BUSINESS GUIDE DISTRIBUTED WITH


12TH FEBRUARY 2024 Are your payments costing you?


From a small South London fl at to over 85,000 customers globally, bank payments provider GoCardless is on a mission to show businesses that there’s a better way to manage their payments


Finance, Legal & Accounting 19


If someone asked you the total cost of managing your business’s payments, how confi dent are you that your response would refl ect the true overall fi gure? What factors spring to mind when trying to calcu- late it? Transaction fees seem like a natural starting point as they are the most visible and measurable cost. But there are many other less-


obvious costs associated with processing payments that, if left unmanaged, will only continue to grow. To assess the real cost that managing payments has on your business, you need to account for operational costs as well as payment-related issues.


The hidden costs of payments You may not have realised it, but how you collect payments has a direct impact on customer conversion and retention rates. GoCardless and YouGov ran a payer preference survey, fi nding that 69% of payers abandon a checkout if it seems too complex, while 45% would abandon if required to manu- ally enter details. So if potential customers have to suff er through an inconsistent or tedious payment process, they might look elsewhere. But that’s just the fi rst hurdle, as


your choice of payment method can also play a role in causing involun- tary churn. T is happens when you have a happy customer but their payment details are compromised or expire without them realising. T ere’s a big connection between payment methods and churn, with average annual churn rates being 16% for PayPal, 14% for credit cards, and just 4% for direct debit*.


Trying to salvage a failed payment


has the knock-on eff ect of needing to redirect time and resources towards chasing payments, and then re-building relationships with customers left feeling agitated. If you then factor in operational


costs such as managing integra- tions, scheme fees, manual reporting and reconciliations, you can start to understand how the total cost of collecting payments is more than you might think. GoCardless’s chief customer


offi cer and managing director of UK&I, Pat Phelan, says:


able


“In an uncertain and unpredict- economy, how you process


payments matters. Every business should ask itself: ‘Does my current payment solution help drive my busi- ness, or hinder it?’ Without realising it, processing payments ineffi ciently can be a drain on time and resources for many businesses.”


Banking on a better way GoCardless believes bank payments are the most effi cient way for busi- nesses to get paid. While all payment methods have associated


costs, automated bank payments off er


a competitive total cost of owner- ship. Take direct debit as a primary example. It isn’t a new way to pay, but it hasn’t had the same big-budget advertising campaigns as credit cards, so you may not have consid- ered all of its business benefi ts. Firstly, there are fewer inter-


mediaries compared to cards, which means fewer points of


failure and


fewer steps in the payment process that can incur fees. It also cuts out manual processes for both you and your customers, as it only requires one-time approval, providing you with a consistent cash fl ow. GoCardless has seen the success of direct debit fi rst hand, with its merchants having an average success rate of 97.3% for collecting recurring payments on the fi rst try. A key benefi t is also that bank


accounts never expire, so there’s a lower risk of missed payments or involuntary churn, and less of your team’s time spent chasing payments.


Simple changes with a big impact A robust payment strategy founded on bank payments puts you in a prime position to boost your bottom line by minimising the indirect costs associated with payment processing. T e correct bank payment provider can guide you through this, giving you the assurance that they’re consolidating costs on your behalf.


Scan the QR code to fi nd out more


about GoCardless and how its bank payment solutions are helping


businesses to get paid without the chasing,


stress or unnecessary high fees.


Visit: gocardless.com


* Insights from Zuora, Subscribed Institute and GoCardless’s ‘How customers pay impacts how long they stay’ report.


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