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How to Facilitate Same Day Payment

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The GoCardless content team comprises a group of subject-matter experts in multiple fields from across GoCardless. The authors and reviewers work in the sales, marketing, legal, and finance departments. All have in-depth knowledge and experience in various aspects of payment scheme technology and the operating rules applicable to each. The team holds expertise in the well-established payment schemes such as UK Direct Debit, the European SEPA scheme, and the US ACH scheme, as well as in schemes operating in Scandinavia, Australia, and New Zealand. See full bio

Last editedNov 20222 min read

In today’s fast-paced and competitive business climate, maintaining healthy cash flow is the key to success. But in an increasingly cashless age, the processing times associated with digital transactions can stifle a company’s liquidity.

When facilitating cashless transactions, there’s often a lag between the point of sale and the point at which the funds settle in your business bank account. Yet in recent years, this lag has significantly reduced, thanks to payment apps and open banking. You can build customer trust and assume less risk in fulfilling orders by using a same day payment processor. Here’s a closer look at same day settlement payment gateways and how they work.

What is a same day payment?

A same day payment is a type of bank-to-bank transfer where payment is requested and received on the same day. In times of financial turbulence, businesses may require payment from clients on the same day that a service is rendered or an invoice is received, in order to ensure healthy working capital and ease cash flow.

So the financial services industry has responded with a choice of same day payment options, ensuring that payment is made within 24 hours in exchange for a nominal fee. Here, we look at different same-day payment options, how they work and how much they command in fees.

How long does a same day payment take?

While some same day payment processors clear funds within seconds, others will take the better part of the day. Traditional payment processing methods like direct debit take three to five working days for settlement, giving the bank enough time to assess for fraud and prevent chargebacks.

Within the UK, there are two same day bank settlement systems to be aware of:

CHAPS, or Clearing House Automated Payments System, offers same day payments for high value transfers. Typically, you’ll have to place your payment request through an authorised bank before the end of a working day to ensure same or next-day settlement. Transfer fees are high – up to £35 per transfer – which means this is a method best suited to large sums of money.
Faster Payments is cheaper and faster than CHAPS. This system operates 24/7 rather than during working business hours, which means there’s no cut-off time for your same day payments. Although there’s a transfer limit of £250,000 per transaction, the charges are lower than CHAPS and payments are sent within a minute.

How does a same day payment processor work?

Both systems mentioned above are designed for bank-to-bank transfers, so what are your options when it comes to credit card processing? Payment gateways allow your business to process same day credit card payments as well as bank transfers. They work as a third-party gateway between the customer and merchant.

While normally payment gateways communicate with payment processors to verify and settle funds, same day settlement payment gateways transfer funds into your merchant account without this extra step involved. This enables real-time payment processing by transferring batches of funds more rapidly than traditional gateways.

How to use Instant Bank Pay for same day payment

Some same day settlement payment gateways let you take card payments. Yet what about bank-to-bank transfers? While services like Faster Payments used to only be available to major banks, open banking has levelled the playing field for businesses who can now access these same benefits.

GoCardless uses open banking technology to facilitate faster payments. Instant Bank Pay confirms payments instantly, so you know funds are cleared and on the way. The payment is either fully settled on the same day if approved by 11am or on the next working day, but confirmation is instant. One-off payments can be processed with a single click, giving both customer and merchant the security of knowing funds have been approved. Instant Bank Pay is typically 54% cheaper than online card transactions, for a money-saving alternative to other same day payment processors.

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. Our open banking-powered solution Instant Bank Pay can facilitate same-day transactions with low fees, while paylinks can be attached to invoices, sent in emails, or even in a text message to make instant payment easier for your clients. Find out how GoCardless can help you with one-off or recurring payments.