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The benefits of a modern payment system

GoCardless
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Last editedJun 20235 min read

Modern payment systems enable secure and convenient financial transactions using electronic methods, such as mobile payments, contactless transactions, and digital wallets. Transitioning to these systems often brings benefits like increased speed, convenience, improved data security, and accessibility – empowering businesses to meet customer expectations, drive sales, and stay competitive in any marketplace.

If you run a business that provides goods or services to the public, nothing matters more than making sure you get paid promptly and securely. Modern payment systems are designed to work equally well for your business and your customers, ensuring that cash flow remains steady and that the payment process is as frictionless as possible. There are various types of modern payment systems, each with built-in advantages for your business.

Advantages of modern payment systems

The advantages of working with a modern payment system include the following:

Payer Preference

Meeting customer expectations is vital to any business, and most customers now expect to be able to make a payment using a method of their choice. Customers could shop elsewhere if you don’t offer a suitable payment mix that includes their preferred option.

Research has shown that UK payers trust bank payments more than card payments. This being the case, it would be a good move to offer bank payment options, such as Direct Debit, to your customers. Additionally, bank payments are beneficial for businesses as they offer lower transaction fees, higher success rates and more automation, cutting down on tiresome manual admin.

How to collect Direct Debit payments with GoCardless

1.

Create your free GoCardless account, access your user-friendly payments dashboard & connect your accounting software (if you use one).

2.

Easily set up & schedule Direct Debit payments via payment pages on your website checkout or secure payment links.

3.

From now on you'll get paid on time, every time, as GoCardless automatically collects payment on the scheduled date. Simple.

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Affordable pricing

The interchange rates set by payment card networks are a fact of life for any business which processes card payments, and even the most advanced payment system can’t operate without these charges. 

The relatively high fees charged on card payments result from the number of intermediaries required to process a credit or debit card transaction, with each adding its fee, driving up the total cost. Bank payments, by contrast, are direct account-to-account transfers that involve two, or often just a single bank, which keeps the transaction fee low.

Prompt payment 

Late payments are a huge issue for UK SMEs, and this has traditionally been a difficult problem for businesses to deal with. Modern payment systems can help mitigate the level of late payments through automation. Bank payments, such as Direct Debit, are automated ‘pull’ payments that, once authorised by the customer, are paid on schedule without any further action required from the customer, eliminating late payments alomost entirely.

Additionally, the electronic transactions handled by different types of modern payment systems enable much faster reconciliation of payments than any traditional method. Digital connectivity, as used by GoCardless, allows money to be transferred from buyer to seller at a much faster speed.

In the UK, the GoCardless system makes use of the latest open banking technology in order to offer the option of instant bank pay – a method that offers faster settlement and lower transaction fees compared to card payments. Indeed the instant bank pay system provides direct bank-to-bank transfers with instant confirmation and has been found to be 54% cheaper than online card transactions.

Security

Card payments are more vulnerable to security issues, posing additional risks to both consumers and merchants. From identity theft to poor authentication methods, not forgetting data breaches, fraudsters have plenty of mechanisms they can abuse to take advantage of an outdated framework. 

The integrated nature of modern payment systems means that the transactions being handled are far more secure than those made using older non-integrated payment technology.

Time investment

In addition to greater security, you must consider the time investment required to set up and manage the system. GoCardless offer quick and easy set-up with minimal time required to manage payments once they are set up. The ability to automate payment collection means that the admin involved in payment collection – invoices, receipts, reconciliation, etc. – is updated in real-time, making accurate record-keeping much simpler.

Operational costs 

Once a modern payment system has been set up across a business, the lines of communication between separate payment devices and workstations are operational. This makes it easier to manage the system with multiple payment devices. Ease of operation also means lower costs and a smoother customer experience.

Key Takeaways

Payer Preference

Customers expect a choice of payment methods, and UK consumers trust bank payments more than card payments. GoCardless offers a simple bank payment collection service for instant, invoice and recurring payments that can be automated to eliminate late payments and reduce manual admin.

Affordable pricing

If you want to keep costs down, consider bank payments rather than card payments. Bank payment fees are lower due to less complex processing requirements. Customers are generally happy to switch to bank payments like Direct Debit, as it is more convenient and offers strong consumer protections

Flexibility

Living in a fast-paced business world, flexibility is always required for payments. With GoCardless recurring payments, you can change the transaction amount, collection date and frequency without needing new authorisation. This makes it a breeze to increase prices or provide discounts.

Prompt payment

GoCardless has almost entirely eliminated the problem of late payments by collecting instant, one-off, recurring, and invoice payments via automated ‘pull’ payment. Pull payments only require one-time customer authorisation to automatically collect payments indefinitely. Once set up, your payments will be automatically pulled from your customers' bank account and credited to yours on the dates you set, meaning you get paid on time every time. 

Time investment

One must consider the ‘total cost of ownership’ regarding payment systems. Other than the obvious question of how much time is required to learn and operate the payment system, other factors need to be considered. A big one is how much admin a system generates. Because 10% - 15% of card payments fail due to lost, stolen or cancelled cards, this creates a lot of work in chasing missed payments and manual reconciliation. With GoCardless, 97.3% of payments are successfully collected on the first try, improving cash flow and reducing manual admin.

Cost-effective, secure and reliable recurring payment collection for small businesses.

"For ongoing monthly payments it’s perfect. You can easily adjust the subscription amounts and don’t suffer from the problem of expired cards." - Charles Cridland, Technical Director, YourParkingSpace

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Case Study: Gravity Active Entertainment

Gravity Active Entertainment, an international chain of trampoline and leisure parks, successfully bounced back from the challenges posed by the COVID-19 pandemic by implementing GoCardless Instant Bank Pay for their payment collection process. By switching from card payments to Instant Bank Pay, Gravity Active Entertainment achieved numerous benefits for both customers and business owners.

According to Shane Williams, Customer Experience Director, the Instant Bank Pay solution seemed perfect for shutting down misuse: 

Unfortunately, some customers took advantage of the lag between signing up and the 14 days it takes to collect a direct debit, gaining free access by cancelling the mandate after their visit. We’d been working with GoCardless on the Direct Debit side of things for a couple of years already, and the Instant Bank Pay solution seemed perfect for shutting down that misuse.

Prior to the adoption of Instant Bank Pay, 33% of customers at Gravity’s Bluewater facility failed to pay, illustrating the feature’s importance in protecting revenue. Chloe Blake, Assistant General Manager at Gravity Bluewater, highlighted how customers appreciate the quick and simple process:

We have had customers say how quick and simple the new process is – they just scan our QR code, choose the service they want, and it takes them straight to the payment page. It's all done within two minutes.

The financial benefits of GoCardless are very palpable as well. Shane notes that collecting payments via GoCardless is "50% cheaper than credit cards." He further stated,

90% of subscription customers now pay via GoCardless, and we expect that to be 100% within months. With almost five and a half thousand VIB customers and projected monthly growth of 6% over the next year, this is a significant source of revenue for the business.

Learn how you can complement your recurring payments with Instant Bank Pay a simple, convenient way to collect one-off payments powered by open banking.

We can help

Find out how Instant Bank Pay and Direct Debit enhance your businesses' payment processes, driving financial efficiency and a smoother customer experience.

GoCardless makes it quick and easy to get started, and with no contracts or long-term commitment required, there’s no risk. You can set up instant, one-off, or recurring payments in the merchant dashboard in just a few clicks, and GoCardless automatically creates and sends all the necessary forms, doing all the heavy lifting for you. You can also connect to GoCardless via over  350 partner apps, such as Xero and Quickbooks.

Cost-effective, secure and reliable recurring payment collection for small businesses.

"For ongoing monthly payments it’s perfect. You can easily adjust the subscription amounts and don’t suffer from the problem of expired cards." - Charles Cridland, Technical Director, YourParkingSpace

FAQs

What are the benefits of an electronic payment system?

There are several benefits of an electronic payment system. It offers convenience and speed, eliminates the need for physical cash, enhances security, provides transaction records and insights, and promotes financial inclusion. Adopting a modern payment system empowers businesses and individuals, facilitating efficient, secure, and inclusive transactions in the digital landscape.

What is a modern payment system?

A modern payment system is a secure and efficient framework that enables seamless transactions between individuals, businesses, and financial institutions. It utilises cutting-edge technology and various methods like account-to-account payments and Instant Bank Pay. This system promotes financial inclusion and convenience and revolutionises digital transactions in the modern economy.

Which payment method is best?

The best payment method varies depending on individual preferences and circumstances. Credit cards offer convenience, while bank transfers provide secure direct transfers. Digital wallets offer quick mobile payments, and cash remains a traditional option for in-person transactions. Choose based on your specific needs.

What is the safest payment method?

Determining the safest payment method depends on various factors. Account-to-account payments ensure direct transfers, while Instant Bank Pay leverages secure banking systems. Choose based on your specific needs and trusted platforms.

Cost-effective, secure and reliable recurring payment collection for small businesses.

"For ongoing monthly payments it’s perfect. You can easily adjust the subscription amounts and don’t suffer from the problem of expired cards." - Charles Cridland, Technical Director, YourParkingSpace

Over 70,000 businesses use GoCardless to get paid on time. Learn more about how you can improve payment processing at your business today.

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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