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5 ways GoCardless reduces the cost of collecting payments

Andy Tweddle
Written by

Last editedJul 20234 min. read

Collecting recurring payments from your customers, whether it’s for a subscription, invoice or instalment, can be done with an array of different payment methods. But choosing your payment method is just the first step. For every method there is a wide selection of payment service providers (PSPs). Each provider comes with its own set of direct and indirect costs.

In this article, we’ll explain exactly what payment problems are causing your costs to increase, and how GoCardless can minimise these costs.

“I had experience of using Direct Debit with GoCardless at TripAdvisor, so I didn’t think twice. I knew it would bring significant savings - and it has.” - Patrick Hughes, Former Assistant Corporate Controller, Autotask

1. My current provider charges set up costs and has hidden fees

In addition to the cost of processing individual transactions your payment provider may include a number of other charges. 

For example, when processing card payments, you will be charged in the region of ~3% +20p on each transaction, plus fees for setup, monthly administration, chargeback and authorisation. Direct Debit typically has lower transaction costs than cards or PayPal. But your PSP may impose its own fees that start to outweigh this benefit. For example, are you charged extra for failed payments? What about adding new customers? And do you pay for cancellations? These are all features that can see your costs start to spiral.

How GoCardless fixes the problem

Not only is GoCardless a cheaper option – credit card transaction fees can be over 3x more expensive – but it also provides total pricing transparency. There are no setup costs or hidden fees. See our full pricing here.

2. I’m losing customers to involuntary churn

Did you know that 30% of all customer churn is involuntary? One of the main causes is failed payments. And the number one offender is credit and debit cards. Cards get lost, stolen, cancelled and eventually expire. Every time this happens, that’s a customer you can’t collect payments from. 

On average card payments fail 5-15% of the time. Just think about how frustrating that is - a customer who loves what you do, but whose latest payment has failed because they forgot to update their card details with you. That’s customer churn that was totally preventable.

Combine that with the cost of acquiring a new customer - typically 5 to 25 times more expensive than retaining an existing one - and it’s easy to see why  involuntary churn is such a big issue for businesses. 

How GoCardless fixes the problem

Because GoCardless is built on Direct Debit, we have a lower payment failure rate than cards. The average GoCardless payment failure rate at the first attempt is just 2.9%. With the ability to retry a payment up to three times when using GoCardless, you can reduce failed payments to as low as 0.5%.

This low figure means two things for your business. Firstly, involuntary churn caused by failed payments has the potential to dramatically reduce, meaning you keep hold of more customers. Secondly, you save the resource and cost of chasing up those failed payments. And that all means less time and money  spent chasing new customers to fill the void.

3. Integrating my recurring payments to other software is costly and time intensive

Adopting any new technology comes at a cost. So the easier and faster you get a new solution up and running, the less you’re going to spend. 

How GoCardless fixes the problem

GoCardless currently integrates seamlessly with over 200 of the best CRMs, subscription billing platforms, and invoicing software providers. If you’re already using one of our partners, it can be really easy to add GoCardless to your technology stack.

If you’re looking to integrate GoCardless directly into your systems using an API, we’ve got you covered as well. Our modern RESTful API has been designed to integrate GoCardless into your business quickly and easily.

Both our API and partner integrations have been designed to increase your speed-to-market. This reduces the costs of development time, meaning you’re collecting payments faster, instead of working on complex integrations and deployments.

“If you need a modern, API-connected Direct Debit integration, go with GoCardless. It’s as simple as that.” - Marc Hartog, CEO, British Journal of Photography

4. I waste a lot of time and money chasing late payments

A sub-optimal payment solution will include a lot of manual processes and human intervention. And that can mean your payment process is slow, costly, and prone to human error. Whether it’s a failed payment that needs someone on your team to chase up, a lack of integration between systems that requires the manual transfer of data, or trying to reconcile payments by hand, the more automation you can bring to your processes, the better. And if your business collects payments on a recurring basis, the benefits of automation is multiplied. 

How GoCardless fixes the problem

With GoCardless, automation is baked-in, so the vast majority of your pain points will be significantly reduced or completely gone.

Lower payment failure rates means less time chasing customers, and our suite of integrations and developer-friendly API removes any need for manual data transfer. Plus, with no manual processes, there’s no need to worry about human error. 

“We used to have two team members spending two days a month on Direct Debit admin. With GoCardless and Fonteva, there’s hardly any intervention needed anymore.” - Jayne Moynihan, Membership & Data Manager, British Institute of Radiology

5. The cost of collecting international payments is stopping my company from growing

If you need to take payments from customers outside of your home market, a significant portion of your revenue can be eaten up by foreign exchange (FX) fees. Plus, PayPal and many banks charge cross-border fees before any transaction fee is applied.

The pain of taking international payments can be so stifling for growing businesses, that many are put off the idea of scaling abroad. Did you know that 73% of senior decision-makers think their business would be more successful if it had greater access to international markets, but 39% believe the complexity of international payments is holding them back*?

How GoCardless fixes the problem

GoCardless now includes access to Wise, the money transfer experts, to ensure you get the real exchange rate when you’re collecting payments in foreign currencies and exchanging them for your business’ home currency.

Find out more about our new global payment network here.

Find out how GoCardless can reduce payment costs for  your business 

Speak to our sales team about the payment costs holding your business back. We’ll show you how GoCardless can help reduce your costs, and set you up to effectively collect recurring payments, now and as you continue to grow.

*All figures, unless otherwise stated, are from YouGov Plc. Total sample size was 741 adults (senior decision-makers in private businesses of 50 or more employees). Fieldwork was undertaken between 14th - 30th October 2019.  The survey was carried out online.