Revolutionising Transactions: The Power of Payment Gateways

A thriving economy is the product of countless transactions, from small businesses to sprawling corporations, and all participants must facilitate seamless exchanges. Traditional methods of payment have served us well, but as the digital world continues to grow exponentially, businesses are increasingly turning to payment gateways. 

What are payment gateways, you ask? Simply put, they’re merchant services provided by e-commerce applications that authorise the credit card or direct payment processing for e-businesses and online retailers. These gateways are the virtual equivalent of a physical point-of-sale terminal located in most retail outlets. 

But why are businesses adopting this digital transition? Because payment gateways are more than just a virtual terminal; they’re transforming how businesses get paid, leading to lower debtors lists and an overall more streamlined financial operation. 

Payment gateways: an easier path to getting paid 

The traditional invoice payment process can be cumbersome, leaving businesses waiting for payments to arrive via cheque or bank transfer. Payment gateways, however, simplify this process significantly, leading businesses to receive payments 50% faster on average. How is this possible? 

Platforms such as Stripe, a leading payment gateway, integrate seamlessly with business software such as Xero. Invoices sent through Xero now come with a handy ‘Pay Now’ button, which links directly to Stripe. With a click, the customer is redirected to a secure page where their credit card details are auto-filled, requiring just a confirmation to complete the transaction. The simplicity and ease of this process make it far more likely for customers to make immediate payment, thus drastically reducing the time businesses spend chasing invoices. 

Payment gateways are cost effective 

Setting up instant payment gateways generally incurs no upfront costs. However, transaction fees are standard, typically falling between two and four percent of the invoice value. Some payment gateway providers also afford businesses the flexibility to transfer these transaction fees to the end customer, further optimising their cost effectiveness. 

The integration of payment gateways with smart accounting software ensures seamless financial operations. The software automatically associates transaction fees with their respective payments, thereby maintaining the books in perfect order without extra administrative efforts. 

Customisation is another critical advantage of payment gateways. Businesses can create tailored invoice templates; some featuring a ‘Pay Now’ option, and others without. This feature allows businesses to control when and to whom they offer instant payment options. To optimise cost management, many companies restrict the use of instant payment services to invoices valued under £5,000. This approach allows businesses to maintain control over transaction fees while offering their clients the convenience of instant payments. 

Mitigating the debtors list 

By using payment gateways, businesses can reduce their debtors list. This happens because the transaction process becomes incredibly convenient and user-friendly, making it easier for customers to pay on time. When given the choice, customers often prefer to settle their invoices at the click of a button, rather than dealing with the hassle of traditional payment methods. 

In other words, payment gateways shift the paradigm from ‘pay when convenient’ to ‘easier to pay now than delay’. This shift is instrumental in improving businesses’ cash flow and reducing the strain on their finances. 

Cashflow forecasting and GoCardless 

Cashflow forecasting is vital for every business, regardless of its size or industry however, it’s often complicated by uncertainty regarding when payments will be received. GoCardless, another popular payment gateway, addresses this issue. 

GoCardless operates on direct debit, meaning businesses always know when they’re going to receive money, as payments are collected automatically on due dates. This predictability in cash inflow makes cashflow forecasting considerably easier, as businesses can confidently plan based on expected income. 

In conclusion, the incorporation of payment gateways in business operations is revolutionising the financial landscape. The ease of use for customers leads to businesses getting paid faster, which in turn reduces their debtors list. Moreover, gateways like GoCardless lend predictability to cash inflows, greatly aiding cashflow forecasting. 

It’s clear that payment gateways offer a win-win situation for both businesses and their customers, making transactions smoother, quicker, and more convenient. Embracing such innovative solutions is the way forward, allowing businesses to maintain pace with the digital evolution, optimise their operations, and improve their financial health. 

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