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The Challenges of Collecting One-Off Payments

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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 editedSep 20212 min read

When it comes to taking one-off payments, options can be limited. Direct Debit takes time for processing, while card payments involve hefty fees. We’ll delve into the challenges that businesses face when it comes to receiving payments online, as well as a few potential solutions.

Challenge 1: cost

When you receive payments online, it often comes at a significant cost. For example, most businesses accept credit and debit cards, but these can cost around 2-3% of the total transaction amount plus an additional flat fee. For small businesses, this can eat away at limited profits. Processing fees are even higher than this for businesses that conduct international transactions. Payments from abroad might involve not only the usual processing fee, but additional currency conversion fees. Currency fluctuation is notoriously difficult to predict, adding uncertainty to the equation.

Challenge 2: security

Another challenge to consider is that of security and fraud. Even the most on-guard business needs to be constantly updating its cybersecurity tactics amongst a rise in payment fraud. You can safeguard against fraud when you receive payments online by running through a checklist of red flags, but this takes both time and money. Payment fraud comes in many disguises. For example, chargebacks are a common issue with smaller businesses. This happens when a customer makes a one-off purchase and then raises a dispute with their bank rather than the business. Another common scam is when a customer pays for their goods and then says they were never received, seeking a refund for their payment. The business is then out of both inventory and cash.

Challenge 3: payment timing

Delays are all too common when it comes to payment processing. Paper cheques are notorious for the length of time it takes to hit your bank account, but even debit payments can take several business days to clear. There have been some improvements on this end, including the UK’s Faster Payments scheme. However, if anything goes wrong during the processing phase it can hold up the entire transaction. For businesses operating on tight margins, the wait for payment clearance can be agony.

Challenge 4:

Along the same lines of timing, late payments from customers are another costly issue for small businesses. For recurring payments and loyal customers, you might not mind stretching your usual payment terms. Yet for one-off payments, the time and effort it takes to send out an invoice and then engage in collections activities is hardly worth the trouble. It can take a serious toll on cash flow. Instant payment systems ensure that there aren’t any languishing invoices or chains of late payments.

Open banking for one-off payments

Now that we’ve covered the various challenges, let’s turn to some solutions. Open banking is a relatively new system striving to make the payment process run more smoothly. The term refers to the possibility of banks sharing data with third parties more easily when the customer opts in. Secure, shared data means that third-party apps can step in to offer better financial services for customers, including one-off payments.

Open banking enables businesses to collect payments at lower cost. With a combination of automated processes and more personalised financial products, costs are reduced accordingly. The online payment experience is improved both for businesses and customers, with much faster bank-to-bank payments. This includes instant payment systems like our Instant Bank Pay, designed to speed up the bank debit process significantly. Real-time confirmation, optimised payer conversion and reduced fees all address the problems we’ve mentioned above.

Through a combination of open banking and instant payment systems, the challenges of one-off payments can be a thing of the past.

We can help

GoCardless helps you automate payment collection, cutting down on the amount of admin your team needs to deal with when chasing invoices. Find out how GoCardless can help you with ad hoc payments or recurring payments.