In working directly with dozens of startups, we get the same questions over and over. Two such requests are those related to payment processing and billing services. These two, though highly related in financial transactions, serve unique purposes from the point of view of a business.
Payment Processing: Facilitating Secure Transactions
Payment processing is the smooth transfer of money from customers to businesses. There are many payment processors available in the market, each entrusted with securely and accurately transferring money. Among the important responsibilities of payment processors are:
- Verification and Security: Validation of details for accounts to avoid fraudulent activities and protection of the integrity of the transaction.
- Transaction mediation: They mediate between the acquiring banks which are the banks of the e-commerce business that is receiving the funds, and the issuing banks from where the customers’ funds are derived.
- Fee structure: The payment processor charges for their services usually in the form of a transaction fee and a certain percentage of the amount being transacted. The typical rate is 2.9% plus $0.30 per transaction for online transactions.
This price structure makes clear the risks involved which are inherent in payment processing. The higher the transaction amount, the greater the risk to the business and the processor’s exposure.
Billing Services: Manage Customer Invoicing and Payments
On the other, billing services involve handling the invoicing and collection of these payments on behalf of a client. These include;
- Invoicing: Draft an invoice specifying the nature of the goods sold or services provided and the amount due upon sale.
- Dunning: Automation of processes involved in notifying customers about failed attempts of payment collection and facilitating retries
- Subscription Management: Customer LTV, conversion rate, churn rate. Managing customer plans on upgrades, downgrades, and when they cancel.
- Integration Flexibility: Where billing systems allow businesses to switch payment processors and leverage competitive rates or better service offerings.
In most cases, billing systems charge on a percentage-of-revenue basis. It is the price they command for bringing much-needed efficiency into the financial management of medical practices and regular and timely payment collections.
Perspective: Exzact Business Solutions
At Exzact Business Solutions, we always occupy the forefront of drawing out the differences while applying each one to their respective fields of action so that the functionality of a financial operation is maximally expressed. While they are complementary and related in undertaking, a billing system and a payment processor have completely different roles. Integrating both functionalities can help your business become more efficient in transactions while decreasing operational risk and sustaining robust financial health.
Bottom Line
Only in this way, by using payment processing and billing services, firms and companies can be empowered to make financial workflows easier for themselves, bring satisfaction to their customers, and be on a long-term growth track. Contact Exzact Business Solutions for tailored solutions and professional advice on how to steer within these areas. Our commitment is to help you achieve smooth financial operations for your business.
This post was written by a professional by Exzact Business Solutions. TRANSPARENT | AFFORDABLE | SIMPLE Merchant Services, Websites, and Social Media Done Right. Exzact Business Solutions are on a mission to educate local businesses to ensure smiles, savings, and solutions. Exzact clients save an average of 30% on their processing alone. No Contracts, Free Equipment, Local Support, No Rate Increases, and More. Exzact Business Solutions goal is to educate the local business community in order to ensure smiles, savings and solutions. Exzact Business Solutions is an Independent Sales Organization with strategic partnerships dedicated to cultivating reliable and trustworthy relationships in the Payment Card Industry, allowing to tailor products and services to the needs of each merchant. Contact EBS and see what a difference having the right advocate can make!
