Timely payments are vital for the growth of a business. As a business owner, you know the difference they make. Receiving payments on time helps you manage your cash flows and keep day-to-day operations going. Everyone appreciates a timely payment – even your suppliers and employees. In Europe, real-time push payments have emerged as a convenient option for companies to make payments on time.
Merchants and governments in the region agree that real-time payments are a swift and secure way of transaction. The demand for flexibility, speed, and transparency makes instant payments a preferred choice. The introduction of ISO 20022, new regulations, and the coming of age of open banking is also spurring this trend.
What is a Push Payment?
A push payment is a real-time payment initiated by the payer. The payer instructs their bank to send money to a merchant’s account or mobile wallet. Unless you have funds in your account, you cannot authorize a payment. If you don’t have enough funds, your bank will immediately decline the transaction and inform you about the insufficient balance. It helps you avoid late payments or settlement delays since you have full clarity about available funds and accordingly “push” a payment to a supplier or seller.
Push payments are a great choice to pay your suppliers or employees on time. If you are a lending business, you can use push payment to disburse loans to customers. Unlike pull payments, push payments do not require the payee to provide sensitive financial details to the recipient. This makes a transaction safe and makes it easier to manage funds. Some B2B payments are recurring and payable in installments, while some are large one-time payments. As such, push payments are a great payment tool for a business.
How do Push Payments work?
A typical electronic payment – where a shopper pays a merchant using a credit or debit card, for example – is a pull payment. The merchant’s bank requests to “pull” money from the customer’s account and place it in the merchant’s account. The customer has to agree to the request and authorize the payment using a PIN, password, or biometric scan for the transaction to be successful.
In push payments, it’s the reverse. A payer instructs their bank to send money to the recipient’s account or mobile wallet. For example, a person sending money to a friend’s e-wallet or bank account, or a merchant paying their staff by directly transferring money into their bank accounts. When a payer initiates a push payment, their bank reviews the transaction. If there are sufficient funds in the payer’s account, the payment is successful, and the money comes into the recipient’s account in hours, if not instantly.
What are the Benefits of Push Payments?
Push payments do not carry the same risks as pull payments. Pull payments, such as checks, can be late, lost, or stolen. Insufficient funds in your account can cause a check to bounce, impacting your brand reputation. A real-time push payment platform helps you send and receive funds without waiting for long periods. And as the payer is the source of the funds, it is safer and easier for them to make a push payment. Moreover, push payments do not require sensitive account details, thus protecting all parties from fraud and data breaches. Plus, they have advanced security features that make it easier to verify a transaction before making a payment.
Push payments also help in quicker reconciliation, as the payment data and the invoice amount is sent together to the concerned party. Other features like payment reminders make it easier to keep a tab of upcoming payments and streamline your activities. All in all, push payments give you easy, secure, and real-time access to funds to pay your B2B expenses. This, in turn, helps you build trust and goodwill with your suppliers and ensure business continues smoothly.
How can Novalnet help?
We are a global PSP with deep experience in processing payments for the European industry. Many of Europe’s leading brands trust us to handle their payments. We can help you accept payments seamlessly in 125+ currencies in 150+ country-specific payment methods. Our instant plug-ins get you up and running within minutes and with minimal coding. With our AI-based risk management solutions and advanced analytics, you can securely process payments in a PCI DSS-compliant environment.
Give us a call today to know more about how we can help with your payments and enable you to become the best in your game.
Jose Augustine is the Chief Business Development Officer at Novalnet AG with extensive experience in European payment industry and a knowledge powerhouse.