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Managing Payments in Canada Can be Painful But It Doesn’t Need to Be

If you operate a business, you are familiar with the many ways that managing payments in Canada can be painful. The legacy banking and payment system requires all kinds of manual intervention to collect and reconcile payment information.

In a word, payments in Canada are inefficient.

This pain and inefficiency drive higher costs for businesses – more staff needed to process and reconcile payments manually and costly delays in settling payments and receiving funds. There is also a negative impact on customer experience as payment delays cause friction and inconvenience. These costs can negatively impact the competitiveness of a business and its ability to grow and scale efficiently.

When businesses streamline their payment processing and management and reduce or eliminate inefficiencies, they increase their bottom line, competitiveness and, almost always, the customer experience.

Below, we have compiled the most common pain points in managing payments for businesses operating in Canada.

EFTs are Old and Slow

Electronic Fund Transfers (EFTs) are a reliable and inexpensive way to send and receive funds, so they get a lot of attention from cost-conscious businesses.

But EFTs are not without their pain points:

EFT payment set-up is an arduous process. It requires skilled and experienced programmers to meet a bank’s exacting specifications for file transfer and exchange and then to integrate the payments data into your enterprise or accounting system.

EFT payments can be painfully slow to settle and appear in your account – sometimes two or three days or more if it happens over a weekend. Since EFT transactions are collected within batches daily by your bank so they can be transmitted to other banks, payments initiated after this cutoff time are delayed until the next day.

Successful EFTs are not reported in the files received back from the bank – they just show up in your bank account. This means that some form of manual reconciliation must happen when managing EFT payments. This is highly inefficient and often requires human labour and expense. And, since people are involved, there are opportunities for error.

EFT payments can fail for many reasons, such as wrong banking information or because the funds in the account to be debited are insufficient (NSF).

Bad Customer Experiences

For businesses accepting recurring payments, NSFs are nothing but trouble.

They are expensive, time-consuming, and create bad customer experiences. It can take a day or two for attempted EFTs to be flagged as NSF, and when they are, most banks only report NSF transactions once a day. Then, the issue must be resolved with manual customer service intervention of some kind.These reporting delays and customer follow-up cost time and money. All the while, delivering a poor customer experience.

Many businesses have yet to transition to a fully digital client onboarding and payments set-up experience. Requiring clients to complete paper-based, manual customer onboarding processes to collect banking and payment information. These processes can have a detrimental impact on customer experience because of their inconvenience – they are lengthy, requiring paper forms, PAD agreements, and void cheques to be filled out. All of which can lead to human errors and further lengthen or complicate the client onboarding.

When all of these negative impacts are considered – settlement delays, manual reconciliation processes and poor customer experiences – EFTs perhaps are not as inexpensive as they seem.

Cash Management and Operations

It is not uncommon for businesses to work with several payments and technology vendors to access the required payment services. Companies that have to send and receive payments are often forced to work with different vendors for each. Another vendor might provide data aggregation services. This causes extra work managing various vendors and ensuring they are compatible and seamlessly work together. Not to mention potential avenues for important client data to be exposed and place your business at risk.

Payment fraud is another serious problem, costing businesses valuable time, resources, and expense to resolve.

Finally, risk underwriting takes time and resources, and can be costly if done incorrectly. Whether you are in the lending business or evaluating a customer’s ability to pay your fees, gathering information, and analyzing it for risk underwriting purposes is challenging and takes significant time and resources. With all the information spread across multiple vendors, understanding the full client financial picture becomes an uphill battle.

Eliminating the Payments Pain Points

Zūm Rails has developed Canada’s only all-in-one payment gateway that eliminates all of these pain points.

  • Zūm is accessed through a modern Application Programming Interface (API), making it a snap to integrate and update.
  • To increase processing speed, Zūm does three EFTs per day. Zūm also offers real-time payment rails through Interac and Visa Direct.
  • Payment reconciliation on Zūm is fully automated, built-in functionality. Since payment transactions and confirmations are sent and received via the API, Accounts Receivable and Accounts Payable are reconciled automatically in real-time.
  • For customers onboarded through data aggregation, Zūm can meet KYC requirements and verify if sufficient funds are available in the customer’s account before sending through a debit request. If the funds are insufficient, the customer can be contacted in advance and resolve the situation without delays and inconveniences.
  • Zūm’s data aggregation features make it easy to digitally onboard customers and collect payment information. Payments are accepted and a PAD agreement can be set up online with no void cheque or paper forms required.
  • Zūm supports inbound and outbound fund transfers, as well as digital onboarding through data aggregation. And Zūm offers a convenient web console for managing it all.
  • Zūm’s data aggregation services can help your business evaluate a customer’s ability to repay their loan, pay their rent, or pay the monthly fee for your services.
  • Zūm is PCI-compliant and uses tokenization to securely store customer data.

Managing payments shouldn’t be difficult or painful. They shouldn’t make your business inefficient, less profitable, and challenging to innovate. Canadian companies have struggled for too long with a payment system that does not support how they do business or their growth plans. Zūm was designed to address and solve all your payment needs.

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