Automated Payment Systems explained

Automation is becoming an ever greater feature of the processes, workflows, and systems we use on a daily basis, and the payments space is no different. 

Automated payment systems improve the efficiency and performance of ecommerce businesses around the world. How? They reduce human error and make it easy to accept different payment methods and to scale in new markets. They also provide a much greater level of insight into your operations, which can be used to make improvements. 

In this article, we explain automated payment systems, the different types, and the benefits they bring to your business. 

What is an automated payment system?

An automated payment system refers to any technology that allows businesses to process customer transactions, settle invoices, or pay employee salaries electronically. 

These automated systems are extremely versatile and can facilitate a range of payment types, including cards, digital wallets, wire transfers, electronic funds transfers (EFT), and more.   

For businesses, automated systems make the process of both sending and receiving payments much more streamlined and efficient. 

The easiest way to implement automated payments is to integrate with a third-party payment provider like Checkout.com. Setting up can be as simple as choosing the types of payments you want to use and then switching them on, if you choose to implement a low-code method of implementing a payment gateway - such as a hosted payment page.

Different types of automated payment systems

Automated payment systems allow you to process a range of payment methods. In fact, there’s an automated system for nearly every type of transaction, including: 

Credit and debit card payments

Credit and debit cards are among the most widely used payment types for online consumer transactions, meaning it's essential for any ecommerce business to have card processing functionality. 

Electronic Funds Transfer (EFT)

EFTs are a category of payments that enable the direct transfer of funds from one bank account to another. They include direct deposits, wire transfers, and electronic checks. They can be a quick and cost-effective way to make both domestic and international payments. 

Automated Clearing House (ACH) payments

An ACH payment is a type of EFT that is used to make bank-to-bank transfers in the US. The ACH network can be used for debit and credit payments and for one-off or recurring transactions. Processing fees for ACH payments are usually lower than other automated payment types like cards, making them a great option for large or recurring transactions. 

Digital wallets and mobile payment systems

Digital wallets, like Apple and Google Pay, allow people to store digital versions of cards on their devices, which can then be used to make fast and secure payments without the need to enter card details every time. Digital wallets are set to account for 54% of all online payments by 2026 and are already used for 70% of ecommerce payments in the Asia-Pacific region, so make sure to find an automated payment system that supports them. 

Likewise, to maximize conversions and remain competitive in the online economy, you should find a provider that allows you to accept all mobile payment types, including in-app purchasing, SMS payments, and P2P mobile payments. 

Peer-to-Peer (P2P) payment systems

P2P payments allow individual consumers to send funds to one another via a digital platform. Typically, an automated payment system acts as the intermediary during the transaction and only requires a phone number or email address to initiate the payment. 

Invoice automation systems

As well as collecting payments, automated payment systems can help you to settle bills and supplier invoices. Automated invoice processing technology can quickly capture essential data from an invoice, match it to a purchase order, and verify the payment for settlement. This is much more efficient and accurate than manual processes.  

Subscription management platforms

Automated payment systems are also great for subscriptions as they can take a lot of the hassle out of collecting recurring payments. Using a single unified system to process payments and manage subscriptions allows for a more reliable, less resource-intensive process, reduces churn, and keeps customers happy. 

Wire transfers

A wire transfer is another type of EFT that allows funds to be transferred between bank accounts without the need for an intermediary. Unlike ACH payments, wire transfers can be used for both domestic and international payments.   

Benefits of using automated payment systems

Automated payment systems have a number of advantages over manual payment processes, including:

Cost saving

Automated payment systems can cut your costs in a number of ways. Firstly, reducing manual processes drives efficiency and frees up resources that can be invested elsewhere.

Secondly, they utilize in-built fraud-fighting measures and reduce the risk of human errors, both of which can be costly for your business. Finally, the transaction fees charged by automated payment providers can be much lower than those for outdated or manual systems. And because you have a range of payment types to choose from, you can utilise intelligent payment routing to direct payments via the path that’s most cost-effective for each transaction. 

Time-saving

Automated systems are highly efficient, as many aspects of payment processing that previously required manual intervention – such as data capture and entry that are part of the MOTO payments flow  – are instead performed behind the scenes by technology.

Enhanced clarity and responsibility

Automated systems can analyze and organize the wealth of data generated by your business into practical insights and useful formats. This can provide a great deal of clarity into the functioning of your business operations, helping you to spot limitations and make improvements. By automatically creating and storing digital records for every transaction, these systems make it easy to meet your regulatory and tax responsibilities. 

Minimized human error 

As they rely on complex algorithms, don’t get tired, and can’t be clumsy, automated systems are much more accurate and far less prone to errors than people are. This means less duplication and fewer costly mistakes that could otherwise damage relationships with suppliers or customers.    

Improved security measures

Most payment automation systems incorporate advanced security measures that can identify and prevent fraudulent activity. For example, 3D Secure provides an additional layer of authentication for verifying customers, and anomaly detection analyzes data to spot and block suspicious transactions. 

Worldwide expansion potential

Automated payment systems provide support and services for businesses that trade internationally. These services include the ability to offer your customers their preferred local payment method, and to process and settle transactions in multiple currencies, which can boost acceptance rates, as well as loyalty with a global customer base. They can also help you to avoid costly international fees and make it easier to comply with varying regional regulations and tax laws. 

Greater control over cash flow 

Using an automated system allows you to gain much greater control over your cash flow. That’s because, where appropriate, you can choose the payment types with the fastest processing and settlement times, meaning funds are available for use much more quickly.

You can also automate supplier invoices, bills, and other recurring payments to leave your account at a time when you’re likely to be more liquid. This ensures your business can maintain financial stability and won’t miss important payments, which could damage supplier relationships. 

Faster growth

Automated systems are highly scalable, with the ability to easily switch on new functions or payment methods and the capacity to deal with sudden increases in transaction volume. This makes it easy to adapt to changing circumstances as your business grows.

How to set up an automated payment system

To set up an automated payment system, follow these steps:

• Assess your requirements - this will help you choose a system that meets your needs. Your main considerations should be transaction volume, payment methods, key functions, international support, security features, and regulatory compliance (such as PCI DSS).
• Research providers - next, you can research providers to find ones that match these requirements. You should also compare their fees, online reviews, and whether or not they are used by other businesses in your sector, which is a good indication that they’ll also be suitable 
• Check compatibility - you’ll also need to assess how you will integrate the provider’s services into your existing infrastructure.
• Implement security features - establish security protocols, and determine whether customer data will be stored in your servers or if your provider will be responsible for safeguarding any sensitive information. For example, if you choose a hosted payments page because your customer is redirected to a third party for data capture and processing, you never have to handle payment information. This reduces your compliance responsibilities and the need for you to build complex security infrastructure   
• Conduct tests - make sure to test your system before going live. This will allow you to check for any snags or security issues that could cause problems after launch. For example, your system should allow you to simulate different types of payments
• Launch your system - once you have tested everything, it's time to launch your system. If necessary, you can use a staggered approach, switching on just a few customers and processing a few small transactions before a full rollout  
• Evaluate and make improvements - even if you’ve chosen the most appropriate system for your needs and conducted tests, there will always be room for improvement. Keep evaluating the performance of your payment platform against your key metrics (such as acceptance rates) and make any necessary amendments  

How to setup an automated payment system with Checkout.com

Checkout.com is an end-to-end, automated payments system that will improve your operational performance and supercharge your growth. 

Our platform is modular and cloud-based. That means all you need to do is select an integration method, choose which features and payment options you’d like to use, conduct testing, and go live.

‍Find out more about how Checkout.com can help your business.