If you run any kind of commercial concern – whether based online or in physical premises – then there’s a very good chance that you and your employees spend a large percentage of your time contacting, working and liaising with the various banks and financial institutions which deal with issues like payments, wages and cash flow.
We live in an age of genuine global commerce with even the smallest online business able to buy and sell goods in all parts of the world. This means having to handle the differences in the banking systems that exist in various territories, in terms of protocols and languages. Host to host connectivity is a form of digital transformation that creates a direct connection between a merchant and each different bank, based on the standard that bank works to.
What is host to host connectivity?
Host to host connectivity goes a long way toward facilitating digital transformation in the way in which a business handles its finances. “Digital transformation” is one of those phrases that gets used a lot in the world of ecommerce without many people having a firm understanding of what it actually means. In the context of the host to host payments process, digital transformation refers to the fact that a wide range of activities that previously required manual intervention on the part of a merchant or their employees can now be automated.
Prior to host to host connectivity, the process of transferring a payment from a merchant to the chosen bank might have involved having to negotiate a set of file formats, security standards and network protocols that differ from bank to bank and territory to territory. For a merchant keen to establish their business in emerging markets that may not use the most widely adopted standards, this could be a massively time-consuming and labour-intensive process.
The advantages of host to host connectivity
Host to host connectivity offers a payment process that is automated from beginning to end, with files transferred seamlessly and the merchant or their employees only ever having to deal with a single interface. The direct and interactive link that host to host payment processes create between a merchant and the banks they need to access, means on-boarding with a new bank becomes a quick and painless task and that a wide range of additional processes can be automated to save time and increase efficiency. These processes include the following:
The payroll system within a business
The Enterprise Resource Planning (ERP) across the business
Purchase orders and invoices
Above everything else, a host to host payment solution means that payments received are automatically sent from the customer’s bank to the merchant’s without the time-consuming intermediate step of those secure payments having to be verified, reauthorised and then manually uploaded to the bank in question.
The kind of digital transformation that is driven by the host to host payments process also has the added advantage of generating large amounts of data. This data can be easily accessed at any time to enable a merchant to ascertain an up-to-date and accurate picture of precisely how their business is performing. Issues such as cash flow, accounts received, accounts payable and much more can be analysed at speed and on the basis of data that is secure, up to the minute and comprehensive.
We can help
If you’re interested in finding out more about host to host payments, or any other aspect of your business finances, then get in touch with our financial experts at GoCardless. Find out how GoCardless can help you with ad hoc payments or recurring payments.