When it comes to collecting payments, there are many options available for streamlining the labor-intensive processing of paper checks. On one hand, banks frequently offer direct debit ACH solutions as part of their overall banking and treasury management services. The problem is that these solutions are not their core focus, are based on outdated technologies, and often result in only a partial fix to the challenges of streamlining and simplifying payment collections.
On the other hand,
- YapStone powers over $8-billion in electronic payments for thousands of partners and offers a cutting-edge platform designed with a singular purpose in mind – to make it easier for our partners’ customers to pay merchants electronically by leveraging the most secure, user-friendly technologies available today.
We surveyed our partners from a diverse group of industries to determine why they chose YapStone’s payment solutions over the ACH direct debit products offered by their banks. We came to the following conclusions:
Processing recurring payments using a bank ACH direct debit product is still a highly inefficient, labor-intensive process
In order to set up a direct debit payment account, users are required to complete and sign a paper direct debit authorization form and provide a voided check. In some cases, this information is then mailed or faxed to the bank, and a bank employee manually sets up the account. This process is labor-intensive, can take several days to complete, and is prone to human error. What’s more, in most cases, the onus is on the merchant to store the client’s bank account information onsite (exposing the merchant to significant legal liability); enter the information into the bank’s software manually; and manually initiate the auto draft for each property in a separate batch on a monthly basis.
- Contrast this process with the web-based self-service model offered by YapStone, which allows users to quickly set up an account online using a computer or mobile device with no paperwork and no added work for the merchant.
There is a loss of control associated with direct debit processing
A major drawback of direct debit processing is a loss of control over the ability to make payments. Customer are locked in to making recurring payments directly from their bank accounts and have no flexibility as regards changing payment amounts or using alternative forms of payment (such as credit cards or other bank accounts) in response to unforeseen expenses. The transactions processed by YapStone’s partners are often large (YapStone processes an average ticket size of $700 across each vertical), and represent the largest monthly expense in their customers’ budgets (rent, HOA dues, etc). Many people are uncomfortable putting payments of this size on “auto-pilot” with no real-time flexibility to make changes. Direct debits can result in late payments and costly non-sufficient funds fees for the merchant.
- YapStone offers its partners a flexible 24/7 platform to make self-service changes from a computer or mobile device to payment amounts, frequency of payments, and payment accounts.
Our partners have the ability to set up recurring payments for “balance in full” payments—allowing their customers to pay variable amounts based on their outstanding balance, and truly “set it and forget it.” In addition, YapStone’s platform enables the distribution of automatic email reminders five days before auto payments are drafted from customer accounts, allowing the flexibility to postpone or modify auto payments if there are insufficient funds or they want to choose an alternative payment method. This greater control results in a higher comfort level than the direct debit alternative, driving increased adoption and ultimately more on-time payments and operating efficiencies for the merchant.
ACH direct debits are not secure
Another major benefit of YapStone’s payment platform over direct debit is improved security. When using direct debit, the client fills out a paper form and gives it to the merchant, who then files it away in the management office. This paper trail creates a significant potential liability should the information ever be stolen or misplaced. Additionally, the transmission of bank account information from the merchant to the bank is typically done via email and fax, which are prime targets for hacking. With YapStone, information is entered into a secure web portal by the user and is stored securely offsite. Our partners never touch this sensitive information.
- When it comes to the storage of sensitive financial information, YapStone is PCI Level 1 compliant, the highest level of compliance achievable from the credit card associations.
Bank direct debit products do not provide good reporting and are not integrated with accounting software
With bank direct debit products, there is no one-stop dashboard for merchants to monitor in real-time, track customer payment accounts and transaction activity, run queries, and generate reports. In contrast, YapStone offers merchants a complete reporting backend tool accessible 24/7 over the Internet.
- In addition, YapStone offers integration with multiple software packages such as Yardi, MRI, and Skyline, allowing payment information to be captured directly into our partners’ accounting software and be recorded in a general ledger.
This eliminates the need for “double entry” to record payments from bank statements and the manual upload of payment information into accounting software.
Many banks do not offer credit cards
The checkbook is rapidly becoming a thing of the past. More and more consumers want the ability to pay their bills online with credit cards, just like they do when making purchases on their favorite websites. Pulling out a checkbook to get bank account and routing number information is a huge hassle. It’s much easier to grab a wallet or purse and pay with a credit card. Credit cards also offer merchants the benefit of guaranteed funds with no risk of non-sufficient funds. Unfortunately many banks don’t offer credit cards because they lack the requisite expertise.
- YapStone has offered a comprehensive end-to-end payment solution that includes both ACH and credit/debit cards for more than 13 years, and is continually making investments to stay at the forefront of payment innovation and consumer payment trends.
Bank check-scanning solutions do not integrate with accounting software
Check-scanning solutions can help merchants save significant time processing paper checks and eliminate trips to the bank to make deposits. Some banks provide check-scanning solutions but the service can be costly and does not integrate with accounting software. The extra work resulting from having to manually enter scanned checks into accounting software tends to mitigate any timesaving benefits of the initial check scanning.
- YapStone’s Integrated Check Scanning solution allows all checks to post to the correct customer accounts in accounting software, thereby eliminating the need for manual entry.
Furthermore, YapStone’s solution provides next day funding and faster notice for any non-sufficient funds, along with our single reporting platform for all payment methods regardless of whether they originate from a scanned paper check, credit card, or electronic check transaction.
Bank check-scanning solutions require the sorting of checks by property merchant and are only compatible with a single bank
Most banks offer check-scanning services that require the end user to first sort their checks by merchant, since each merchant has a different depository account. The checks from each merchant must be scanned and batched separately, which is a time consuming process. Furthermore if the merchant company is scanning checks to different banks, they often need to use different software for each bank, and in many cases a different check scanner for each bank.
- YapStone’s check-scanning service allows our partners to scan all checks together without the added step of sorting the checks first. YapStone’s check-scanning interface is designed to sort checks automatically and deposit the funds to each bank account accordingly, whether the merchant uses the same bank or not.
FOR MORE INFORMATION
Download the official whitepaper on Why Our Partners Prefer Electronic Payment Services Over Direct Debit Payments Processing.