Why Lenders Should Consider Push Payments

Mar 13, 2020

The way consumers pay and receive money is radically changing. Consumers are familiarized with making payments in real-time, using cards and wallets. As a result, their expectations about the way they receive their money is also shifting. 

Initially, consumers did not have a simple solution for sending payments to each other. However, non-financial institutions stepped in and created solutions for consumers to “push” payments to one another.

So what are push payments?

Push, also known as credit, transactions are those where the payer authorizes their bank to send funds from their account to the recipient’s account. 

Some of the many benefits of push payments are that they are not as risky and they are quick. The payer determines when the funds are ready to initiate the payment. Moreover, the bank will instantly decline the transaction, should the payer not have enough funds. 

Push payments used for wire transfers, mobile peer-to-peer (P2P) services, and direct deposits for payroll. Employers use push payments to send payroll funds from their company account to their staff’s bank accounts.

This is in direct contrast to traditional pull payments, where the payer needs to provide either a signature or PIN number, authorizing the recipient to remove funds from the payer’s account.  Common forms of pull payments are the use of checks and debit cards. They are also utilized for ongoing purchases such as subscriptions and utility bills.

Pull payments are riskier in that the owner of the account may not know when the funds will be withdrawn from their account and may not have sufficient funds to cover those costs. Also, this type of payment requires payees to share sensitive information such as bank account numbers, that can be vulnerable to fraudsters.

Why Push Payments Are Good For Lenders

Alternative lenders have been early adopters of this “instant push payment technology” because of its online and digital structure. They value speed and efficiency. They have streamlined the underwriting process by reducing it from the standard days and weeks to only hours, even minutes.  More of these lenders are looking for ways to cater to their customer’s specific needs. Alternative lenders are also not bogged down by complex infrastructures and therefore have a technological upper hand.

The same cannot be said about large banks as they have systems and infrastructures that are dictated by regulation and other compliance issues. This inevitably makes it challenging to adopt these new technological advancements in payments. 

With push payments, consumers are able to apply, get verified, get approved, and have access to the loan within the same time frame it takes to receive an approval or denial from a traditional lender.

Offer Simple Solutions In A Fraction Of The Time

Many players in the financial world are beginning to see the benefits of adopting real-time push payments. The application is streamlined, secure, less of a hassle, and delivers the much-needed funds to the consumer or business so that it can be used instantly. It would be of great benefit if more lenders can adopt this emerging technology.

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Having a merchant account allows an account holder to take advantage of merchant cash advances. When a merchant is approved for an advance, the business agrees to receive a lump sum of cash in exchange for an agreed-upon percentage of future credit card sales.

Pricing varies depending on the merchant’s industry, past credit card processing history, the type of business seeking the account, average ticket sales, and average transaction volumes.

Yes, EMB works with merchants who are building their credit, as well as those who have poor credit. EMB also approves merchants that have no credit card processing history and businesses that have lost their merchant accounts due to high chargebacks.

Several factors influence a merchant’s risk level. Though only one factor likely will not get a merchant classified as high risk, a combination of these may: business size, location, and industry, credit score, credit card processing history, a industry’s reputation for excessive chargebacks, a prior history of high chargeback ratios, and whether a merchant exclusively sells online.

Virtual terminals are stationed on a merchant’s website, making it easy for customers to make a payment or purchase online. Merchants or a payment processor can easily set up virtual terminals, so online businesses can accept credit and debit card and e-check transactions.

A merchant account is a business account with an acquiring bank. Without this business account, which actually works more like a line of credit, a merchant cannot accept and process credit and debit card transactions. Businesses need a merchant account to accept major credit cards via a static point-of-sale terminal, mobile card reader, or through a virtual payment gateway.

After filling out EMB’s simple online application and submitting any necessary, requested documents, many merchants get approved within 24 and 48 hours.

EMB specializes in working with high-risk merchants. EMB works with many merchants, including but not limited to businesses in these industries: gambling and gaming, adult entertainment, nutraceuticals, vaping and e-cigarettes, electronics, tech support, travel, high-end furniture, weight loss programs, calling cards, e-books and software, and telecommunications.

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