Auto Debit vs Manual Payment Processing: Which is Better for Your Business?

As a business owner, you know that managing finances is crucial to the success of your business. And a critical aspect of financial management is payment processing. But with so many options available, choosing the right payment processing method for your business can be overwhelming.

In this blog post, we’ll explore two popular payment processing methods: auto-debit and manual payment processing. We’ll discuss each method’s advantages and disadvantages and provide insights to help you determine which is better for your business.

Auto Debit Payment Processing

Auto debit payment processing is a payment method in which the payer authorises a company or service provider to withdraw funds from their bank account on a recurring basis.  This is commonly used for recurring payments such as utility bills, rent or mortgage payments, subscription services, or other similar payments.

This is also called “automatic payments” or “automatic bill payments.”

How it works

For auto debit to work, the customer must give the business or organisation their banking information, including their account number and IFSC code. The company then negotiates with the customer’s bank to automatically deduct a certain amount from the customer’s account regularly without the payer having to take any further action. 

This type of payment makes it convenient for the payer and guarantees that payments are sent out on time, preventing late fees and other penalties.

Advantages and Disadvantages of Auto Debit Payment Processing

Advantages	Disadvantages
Convenience: Customers don’t need to remember to pay their bills each month. This will save them time and effort. It also eliminates the need for businesses to issue invoices and follow up with customers who are yet to pay.	Potential for unauthorised charges: If a company makes a mistake, such as charging the incorrect amount or charging a customer who has cancelled their service, it can be difficult to reverse the transaction, which can harm the customer relationship.
Cost savings: Auto debit payment processing can reduce the cost of processing paper cheques  or credit card payments and reduce the risk of payment fraud or insufficient funds.	No control over payment timing: With auto debit payment processing, businesses don’t have control over when payments are made.
Timely payments: Auto debit ensures that payments are made on time and in full. This can help businesses improve their cash flow and reduce the risk of missed payments.	Potential for insufficient funds: There’s always a risk that a customer’s account may not have sufficient funds to cover the payment. This can result in fees and damage the customer relationship.

What is the Safest Way to Autopay?

The safest way to autopay is to use a credit card with fraud protection rather than a debit card, as credit cards offer stronger legal protections and lower liability limits. 

Additionally, it’s important to regularly monitor your bank and credit card statements to ensure that no unauthorised transactions have occurred, and to use a reputable payment processor with strong security measures in place.

You can also set up alerts for your bill due dates to ensure you have enough money to cover the bills. Always double-check your statements for errors, duplicates, or fraudulent transactions.

Manual Payment Processing

Manual payment processing is the process of manually processing a payment rather than using an automated system or electronic payment processing. This can include cheques, money orders, and cash.

Manual payment processing can be time-consuming and labour-intensive since this requires manual data entry and payment reconciliation. Manual payment processing may also increase or sometimes is incapable of handling the tedious task of split payment settlement. 

How it works

Manual payment processing is typically initiated by the customer, who provides payment information to the merchant or service provider, such as a cheque or money order. The payment is then manually processed by the merchant or service provider, who deposits the cheque or money order into their bank account or physically collects the cash.

Advantages and Disadvantages Manual Payment

Advantages	Disadvantages
Control over payment timing: Manual payment processing gives you more control over when payments are received and processed, allowing you to manage your cash flow better.	Time-consuming: Manual payment collection can be time-consuming, especially if you have a high volume of transactions.
Monitor payment activity: With manual payment processing, you can closely monitor payment activity, lowering the risk of fraudulent activity or chargebacks.	Higher risk of missed payments: With manual payment processing, there’s a higher risk of missed payments due to human error or forgetfulness.
No risk of unauthorised charges: Unlike auto debit payment processing, manual payment processing eliminates the risk of unauthorised charges being made to your customers’ accounts.	Higher processing costs: Manual payment processing can be more expensive, particularly if you need to invest in equipment or hire more staff to manage the process.

How Long Does a Manual Payment Take?

The time it takes for a manual payment to be processed varies depending on the payment method and the merchant’s or service provider’s processing time. A cheque, for example, may take several business days to clear and be processed, whereas cash or money order payments can be processed much faster.

However, typically, this process takes 1-2 business days to complete.

Furthermore, due to the need for manual data entry and reconciliation, manual payment processing can be more time-consuming than the electronic mode.

Factors to Consider When Choosing Between Auto Debit and Manual Payment Processing

When it comes to payment processing, there are many factors to consider. Here are some of the key factors to keep in mind when deciding between auto debit and manual payment processing:

1. Customer preferences

You should select a payment method that is convenient for your customers. Some customers prefer the convenience and ease of auto debit payments, while others prefer to pay manually. 

Consider your customers’ preferences and habits when making your decision.

2. Business goals and needs

Your business goals and needs should also be considered. Manual payment processing, for example, maybe a better option if you need to manage your cash flow closely. 

On the other hand, if you want to reduce administrative tasks and free up more time for other business activities, auto-debit payment processing may be a better fit.

3. Industry norms and regulations

Depending on your industry, certain regulations or norms may govern the payment methods you can accept. Some industries, for example, may require you to accept specific types of payments, such as credit or debit cards.

4. Risk tolerance

Finally, when making your decision, consider your risk tolerance. Auto debit payment processing carries some risks, such as the possibility of unauthorised charges or insufficient funds. Manual payment processing, on the other hand, may take more time and effort.

By considering these factors, you can determine which payment processing method best fits your business. Just like any online payment, it’s important to weigh the advantages and disadvantages of payment carefully and make an informed decision that supports your business goals and priorities.

Experience seamless payment solutions with NTT DATA Payment Services

Efficient and quick payment solutions are essential for businesses to improve their cash flow and maintain a positive customer experience. Delayed or inaccurate payments can result in lost revenue, customer dissatisfaction, and damage to the business’s reputation.

NTT DATA Payment Services offers a complete payment solution to advance your offline and online businesses from,

• Payment Gateway in India
• POS machines
• IVR payments
• Mobile applications, and
• Bharat QR Scan and Pay

We ensure maximum comfort, convenience, and safety for all your payments.

Conclusion

The decision between auto debit and manual payment processing is influenced by various factors. Both methods have advantages and disadvantages, and the best solution for your company ultimately depends on your situation.

Auto debit payment processing is more convenient and efficient, whereas manual payment processing gives you more control and security. Consider the pros and cons of each method and how they align with your business priorities when making your decision.

Ultimately, the decision to choose your payment processing solution should be based on supporting your business goals and providing a positive experience for your customers.

Also, you can get frequent updates on nttdatapayments Instagram page.

FAQs

1. Is auto debit safe?

Auto debit can be a safe and convenient way to pay bills or make recurring payments, but it is critical to ensure that the payment details and frequency are correct and that any errors or unauthorised charges are regularly monitored.

2. How does auto debit work?

Auto debit enables recurring payments to be made directly from a bank account or credit card, such as for monthly bills or subscriptions. The account holder authorises the payment, which is then processed automatically by the bank or merchant.

3. What does manual payment mean?

The process of manually processing a payment, such as cash, Cheque check, or money order, is called manual payment. It typically involves manual data entry and payment reconciliation.