Last editedJan 20232 min read
Small businesses have traditionally relied on cash or card payments particularly in the retail sector. Yet the rise of new technology has opened the doors to more convenient bank to bank payment methods. These cut the need for costly third-party card processors, making it easy for customers to transfer money directly from their bank accounts to yours. There are several bank to bank payment types to choose from, which we’ll go through in this guide.
1. Electronic funds transfers
Electronic funds transfers, or ETFs, are a broad category of bank to bank payments. This umbrella term encompasses any electronic transfer of funds from one account to another. It includes both ACH and wire transfers as well as some types of point-of-sale transactions. When you withdraw money from an ATM, this is also considered an EFT, as is an eCheck. Most of the methods we’ll describe below fall under this umbrella term.
2. Wire transfers
Wire transfers are a more specific type of bank to bank payment often used for international transactions. They allow your business to send money to a recipient anywhere in the world, usually within the same business day. Fees can be high for international wire transfers, particularly if you want same-day service. You might pay a fee for incoming wire transfers as well depending on your bank’s regulations.
3. ACH transfers
One of the most popular bank to bank payment systems within the USA is the Automated Clearing House network. This electronic network is used to send and receive funds between participating financial institutions. Transfers are processed in batches throughout the day, which keeps fees lower than with individual wire transfers. The downside is that they can take several days for processing and clearance. To get around this, you can use the Real Time Payments (RTP) network for faster payment processing. Another option is to use third-party payment processors like GoCardless to collect payments using ACH transfers at the designated date and time.
4. Digital wallets
While digital wallets are often linked to payment cards, they can also sometimes be used for bank to bank payments. For example, you can link your bank account to services like Venmo or PayPal. When you make a transfer, funds are pulled directly from the linked bank account and transferred to your recipient. The benefit of a digital wallet is that it gives you quick access to multiple payment methods, just as a physical wallet would contain a selection of cash and cards. The difference is that you can use them both online and in-person.
5. Open banking transfers
The rise of open banking within the United States has opened the doors to the next generation of bank to bank payment systems. Open banking facilitates data sharing between financial institutions, all controlled by the user. It gives wider access to financial products including real-time bank transfers. Our Instant Bank Pay solution is a good example, allowing you to send payment requests to your customers. When the customer authorizes payment via their bank, payment is sent through, and you both receive instant confirmation of the transfer. This provides a seamless user experience all at lower fees than other payment methods.
In most cases, the best payment solution will be one with plenty of options. GoCardless is the global leader in bank payments when it comes to open banking, ACH direct debit, and payments intelligence. You’ll be able to collect one-off and recurring payments directly from customer bank accounts, reducing the stress of chasing up on late payments. Blending convenience with cost efficiency, bank to bank payments are a trend to watch.
We can help
GoCardless is a global payments solution that helps you automate payment collection, cutting down on the amount of financial admin your team needs to deal with. Find out how GoCardless can help you with one-off or recurring payments.
