Last editedNov 20222 min read
The payments landscape is constantly evolving, with businesses now able to offer a wider variety of methods than ever before. While there are plentiful ways to categorize payments, dividing them into push vs. pull payments is an easy way to start. In this guide, we’ll look at the key differences between a push payment and pull payment, so that you can determine which is better suited to your industry and client base.
Push payment vs. pull payment: definition
To better compare push vs. pull payments, let’s look at how they’re defined.
Push payments describe any method where the customer must take the action to initiate payment. In other words, the payer is in control, pushing the funds to a destination account.
Pull payments describe any method where the business can take money from the customer without approval for every single transaction. In this case, the payee is in control, pulling funds into their own account.
Push payment vs. pull payment: examples
Push payments are more frequently used for transferring one-off sums of money. Cash is perhaps the most clear-cut example of a push payment because the payer physically has money in their hand which they give to the payee. Paper checks are not quite as obvious, but they also qualify as push payments because they put the payer in control of the payment’s timing and amount. Another example of push payments are bank transfers from one account to another, where the payer has to initiate the payment.
Here's a summary of push payment examples:
Single card payments
One-time digital wallet payments
By contrast, direct debit mandates are a prime example of pull payments. These occur when the payer gives the payee permission to withdraw money from their account, a set-up typically preferred by businesses using a recurring payment model.
Here’s a summary of pull payment examples:
ACH debit or direct debit payments
Automated card payments
Automated digital wallet payments
Pros and cons of push payments
For one-time payments and everyday retail situations, push payments offer a variety of benefits.
They can be faster than pull payments, at least for the first time, because they give all relevant information up front.
They are sometimes preferred by first-time customers, who prefer to remain in control over payment with a business they’ve never interacted with before.
However, there are also disadvantages – namely for the business who doesn’t retain control over the payment. The payee is putting full trust in the payer to initiate the correct payment at the correct time. This means that payments might be missing or delayed, all of which can impact a business’s bottom line.
Pros and cons of pull payments
Pull payments also offer an array of advantages, particularly for recurring or subscription businesses.
They put the business in full control of payment, determining the timing and amount of funds taken.
They require full authorization from the payee for payment security.
On the other hand, downsides include the potential for fraud if the payer authorizes the wrong person to pull funds from their account. This might be due to phishing attacks or simple human error when entering account details. Fortunately, most payment gateways have built-in protections to prevent this.
Push vs. pull payments: the bottom line
There’s a time and a place for both push and pull payments. For single transactions, push payments are still a popular option particularly with the wealth of convenient mobile and digital wallet options available today.
Yet for subscription services or recurring payments, pull methods are almost always the better option. They don’t require continuous customer action or input. This makes it more reliable and convenient both for the payer and payee, improving cash flow and customer retention. The company retains control for greater stability and reduced payment failure rates.
We can help
GoCardless is a global payments solution, setting people and businesses free from the frustrations and cost of outdated payment methods. We allow businesses to easily access ACH Pull payments via ACH Debit. With intelligence features like Success+, which retries failed payments at the best time, make late payments a thing of the past.
Find out how GoCardless can help you with one-off or recurring payments.