Automation and digitalization have taken over the financial world like wildfire. While digitalization is the process of amalgamating technology with the finance sector, automation of payments is a subset born out of this amalgamation.
Automated payments have not only proven to be a convenient alternative for individual users, but they have also been a boon for businesses both big and small.
Setting up automated payments is quite easy and can be used for a multitude of things. They can be set up as easy monthly instalments (EMIs), monthly electricity and water bills, loan repayments, etc.
For businesses making or receiving recurring payments to and from customers, automated payments have helped achieve a high level of efficiency and accuracy saving them from misses and mistakes.
Let us first talk about automated payments for individual users.
Users can set up these payments in two ways- 1. Directly from the bank account, like an electronic fund transfer (EFT), or 2. By using a credit card.
Setting up automatic payments is easy and can be started almost immediately, by choosing your preferred method and setting up a particular date and time for the recurring payment to go through every month.
The advantages of automated payments for individuals users:
- The procedure to set automated payments is quite simple.
- After setting it up once, there is no need for manually entering information or making fund transfers manually.
- It saves the user a lot of time as the user is no longer required to make such transfers manually every time.
- Since the date and time are already set beforehand, it saves the user from mistakes like missing out on the last payment dates.
- When the user becomes habitual of seeing this amount getting debited from their account, it helps them to create more efficient budgets.
The disadvantages of automated payments for individual users:
- Automated payments can only be used for recurring payments that don’t occur in an erratic manner.
- If the user is not careful, automated payments can lead to creating overdrafts if there is an insufficient balance.
- There is a high penalty for insufficient balances in bank accounts.
- The user needs to keep a frequent check on their balances as well as whether their payments are getting processed successfully or not.
- Automated payment systems are versatile but they are not accepted by all billers, which limits the functionality of the system.
Automated payments for businesses are a little more elaborate when compared to individual users as other than making recurring payments, businesses can also use this functionality to receive payments from their consumers.
It is highly imperative for businesses to be on time, and have 100% accuracy and high efficiency to manage their payment systems. With automated payments, businesses don’t need to go through the trouble of manually feeding in information every time payment has to go through. Digitalization has also made the concept of subscriptions quite popular among the masses. Businesses can also have automated their systems to receive recurring payments from their customers.
The pros of automated payments for businesses are:
- When there is minimal manual work involved, there are lesser chances of mistakes. After receiving information from the customer, the data is stored automatically on the customer database, which gives much higher accuracy than if the information has to be entered manually each time.
- Automation saves a lot of time and manual labor costs, making the entire system much more efficient.
- Automated payments ensure that the payments that the business has to receive and make are conducted in time, with minimal or no errors and mistakes enabling higher reliability.
- This also gives a chance for businesses to store sensitive customer information, which can later also be used for creating customized plans and packages.
The cons of automated payments for businesses are:
- If there is any change in the customer’s personal details, or if their account has an insufficient balance, the payment is unable to go through. In such scenarios, the business has lesser control over the entire transaction.
- When businesses choose to offer such a service to their customers, it is important for them to abide by the strict rules governing data protection and privacy policies. Any lag in following them can lead to damaging results.
- This is an added expenditure for business as automated payment setups mostly require third-party involvement. The third-party supplies this technology that the business can integrate with its system, which can be a little expensive.
Overall, automated payments have brought about much higher efficiency and accurate results for both businesses and customers that the subscribers to this technology are not going back any time soon. With easy procedures, businesses can save on time and manual resources to achieve a much higher percentage of returns from their customers.
As this technology has already been adopted by most banks and is quite prevalent with businesses providing services like Netflix, magazines, etc., it is quite likely that the popularity is only going to grow and automated payments could become an essential asset, more for businesses than individual users.