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Manual payments explained

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Last editedMar 20232 min read

In an increasingly online and automated world, is there still a place for manual payments? Yes, if your customers prefer them. According to a 2021 Mintel report, credit cards are preferred by older consumers, with younger generations preferring a mix of digital payments, debit cards and cash. We’ll look at the benefits and challenges of manual payments in this guide to help you choose the best payment methods for your business.

What is the manual payment definition?

The manual payment meaning applies to any payment that requires manual input from the vendor. If you operate an in-person POS, this means that many transactions require manual input. Whether it’s taking cash and counting out the change, accepting checks, or reconciling invoices, all of these are examples of manual payments.

By contrast, automated payments don’t require any input from the vendor. Instead, the automated system handles transactions. Examples include billing software and automated online checkouts.

What are the types of manual payments?

Here’s a quick look at the various types of manual payments you might come across.

1. Cash and checks

The most obvious example is cash, which is still used across all age levels. While many businesses have gone cash-free at the point of sale, they could potentially lose business from customers who prefer to carry cash. Manual check payments still exist as well, although they’ve become far less common than in the past.

2. Manual card payments

Debit and credit card transactions are often manually processed. One example is card not present transactions, where customers provide their card details over the phone. This requires the vendor to manually enter details into the POS system. Similarly, Virtual Terminals transform your computer into its own POS for keying in payment details.

3. Manual ACH payments

Bank transfers using the ACH system are often automated, but some invoices require manual processing. While the transfer of funds itself is automated through the bank’s systems, you’ll need to manually reconcile the payment received with invoices if you don’t use automated invoicing software.

How long does a manual payment take?

Processing times will vary widely depending on the type of transaction and payment method used. While credit card and ACH payments might be processed within 1-3 business days, settling a cash payment can take longer if it relies on a company bank run. Manual payments nearly always take longer than comparable automated payments.

Are there benefits of manual payments?

They’re time consuming and take longer to process, so do manual payments have any benefits for business owners? Here are a few:

  • They cater to some customer preferences, particularly those of an older or more traditional demographic.

  • They attract customers who prefer to shop in person or over the phone, increasing your market reach.

  • Some industries, such as second-hand markets, are more suited for manual payments.

  • Large B2B transactions often require manual processing to complete the sale.

In general, whether you need manual payments will depend on your customer demographic, industry, and volume of sales.

What are the risks of manual payments?

On the other hand, manual payment processing doesn’t come without challenge or risk. To begin with, there’s an inherent risk of human error associated with any hands-on processing. There’s also a risk of fraud. Signatures are easy to forge on checks, and paper trails are easy to intercept. By contrast, electronic transactions are fully encrypted from one end to the other making it harder to divert or redirect funds.

To make manual payments safer, it’s important to use proper authentication procedures just as you would with an electronic payment. Of course, automating your payments systems is the best way to avoid these risks. While you might offer customers the option of cash and checks, for recurring payments automation is generally the way to go. GoCardless can help businesses automate recurring payments for invoices, subscriptions, membership fees and more. This cuts down on processing times and fees, while improving cash flow.

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.

Over 70,000 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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