely, a Standing Order is you transferring a set value of funds over to a recipient account.
Continuous Payment Authority – Card issuers provide networks for merchant acquirers to send transaction via Interchange. A cardholder gives an institution card information for a convenient payment, such as in-store. The merchant, in turn, submits for a transaction, for which a small fee is incurred from the banks.
http://moneyfacts.co.uk/ is a great source for more in-depth information on these methods
Companies usually specialise in one payment method only, this makes sense because it could be hard for companies to remain in touch with two different industries. The financial cost and time investment would be resource consuming. You can offer both, without the hassle, which we’ll get into. But are there benefits to offering card payments, as well as offering Direct Debits?
Card Payments give you a strong range of fraud prevention tools that help transaction security, which includes AVS, CV2, and 3D Secure checking. In addition to these, Cardstream offers our own in-house supported tools.
Real-time reporting and authorisation of transactions to easier manage transaction success. Card payments help to keep an environmentally friendly workplace because no paperwork is used in transaction processing at all.
Payment method versatility – Cards offer the ability to enable payments via email, phone, and online payment page.
Direct Debits have their own advantages. For example, merchants using Direct Debits consider it a more convenient means of payments. Merchants may consider it easier to cancel a Direct Debit too: you only need to request a cancellation from your bank. Direct Debits come with a guarantee, that states if a payment is erroneous, the bank will recover the payment.
If you already offer Direct Debits as a service then it makes sense to offer card payments. It gives you access to new sectors within eCommerce. Such as cloud software, finances, electronics, gyms, booking platforms and so on. The most voluminous subscription platforms such as Netflix have 44 million plus subscribers (1), and they are not the only one of their kind! In financial technology (Fintech), the focus is heavily on card and alternative payment methods right now. Multiple payment options are a way to maintain relevance.
White-labelling Cardstream, a leading UK payments platform, is a fantastic way to stay in touch with a developing sector and tap into a whole new customer base. You can go straight-to-market and start working within new business sectors immediately. You will also be able to offer the payment gateway to your existing client base, this increases the revenue you generate without even gaining a new customer! Cardstream has had a great year, join our ever-expanding network of partners.
(1) http://www.whats-on-netflix.com/news/netflix-subscribers-surpass-44-million/page/165/
