Push Payments — Transforming the Online Checkout Experience. How online businesses can eliminate the need for a merchant account and accept non-reversible payments for 50% less than credit card processing.
Caveat: This solution is currently only available to businesses that bank in the US and whose bank participates in the Push Payment network (there is a list in this article)
PushPayments, also called consumer-permissioned payments, can completely eliminate payment chargebacks and reduce payment processing fees by 50% compared to credit card payments.
PushPayments work by connecting the person or business paying at checkout to their online banking platform. From there the paying party authorizes a push payment or credit, from their bank account to the merchant they are paying.
The merchant is funded in seconds and the payment is final and can not be charged back.
For many businesses getting a merchant account can be a huge hassle. Filling out forms, providing bank account statements, etc is time-consuming and even when done provides no guarantee of getting the merchant account.
There are “Super Payment Facilitation providers” like Stripe and Square that make it easier to accept payments but in essence, you are obtaining a sub-merchant account that they can terminate or withhold funds from you at any time. There are many examples to be found online of this very thing.
So is there another way to take payments for goods or services without using cash or securing a merchant account?
The answer is absolutely, with a couple of buts.
If you are in the US and have a US bank account at an in-network bank you can potentially accept customer payments (both the customer and business must bank at an in-network institution). Currently around 60% of bank accounts in the US participate.
The other BUT is that your business must be legit and an acceptable business type. This payment solution does tend to be more high-risk tolerant and we will explain why.
So what is it and what’s the story?
The current payment schemes available (debit, credit cards, ACH, PayPal, Stripe) all rely on a debit (authorized by the consumer). So $ are always pulled from the consumer. Both the card and ACH networks offer protection from unauthorized or fraudulent debits and in addition offer protection from damaged/unsatisfactory goods or services. These protective measures are implemented via a chargeback. So the consumer calls their issuing credit card bank and initiates a chargeback. Although not all chargebacks are held up, more often than not the consumer gets their money back and the merchant is left to sort this out. So fundamentally the issue lies in DEBITING the customer.
The solution that eliminates the need for a middleman/merchant account, lies in reversing the payment originator.
Essentially the consumer initiates a push payment from their bank account. There is no Merchant Account whereby a payment processor receives the sale proceeds from the consumer and in turn (24–48 hours later) funds the business. Funds travel directly (and instantly) from the consumer bank account to the merchant.
Conventionally your merchant account provider (or Stripe etc) processes the payment by DEBITING (pulling $ out) of the consumer's credit card or bank account. They then collect those $ and in turn pay you out via an ACH credit.
With Push Payments or Consumer Permission Payments, that payment flow is reversed. At checkout, the consumer connects to their online bank platform and an ACH credit is then pushed DIRECTLY from the consumer bank account to the business bank account.
If you have processed payments for any period of time you can see two MAJOR benefits:
1-No Chargebacks: The consumer is authorizing with express permission the payment required.
2-No Declines: The consumer can’t push money NOT in their bank account.
Because there is no merchant account as well as payment finality higher risk businesses can often use this payment option.
Quite brilliant
For more information on how PushPayments can help your business payment needs click here.