Unlocking Cost-Effective Payments
How Automation Can Help Streamline Your Business Operations
If you own a small business, you may accept credit and debit cards for payments.
While convenient for customers, using plastic comes with drawbacks for business owners. Transaction fees can range from 2% to 4%, which may not seem significant for small purchases but can quickly add up, especially for big-ticket items or large bill payments like rent or tuition.
Fortunately, there’s a simple and cost-effective solution: Pre-authorized debits (PADs) for small businesses.
Benefits of Pre-authorized Debits
PADs offer several advantages over credit cards and cash.
Firstly, they are more affordable, with the average transaction costing around $0.29 compared to the higher fees of credit card companies. Additionally, PADs provide enhanced security as they are overseen by Payments Canada and the Canadian Banking network, protecting both businesses and customers from fraud. Transactions are processed through a secure bank network, reducing the risk of fraudulent activities.
PADs also offer a favourable timeline, typically taking 3 to 5 business days to process compared to 2 to 3 days for credit card payments. This slightly longer timeframe is offset by the significant savings in fees and provides a buffer against fraud.
How to Implement PADs
Implementing PADs is straightforward. Businesses can collect customers’ banking information through paper forms or online portals provided by third-party payment processors (TPPPs). These forms serve as signed agreements authorizing recurring debits from the customer’s account, specifying the amount, frequency, and duration of payments.
PADs can also be set up over the phone, provided there is a preexisting relationship with the customer. Online payment portals offered by TPPPs streamline the process, integrating seamlessly with business websites and accounting software while ensuring security and compliance with legal requirements.
PADs are ideal for recurring charges like rent, membership fees, and subscriptions, as well as one-off sales and invoice payments.
Preparing Your Business for PADs
To onboard clients for PADs, simply collect their banking information and obtain permission to debit their accounts. Remind customers before each debit and provide receipts for setup and cancellation of PAD agreements.
Pro tip: Keep documentation on file for two years and reassure customers of the security measures in place.
Small business PADs offer cost-effective, secure, and timely payment solutions, making them an excellent choice for businesses of all sizes. If your business hasn’t explored accepting PADs yet, now is the time to consider the benefits.
Luckily, Rotessa offers a free PAD authorization tool that seamlessly integrates with your website and accounting software.
Contact us today to learn more about how Rotessa and Indigo Bookkeeping, can help streamline your payment collection process!
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