Push payments vs pull payments: What's the difference?

Not all payments are created equal. Some are initiated by the customer. Others are triggered by the business. These two flows, known as push and pull payments, shape everything from your cash flow to your customer experience.

At first glance, the distinction might seem small. But how a payment is initiated can affect your fraud risk, reconciliation process, and even your processing fees. And that makes it a critical choice for every business, especially if performance and efficiency are priorities. 

Whether you’re launching a subscription service, collecting invoice payments, or building a smooth checkout, the right payment flow depends on what you want to achieve – and the provider you choose should support both, without compromise.

In this article, we’ll break down the key differences between push and pull payments, explore when each is best used, and help you build a smarter, more efficient payment strategy. 

But first, here’s a quick overview of how they stack up: 

Quick summary: Difference between push and pull payments

To put it simply: push payments happen when somebody actively transfers funds from one source to another. By contrast, pull payments collect funds from someone who has authorized it. 

What differentiates the two is the entity who sets off the transaction; If it’s the payer, it’s a push payment. If it’s the payee, it’s a pull payment.

Here are some examples of purchases commonly made with each method:

Below, we will explain each type in more detail.

What is a push payment?

A push payment is any monetary transaction initiated by the payer, rather than the payee. Common examples include a customer swiping a credit card at the cash register or choosing to pay by digital wallet at an online checkout.

If you receive $60,000 in an insurance payout, that’s a push payment because the insurance company sent the funds directly to your account. Similarly, if you make a withdrawal from an ATM, this is also a push payment (because you triggered the transaction request).

Push payment process

These days, you may be more likely to come across push payments in the context of digital payments such as via payment gateway or electronic funds transfer (EFT). A quick example of a push payment is sending your partner $400 over Venmo (a peer-to-peer electronic payment).

Now let’s look at a more secure form of transaction: a C2B credit card payment on receipt of goods. Here are the stages of that push payment.

1. The point-of-sale device or payment gateway captures the cardholder’s account information. The cardholder authenticates the transaction.
2. The payment processor passes the transaction request to the merchant acquirer.
3. The acquirer contacts the card scheme of the cardholder’s credit card (such as Visa, Mastercard or Diners Club) to request authorization.
4. The card scheme contacts the cardholder’s bank (the issuer) for confirmation.
5. The issuer authorizes the payment. The processor relays the message back to the merchant (at the point of sale/payment gateway).

Pros of push payments

Push payments put the payer in control. When the customer initiates the transaction, there’s a reduced risk of refund requests or chargebacks – particularly when authentication is required at the point of payment. That added layer of certainty gives both parties confidence.

Customers benefit from speed and simplicity. They choose how and when to pay – whether by card, bank transfer, or digital wallets like Apple Pay and Google Pay. That clarity supports better cash flow management and builds trust in the process.

For merchants, the advantages are tangible. Funds arrive quickly, often instantly, making it easier to plan supplier payments, payroll, and investments. Payment visibility also improves, enabling smarter reconciliation and fewer disputes. Digital payments are authenticated by the customer and processed through platforms with built-in fraud detection, helping to maintain high security standards throughout. 

Cons of push payments

Customer control can create challenges for businesses. When payment relies on the payer taking action, delays are common, and that lack of certainty can disrupt cash flow, particularly for subscription-based models. Without automation, finance teams often spend more time chasing payments and reconciling accounts.

Not storing payment details can also impact repeat business. Research shows that 30% of US shoppers will abandon their carts if asked to re-enter their card details – increasing the risk of drop-off and lost revenue.

Push payments also present a higher risk of fraud. Authorised Push Payment (APP) fraud, where payers are tricked into sending money to a fraudulent account, is a growing threat – and since the payer initiates the transaction, recovering funds is often more difficult.

Processing fees vary. Some setups offer lower transaction costs than pull methods, but any savings can be offset by higher failure rates, more manual admin, and reduced visibility over incoming funds. For the business, that adds up to a less predictable payment experience.

What is a pull payment?

A pull payment happens when a payee triggers a transaction, instead of the payer. That means the organization expecting payment sends a request, and automatically collects the amount specified. These are also known as merchant-initiated transactions.

The clearest example is an ACH payment that covers your phone bill. Rather than logging into your bank account every month and sending $60 to T-Mobile, you agree to ongoing payments that don’t need any action on your part.

Pull payment process

The exact structure of a pull payment will depend on the specific method chosen. For the sake of simplicity, we will describe the steps of a Direct Debit mandate via ACH in the US. Using the centralized clearing facility in this way is standard practice for taking regular (or one-off) payments from a client. 

1. The business presents a contract (known as a mandate) to the buyer, which sets out the payment terms.
2. The buyer signs the contract, and provides their account information.
3. The merchant submits the Direct Debit mandate to their payment service provider (PSP), with details of transaction amount(s) and frequency.
4. PSP submits the mandate to the Originating Depository Financial Institution (ODFI) if they are separate entities.
5. The ODFI contacts the ACH network to initiate the transaction.
6. The ACH makes the payment request from the Receiving Depository Financial Institution (RDFI), that is, the payer’s bank. 
7. The RDFI authorizes the payment, and credits the merchant’s account.

Benefits of pull payments 

Reduces effort and burden on customers to actively engage in recurring payments. This is a significant convenience which works well for ongoing services, prepaid subscriptions, repeat deliveries, memberships, and other types of recurring trade.

Reduce cart abandonment by allowing customers to spread payments over time (which is how BNPL works).

Predictable revenue flow for your business because mandated payments are more concrete than estimates for pay-on-demand. 

‍ACH transactions are cheaper for merchants compared with credit card processing. However, this may not be the case if your business faces a high rate of ACH declines.

One-off authentication is convenient for merchants, saving time and costs usually involved in customer payment permissions. Merchant-initiated transactions are out of the scope of SCA, and European paperless Direct Debit mandates may not need authenticating at all.

Drawbacks of pull payments

Risk of failed payments if the payer has insufficient funds or cancels the mandate via their bank. Merchants can end up chasing debt because service provision is already underway. Thankfully, modern tech such as Checkout.com's Real-Time Account Updater means customer card details update automatically.

Refund requests can be harder to combat. For instance, when a subscription renews and buyer’s remorse kicks in.

Funds may take several working days to land in the merchant’s account (because ACH Direct Debit is a delayed notification transaction type). You may be able to access same-day ACH payment processing, depending on your bank. However, this comes with additional fees and is not available for international transactions.

Deciding between push or pull payments for your business

Most businesses rely primarily on either push or pull payment methods to handle revenue, but the right approach depends on your product (or service), your customers, and the markets you operate in. 

Here’s a quick comparison to help frame your decision:

Pull payments are ideal for businesses with steady, recurring revenue – like subscription services, utilities, or insurance. Once the customer authorizes access, you can collect funds automatically, with minimal manual input. That predictability is valuable. However, it comes with some risk: if a customer cancels a mandate or has insufficient funds, you may still be liable for service provision already underway. And if a renewal triggers buyer’s remorse, refund requests and chargebacks can be difficult to dispute.

Push payments offer immediacy. Transactions are completed in real-time, giving merchants visibility and control over cash flow. They’re ideal for one-off purchases. But push payments can also mean more failed transactions, especially if customer details aren’t stored or the payer forgets to complete the transfer. High-value or B2B transactions often use push methods, but the manual nature of these payments can increase admin overhead and expose merchants to APP (Authorized Push Payment) fraud. 

Some businesses benefit from using both models. An insurance firm, for example, might collect premiums via pull payments and issue claim payouts via push. The key is to align your payment method with your operational model, and your customers’ expectations.

By contrast, there are certainly a range of services, subscriptions, memberships, and repeat deliveries where continual authorization requests would irritate and exhaust the consumer. 

To clarify the differences, here are some examples of businesses better suited to push or pull payments (in the context of taking payment from customers):

It often makes sense for businesses to support more than one payment method across different parts of their operation. A simple example: an insurance broker that receives premiums via pull payments and dispenses payouts using push payments. 

For others, it may be unnecessary to build out infrastructure for one-off payments if the business only offers services via subscription. 

Explore payment processing with Checkout.com

When considering long-term investment in your payments infrastructure, you should weigh up which provider is best equipped for the transactions you need. As an integrated provider of payment gateways, acquiring, processing, issuing, and authentication, Checkout.com is reliable for a multitude of business payments.

Secure and flexible push payments

Our dependable platform facilitates secure push payments, empowering businesses to send and receive money across multiple channels and international borders.

Simple integration for pull payments

Checkout.com offers robust APIs and pre-built integrations that make it easier for businesses to set up and manage pull payments, such as recurring billing and subscription-based models.