Things to consider when setting up payments with your financial institution

The payments landscape within Australia is rapidly moving away from cash transactions. With non-cash transactions now accounting for over 70% of all transactions. The main drivers of this change include increasing security, convenience for consumers and improved reliability.

Two of the most common methods used by consumers is Bank Transfer and Direct Debit. From childcare fees, to electricity and internet bills, to paying regular fortnightly or monthly rent payments; many businesses are opting for their customers to use one of these electronic payment methods

While there are a number of benefits to using electronic payments for both consumers and businesses, which is the better choice between bank transfers through your financial institution and direct debit with your property agent? In our latest blog, we look at things you should consider when deciding between direct debit and bank transfer. Firstly, let’s explain the difference between these two methods.

BANK TRANSFER

Originally used by businesses to make regular, low-value payments into employee accounts, in the modern banking world this is now commonly used by consumers to make fast, one-off or regular direct payments from their own bank account into the bank account of anyone whose bank account number they have. Consumers are in control of their payments and can register for these services through their own bank or financial institution. This allows consumers to amend, hold off or change amount details at any time, mainly using mobile banking apps, internet banking or phone banking services.

DIRECT DEBIT

Direct debit is a separate payment method and is a common way consumers regularly pay their ongoing and recurring bills. The most common uses for direct debit include paying insurance premiums, utility bills, gym memberships or childcare fees. An emerging trend for direct debit, in more recent times, has seen consumers using this method of payment for their mortgage or rental payments. Direct debits are set up in advance, and may run as recurring billing, or be used for one-off or variable payments.

Here are 5 things to consider when setting up payments with your financial institution:

1. NO GUARANTEES YOU’LL BE ABLE TO GET YOUR MONEY BACK

If you set up a bank transfer with your financial institution, there are no guarantees you’ll be able to get your money back if you enter wrong details. There’s also no guarantee of refund if your landlord changes management during your tenancy and you don’t update your rent debit to the new Agent’s account.

2. CHANGING BANKS CAN BE A BIT OF A HASSLE

Keeping on top of all your bill payments that are set up with your financial institution can become a bit of a hassle if you choose to change institutions or you pay bills from multiple accounts.

3. INCORRECT DETAILS CAN LEAD TO LOST PAYMENTS

Many businesses these days have a bucket for “lost payments” – these are essentially payments from bank transfers where they cannot identify who the original owner of the payment is, due to incorrect details or references being entered. This could lead to late payments and dishonour fees with the business.

4. NOT ALWAYS “SET AND FORGET”

Although you can automate payments quite easily with your financial institution, the benefits of using direct debit is that often businesses will send you reminders or alerts when payment is due. This is more difficult to do with your bank, meaning it’s not recommended as an out-of-sight, out-of-mind approach for regular payments.

5. HOW TO MAKE SURE YOU ARE PAYING THE CORRECT AMOUNT

The benefit of liaising directly with the business you require payment for is, that you can set up variable schedules and amounts. The amount being debited is always correct, which means you avoid late payment fees or penalties from that business. Examples are different electricity or phone bill amounts each month, housemates who get paid on different weeks or variations of childcare fees during school holidays. This is often difficult to automate if you set payments up directly with your bank.

Console Pay powered by Ezidebit is a new capability designed to make paying rent easier. Console Pay facilitates recurring rental payments in conjunction with Ezidebit, to help make rental payments more convenient to get rent paid on time.