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How SaaS Businesses are Leveraging Bank Debit Payments to Scale Internationally

Lewis Turek
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Last editedNov 20216 min read

COVID-19 did more than disrupt the economy, sideline businesses, and create massive unemployment. It also changed the way businesses make payments.

Last  November, Forrester Consulting released a report titled “Recurring Payment Friction in the US.” Based on a survey of B2B and B2C companies, the report concluded that months of the pandemic led to “years of change.” In this blog post, I’ll share how these years of change have impacted the payments landscape.

Three factors contributing to payment friction

According to Forrester, payment friction in the U.S. exists in three key areas:

  1. Payment failures – Profitability has decreased.

  2. Added complexities – Under-resourced payment teams are under extra pressure.

  3. Higher costs – Revenues and profits see the impact. 

These three areas of payment friction make it more difficult for businesses to remain competitive and profitable. To overcome this friction, businesses must face the market head on and adopt new business practices. Specifically, new business models are forcing companies to update their technology and payments processes, but that requires choosing the right service providers. 

Before we talk about the solution, let’s examine these friction factors one by one.

Payment failures

More than half of U.S. payment decision-makers report a 7% or more increase in payment failures in the last 12 months. In fact, almost 80%say it takes more than 20 days to receive a payment.

This is significant in a few ways:

  1. First, it increases recovery costs 16 to 20%of payment size.

  2. More than two-thirds of B2B business leaders say 11% or more of failed payments result in bad debt.  

  3. One third of U.S. B2B leaders report 20%or more failed payments, resulting in higher churn. 

  4. Finally, it lowers profitability by nearly 40%.

Fixing payment failures is of high or critical importance for many businesses this year and next. It tops the list of problems to solve.

New payment complexities

Under-resourced payments teams are under constant and consistent pressure. For starters, B2B payments are much more complex now than before the pandemic. This reality comes with implications that impact cash flow, churn, and administrative costs. It also increases frustration. The result is an acceleration toward more digitalization as companies struggle to modernize.

When we look at recurring payments, complexities include an increase in different types of technology:

  • 54% of decision-makers report primarily using a customer relationship management tool.

  • 54% use a billing system.

  • 50% use some type of accounting system.

  • Almost 85% have more than 20 full-time employees managing their payment systems.

Each of these outdated modes of collecting payments have inefficiencies that do not exist with cloud-based services using robust APIs. The more complexities at play, and the more under-resourced the payments team, the more critical and urgent it is to address this challenge.

Higher Costs

During the pandemic, administrative costs associated with payment processing went up from 6 to 50% for 87% of businesses. Administrative costs have gone up more than 20% for 41% of businesses. And they’ve gone up more than 35% for 14%of businesses.

About four out of five B2B-only decision makers in the U.S. say the cost of recovery is 16 to 20% of the average payment size.

Overall, more than half of B2B and B2C decision makers say the average cost of recovery for usage or consumption-based payment models is 11%of the average payment size.

And let’s not forget that inflation is beginning to put pressure on a lot of businesses in many industries, which adds pressure on top of pressure.

The payments landscape in 7 leading countries

The U.S. recurring payments landscape is evolving. Post-pandemic, the importance of expediting the payments modernization journey from paper to digital — and from manual to automated — transactions is more urgent. But U.S. firms are not prepared and struggle to keep up.  

U.S. businesses are shifting away from checks as a recurring payment method. As businesses move away from checks, various electronic payment processing methods will become more important. 

Additionally, there are significant differences in consumer payment preferences based on geography. Companies planning to expand internationally or accept payments from abroad should look at these payment preferences as a road sign along the recurring payments highway.

In the U.S., for instance, credit and debit cards dominate, but account-to-account bank debits are also highly favored. Either debit or credit cards are the preferred method of payment for most transaction types, but when it comes to installment plans, Americans prefer bank debits. Americans do not like PayPal.

Canadians also prefer cards over checks. Their preferences are almost identical to Americans except that they like PayPal even less and prefer bank transfers more.

In the UK, direct debits are overwhelmingly preferred. Debit cards are more popular than credit cards, which hold a very distant second place.

In France, bank debits and credit cards are first and second, respectively, for every transaction type. What’s interesting is the third preference changes based on transaction type. For household bills and installments, it’s bank transfers. For digital subscriptions, it’s PayPal, and for traditional subscriptions, the French prefer checks.

Germans love banks in general. Their first preference is for bank debits and second is for bank transfers. However, PayPal is much more preferred in Germany than anywhere else.

In Australia, payment preferences are nuanced. No one choice dominates overwhelmingly, but bank debits are the most preferred except for digital subscriptions where debit cards have a slight edge. For Australians, the use case matters much more than it does for any of the other countries. For instance, PayPal has a higher preference for digital subscriptions (15% of Australians prefer PayPal for that use case) but a low preference when it comes to household bills (only 5% prefer PayPal). Australians prefer debit cards over credit cards.

In New Zealand, both debit and credit cards beat other payment preferences with a thin margin, but bank transfers are popular. No preference is predominant, and it largely depends on transaction type.

Consumers across the board lean toward more digital payment preferences but PayPal is low on the preference list with a few exceptions. Consumers prefer bank debits and bank transfers in most places. Businesses need to pay attention to the payments landscape in the country where they are doing business if they expect to achieve maximum benefits from their payment solutions.

(Note: These figures come from an IDC whitepaper published in 2020 titled “The business value of taking recurring payments with GoCardless.”)

The cost of not offering the preferred payment method

Doing business internationally can be tricky, especially when collecting payments and dealing with different regulations, processes, and payer preferences in several countries. Aligning your payment strategy to the market’s preferred way to pay is efficient and effective, but results can vary from country to country.

Before publishing their whitepaper, IDC spoke to organizations that depend on accepting recurring payments as a core aspect of their business models. IDC found that recurring payments cost 56% less per transaction than the weighted average cost of other payment types. Meanwhile, survey participants reported leveraging a recurring payment provider to improve their ability to offer cost-effective bank debits as a payment method.

Conclusion: Other methods of payment cost more and take longer.

  • Credit card transaction fees range from 1.5 to 5%. 

  • PayPal charges between 2.9 and 5%. 

  • SWIFT transactions take a week or longer to process.  

By contrast, bank debits cost 1%. Cross-border bank debits take less than a week to process and reduce friction. Plus, companies that switched to a recurring payments provider saved an average of 59% managing the process. That includes time staff spent managing and processing payments as well as technology costs associated with processing payments. 

Businesses that grow internationally use bank debits

Two recurring payments case studies illustrate the benefits of using bank debits to grow internationally. 


DocuSign is a global SaaS brand that helps companies manage electronic agreements. Used by 750,000 businesses in over 180 countries, the company integrated recurring payments into its Eurozone market, the UK, and Australia. After one year, DocuSign saw several business benefits because of this integration: 

  • 11%of new customers chose bank debits. In Germany and the Netherlands, 23% and 35% of new customers, respectively, chose bank debits. 

  • Customers who chose bank debits spent an average 14% more on DocuSign services.

  • DocuSign’s conversion rate across all payment methods increased 10%

  • The customer retention rate on bank debits was 70% versus 69%for credit cards and 61% for PayPal

  • The company also experienced lower churn

Offering a bank debit option for recurring payments in markets where that is a preferred payment method increased conversions, leading to higher revenue for the company.


In 2018, Re-Leased, a cloud-based commercial real estate management solution, wanted to increase payment processing efficiencies. Based in New Zealand, the company expanded into Australia, UK, the U.S., and Canada. They were losing 25%of transaction value to bank fees and foreign currency exchange costs.  

One immediately noticeable efficiency was the time it took to onboard new customers. Before implementation, it took five days through the mail. In adding GoCardless, that time was reduced significantly. Re-Leased saved $10,000 a month in bank fees and reduced DSO from 40-50 days to 30.  

Obstacles that get in the way of conversions include payment page quality and a low-functioning payment processing API. If customers get frustrated, they’ll leave the merchant’s website, and the merchant will lose a sale. Recurring bank debits eases payment friction, facilitating better conversion rates.

Key takeaways

Some companies surveyed by IDC collect 50% more in payments with recurring payments than they did before implementation. One business retained 91%of bank debits after three months. Retention for credit cards and digital wallets was 86% and 75%, respectively, for that same business. 

Customer support teams have seen an average 12% increase in efficiency after implementing recurring payments. Finance and accounts receivable departments have seen a 21% increase in staff efficiency, which translates into lower costs and higher revenues.

To summarize, recurring payments benefits companies in multiple ways: 

  • Lower cost per transaction

  • Reduced customer churn

  • Increased customer retention rates 

  • Customers pay on time

  • Staff spend less time chasing payments and invoices  

  • Companies can expand into new markets more seamlessly

  • And they see greater revenue

Three tips for doing business internationally

The payment processing landscape is evolving to meet the needs of a new business paradigm. As you grow your business internationally, keep these practical tips in mind:

  • Build your payment strategy based on the needs of the market

  • Offer the preferred way to pay in the market

  • Use a payment processor that can help you collect payments internationally with ease

If you do these three things, you’ll be more competitive in your industry, more profitable overall, and your international growth will have one less obstacle to overcome as your company reduces friction in the payments process.

Over 85,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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Interested in automating the way you get paid? GoCardless can help
Interested in automating the way you get paid? GoCardless can help

Interested in automating the way you get paid? GoCardless can help

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