Why all businesses should let their customers pay like Uber

| January 7, 2021

COVID-19 and the resulting decline in business activity has made it necessary for businesses to provide safe, fast and easy payment options for customers.

Industry disruptors like Uber introduced consumers to a seamless payment system – a sales process customers now expect.

Business payment processes are long overdue for an overhaul.

The way businesses trade has changed little in centuries, with most businesses using manual data entry, which wastes time, money and is prone to mistakes.

The late payment of invoices limits business cash flow, meaning they are less resilient to economic volatility and cannot survive long if business drops.

However, businesses can get paid for goods and services on delivery in real time if they adopt software that features an intent to pay framework and workflow payments.

Once customers have entered their details and confirmed tokenisation of their card they can enjoy contactless transactions triggered at the point of purchase.

Payments are automatic and effortless, just like Uber.

The benefits for customers:

  • Enhanced customer experience – Payments seem invisible. Customers won’t need to wait for an invoice or remember to pay their bills.

  • Convenience – Swipe yes to pay or automatic payments saves time. Customers do not have to worry about having cash or cards on them. They can purchase goods and services anywhere and at any time using their smartphone.

  • Security – customers do not give out credit details over the phone or risk typing in the wrong bank account details. Mobile payment apps use tokenization encryption technology. This technology replaces personal card data with a number, so no sensitive data is exposed during the authorization process.

The benefits for business:

  • Better cash flow – making it easy for customers to pay is the key to fast payment and increased sales. Intent to pay frameworks give more certainty for business owners.

  • Eliminates debt recovery – enhanced customer reconciliation automation means less time spent chasing up late invoices and improves relationships with customers.

  • Real time collaboration – improves business to business (B2B) transactions with one integrated system, that benefits both parties.

  • Less computer hardware – reduces the need for terminals (such as EFTPOS) in the field.

  • Security – good payment systems offer anti-money laundering (AML), know your customer (KYC) and two factor authentication (2FA).

The benefits for the economy:

  • Increased cash flow – late invoice payments and a lack of payment methods costs Australian small businesses a combined $20 billion each year, according to a Xero report. By encouraging customers and suppliers to pay on time increases the amount of money flowing through the economy. It increases the growth potential of a business and the ability of business owners to invest and access finance.

Despite the advantages of an intent to pay framework and workflow payments, most businesses only offer outdated and inefficient payment options.

Many business to business (B2B) payments are made through bank transfers, which can leave businesses exposed to human error, fraud and security breaches.

A Xero study of 150,000 SMBs in Australia, found 53 per cent of all invoices sent were paid late, another 20 per cent were for the incorrect amount and 20 per cent were paid to the wrong business. This costs small businesses more than $7 billion each year alone in working capital.