Automated Payment Processing: What Businesses Need to Know Before Committing

Automated payment processing can be useful for many businesses. We’ll go over the must-know details of this technology below. We’ll discuss the basic principles of automated payment processing and its advantages. We'll also go into detail on the challenges it can present. Finally, we'll go over tips to help you smoothly integrate a new payment system.

Automated Payment Processing: The Basics

So what is automated payment processing? Put simply, it is a way of electronically transferring money between accounts. It's used for a range of purposes, such as paying invoices and payroll. It is also used for customer purchases. Automated payment processing can be used alongside other programs to streamline workflows. For example, automated payment and ERP systems integration can automatically update financial information as transactions take place.

Automated payment systems will complete certain instructions when required conditions are met. For example, a company may automate a customer’s subscription payment. On the due date for the payment, the transaction is automatically completed. This can be repeated regularly until canceled.

There are a range of automated payment system types. Some examples include:

• Electronic funds transfers (EFTs), including bank transfers, direct debits, and electronic cheques.
• Online payment services, used to send and receive money online.
• Point-of-sale (POS) systems, used to process customer payments when making a purchase.

These each have unique features and protocols. This makes them suitable for different uses.

Automated payment processing can revolutionize many businesses. It does, however, come with certain challenges and risks. Careful consideration can make your implementation of automated payments smooth and simple.

Advantages of Automated Payment Processing

Payment infrastructure is a crucial part of any business. Global digital payment transaction value is expected to reach US$16.62 trillion by 2028. Making sure you can effectively handle payments will help your company now and will prepare you for future growth. Adopting an automated payment system can be a key part of that.

Some of the benefits of automated payment processing include:

Accuracy

Automated payment processing reduces incidents of human error. Automated payment systems use specialized methods to calculate transactions and verify their recipients.

Automated payment processing can significantly streamline your operations. Repetitive tasks can be completed in moments, meaning your team has more time for other work.

Security

Many automated payment systems come equipped with advanced security features. Technologies such as encryption, multi-factor authentication, and anomaly detection can all prevent fraud and theft.

Convenience

Automated payments can help streamline your customer experience. Instead of remembering due dates and manually submitting payments, your system can take care of them automatically. This can massively improve retention and reduce incidents of late payment.

Automation can also help with business transactions. Payments can be scheduled ahead of time and completed automatically. Vendor payments, payroll, and more can be taken care of simply and consistently.

Record-Keeping and Compliance

An automated payment system will create records for all your transactions. Automating this data minimizes errors and ensures your information is up to date. Data for compliance audits or similar processes can be quickly gathered and presented.

Automated record-keeping can also be useful for other systems. For example, demand planning KPI examples, like automated payments and inventory data, can help forecast product demand trends.

Adaptability

Automated payment processes can be easily tailored to your specific needs. They can accept a wide variety of currencies and be made to comply with a wide variety of regulations. This simplifies your work and makes global growth easier.

Common Automated Payment Processing Challenges

Automated payment processing comes with specific challenges. It’s important to be aware of these before implementing new systems so you can prevent issues and maintain compliance. Each business’s challenges will be different, but some common ones include:

Costs

Initial costs for automated payment systems may be high. The hardware and software used to run these systems can be costly. On top of this, you will have to commit to ongoing expenses such as maintenance, security, and updating.

Automated payment systems will often have a transaction fee taken from every purchase. These can vary depending on the provider and specific package you settle for. Make sure to account for these fees in your pricing and shop around to get the best deal possible.

Integrating with Legacy Systems

Making a new automated payment process work with your existing financial systems can be challenging. It is important to carefully plan and prepare for this integration. Existing procedures may have to be altered to accommodate your new system. You will also have to make sure you have adequate support to deal with any teething problems.

Disruption

Implementing new processes may cause some disruption to your business. For example, you may be temporarily unable to accept or send some payments. It is important to carefully plan to transition to your new system. This can minimize downtime and ensure that essential transactions are fulfilled.

You may also experience disruption for other reasons. A third-party vendor, for instance, may suffer an outage. This means you will need a contingency plan in place so your business can operate through such issues.

Compliance

Your automated payment processes must comply with relevant regulations. These can cover multiple areas, such as financial compliance and data protection. Ensuring your systems remain compliant and up to date with regulations requires constant work.

Training

The transition to a new system and workflow can be challenging. If your new system is complex or difficult to use, your team may be reluctant to adopt it. Research your options and pick an automated payment system that is right for you. Prepare to train your employees extensively on your new system and be ready to help them as needed.

Errors and Disputes

While automated payment processing can help reduce errors, some will still occur. These can lead to disputes between your business and customers. Carefully handling these incidents is important to maintaining customer relations and protecting income.

In some instances, customers may contact their bank and request a chargeback. By claiming they did not receive your product or don’t remember making the payment, they can trigger a refund. While many chargebacks are legitimate, they can also be used as part of friendly fraud. It is important to manage chargebacks to prevent undue loss of revenue.

Automated Payment Processing Best Practices

If you decide to automate your payment processes, there are some things you can do to prevent problems and get the most out of your new system.

Do Your Research

There is a huge range of automated payment system vendors. Each will have unique offerings and pricing. Carefully considering your needs and seeing what options are available ensures your new system works for you.

Before researching your options, thoroughly review your needs. Consider factors such as transaction volume, payment types, specific industry requirements, and relevant regulations. Once you have done this, research your options. Seek advice and guidance as needed to ensure you are investing in a useful system.

Prepare

Once you have selected a suitable vendor, prepare to transition to your new system. Consult with experts and your team to create an integration plan. This will cover areas such as IT capacity, financial infrastructure, and security. Consider the hardware and software you will need to invest in.

When you are ready, test your new system thoroughly to try and find any issues. Train your staff on how to properly use this new technology. If needed, prepare materials to guide your customers and vendors on how to use the system.

When you deploy your automated payment system, some disruption may be inevitable. Careful preparation will prevent a lot of it, however, and get you up to speed quickly.

Keep Up to Date

Maintaining your automated payment system ensures smooth operation and a good customer experience. Commit your company to regularly updating and maintaining software and hardware. Regularly train your staff and keep on top of any new developments that may affect you.

Be Vigilant

Security has to be a high priority when dealing with automated payment processing. Keep up to date on new best practices in the field and implement them if possible. Consider using technology such as two-factor authentication for an additional layer of protection.

Carefully track your transactions as well. While automated systems can flag suspicious activity, these may be false alarms. There may also be fraudulent transactions that your systems miss. Human supervision helps catch suspicious activity early.

Prepare for Issues

Have contingency plans in place for predictable issues. Consider how your business will respond to incidents such as a security breach or vendor outage. Documenting and outlining any required processes means they can be completed quickly. Disruption is therefore minimized.

Regularly back up your data. A system outage or cyberattack can put huge amounts of data at risk. Consistent backups mean you can quickly restore your systems if they go offline.

Consider further tools to protect yourself from risk. For example, you may be worried about chargebacks. They can cost you revenue and take up time to dispute. Using an automated chargeback and dispute management system such as Chargeflow can protect your revenue and keep your business running smoothly.

Getting the Most Out of Automated Payment Processing

Automated payment processing can be useful for many businesses. It also comes with unique challenges. Careful preparation and planning ahead prevent issues and make your business run smoother. Research different payment vendors to make sure you are getting the best fit for your business. Finally, consider tools such as Chargeflow. These can help you manage risks associated with automated payments.