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Challenges Of Online Banking Payment Systems


Part  2 of the Series: Going Electronic with Business Payments.

Many times when business owners or accounting professionals think about “going electronic,” they default to their personal online banking experience – paying bills through their financial institution’s online bill payment service. Most are surprised to learn that the limited bill payment service at their financial institution falls short of a complete electronic system for sending and receiving payments.

Since online banking services at the various financial institutions were designed for the personal payment experience, it shouldn’t come as much of a surprise that these services have yet to meet the requirements for business payments.

Online banking services offer two options for sending and receiving payments. These options can work for some businesses, but both have their limitations, which I will review below.

Sending Payments
Biller list: The number of billers (suppliers) that can be paid is limited. For our personal bill payments most of our regular billers are listed such as utilities, telephone companies and credit cards are all available for payment. However for most businesses, the vast majority of their suppliers will not be listed. That’s because it is challenging for small-to-medium size enterprises (SMEs) to be included in their financial institution’s biller list, which I will discuss in the next section. The end result is that the standard biller list, contains approximately only 10% of the companies a business needs to pay in a month.

Note: Telpay’s system has been designed to allow a business to pay all billers, large and small. Even better is your billers are not required to ‘sign up’ in advance. Telpay has a process that allows all businesses to be set up to receive payments.

Double entry of payment information: As most people know, online banking services require manual keying of information, there is no integration to save time or keying errors.
Note: Telpay’s system integrates seamlessly with all major accounting software, eliminating double entry.

Limited access: Many financial institutions will limit access to online banking services, if a business requires two signatures for payment approval. This shortcoming is improving as financial institutions develop solutions that enable multiple signing officers to approve payments made through the online bill payment service.

Note: Telpay’s system allows for one, two or multiple signing officers to approve payments remotely through their computer or smart phone.
Receiving Payments
I’ve spoken to many owners and accounting professionals about their experience getting set up to receive payments through their financial institution online banking service. Most of the time, these customers were left feeling frustrated by their experience. Here is a list of the challenges that they have encountered:

1. Receiving payments can be costly. Often clients are charged a set up fee from their primary bank and monthly fees from each of the major banks. If your business is receiving a few payments each month, the cost to receive payments will be high.

2. Your customers may not have a bank account at the financial institution where your business is set up. If you are set up at one of the major banks, but your customer banks at a credit union, you will need to set up your business with the credit union (If your business operates in a small community and most of your customer’s bank at local financial institutions, this will not be a problem).

3. Most online banking services cannot easily handle invoice numbers. This one is the biggest challenge for SMEs to overcome because most SMEs require invoice details not only customer account numbers. At most, I’ve seen that some online banking services have a field where an invoice number can be entered. But if you send multiple invoices to a customer, I’ve yet to hear of a way that online banking services will work for a business that wants to receive payments.

There you have it! This list will change and evolve. Financial institutions are always improving their systems so it may well be that some of the challenges I’ve listed above may no longer be as problematic as they once were. Either way, let’s talk about it! Give me your feedback and experiences. Each of us in the account accounting community is going through the transition from paper to electronic. There are a lot of questions and a lot of experiences that if shared will make the transition easier for everyone!