Getting paid isn't what it used to be.
Find a Company That Processes Pre-Authorized Debits
Every journey starts with a single step.
And with that nugget of wisdom, here's where your automatic payment journey should begin. You need a way to processed pre-authorized debits.
Your first thought might be to contact your bank. It seems like a sensible place for payment collection, right?
Not quite. It may surprise you, but banks aren't always your best option for pre-authorized debits. There's a few reasons for this:
What's a small business to do? Get on-board with a third-party payment processor.
These are companies that deal with the banks for you. They act as a middle-person, dealing with the banks so you don't have to. Because a payment processor will run thousands of transactions a month, the banks are willing to deal with them.
Even if you only process 1 transaction a month, using a third-party processor allows you to do that in a cost-effective way.
How to Choose a Third-Party Payment Processor
Having many choices is, often, a good thing.
When it comes to payment processors, you have a lot of choices. The trick is narrowing down those choices to find the right fit for you. A quick way to make this easier is to answer a few questions about your needs and preferences:
The good news is that once you decide on a payment processor, the hard part is over! A few more steps and you'll be collecting your payments automatically!
Get Authorization From Your Customer
This is a critical step in accepting payments automatically.
Before you can withdraw payments from your customers, you need to get their permission first. That is most often done by using a Pre-Authorized Debit Agreement.
A PAD agreement is a legally-binding document that gives you permission to debit their account. One of the most common ways to get permission is with a paper PAD agreement. You can also do it electronically, with a form on a website for example, but in either case you must follow the requirements on the Payments Canada website.
Paper agreements work, but you should consider using an electronic PAD agreement. It cuts down on paperwork, and is easier for you and your customers. When you're researching payment processors, check to see if they offer electronic agreements. Trust me, it's going to save you a bundle of time.
Once you have permission, you're halfway to the finish line.
Get Bank Account Details From Your Customer
Next step? You need to get some basic account details from your customers.
"Hey," I hear you say, "Mr. Attractive Blog Author - is that safe, getting account information from my customer?"
Rest assured, it's quite safe. The only information you need can be found on the bottom of a cheque. Yes, if someone was dedicated they may be able to use that information for nefarious purposes. But, it's no more dangerous than paying with a cheque. With the way pre-authorized debits are structured, they're far less prone to fraud than credit cards.
The easiest way to get this information? A void cheque. Otherwise, just ask your customer for their transit, bank, and account number. I recommend you get it in writing, it can be easy to make a mistake writing down numbers over the phone!
You know what I'm talking about
Once you have the numbers, you can add your customer's information into the system of your chosen payment processor.
And you're almost at the end - last step is setting up a transaction schedule!
Set Up a Transaction Schedule
Here we are: the reason for using pre-authorized debits.
The transaction schedule.
This is where you set up a schedule that tells your payment processor when to debit your customers account, and for how much.
Each payment processor works a little differently in this regard, but here's how it (basically) works:
Pat Yourself On The Back
Pre-authorized debits are the easy, stress-free way to collect recurring payments. With the fantastic selection of third-party payment processors today, there's no reason you can't get started with automatic payments in your business.
Have questions about pre-authorized debits? Contact us, we'd be happy to help no sales pitches, I promise!)