The payments industry is constantly evolving and it can be hard to keep up with the plethora of new solutions entering the market. A good place to start is with a sound understanding of the two core methods of payment, known as push and pull payments. Here’s a look at the differences between these payment methods, to help you narrow your search and decide which one is better suited to the needs of your business.
Push Payments
Push payments rely on your customers or clients actively sending or ‘pushing’ money to you. This means your company has to request the payment and you’re then reliant on your customers sending you the monies owed. Common examples of push payments include cash, cheques, bank transfers and invoice payments.
Push payments are typically used for transferring high value, one-off sums. Since they relinquish control of your incoming monies to your customers, they can tarnish cash flow if a customer forgets or chooses not to pay you.
Pull Payments
Unlike push payments, pull payments allow your business to withdraw or ‘pull’ money from customers, providing there is a pre-existing agreement between you both. In this way, they give you greater control of your cash collection. This makes managing and predicting your cash flow much easier, as you’re not reliant on your customers to initiate payments.
Pull payments are particularly beneficial to companies that require recurring payments from customers, or perhaps payments of different amounts and time periods. Direct Debit is a common pull payment method which is really useful for organisations that require regular transfers from customers, such as subscription or membership services.
Each payment method has its own advantages, but for companies wanting greater control and stability in their cash flow, pull payments such as Direct Debits are a great choice. Read more about Bacs vs bank transfer in our blog article.
