The other night I needed to arrange a bank transfer from my New Zealand account to a supplier.
My bank in NZ was once leading the way with internet banking; at the time it was quite incredible. Internet. Banking. Wow.
Having been a client for almost 20 years, I am also surprised that not much has changed with their system since those pioneering days. I’m talking about the 90’s.
In fact, at 9PM I can’t make a payment online with this bank, because they are closed. Yes, closed. The internet banking is shut at 9PM. It would be fitting to put a shutter on their homepage after 4pm, about the same time that the bank closes. I’m surprised they don’t just close the whole website at 4pm, and turn it back on at 10am or whatever ridiculous hour they open again.
This is infuriating. It jolted me into action to put into writing my opinions about what is out there, especially non bank stuff which is genuinely helpful.
SME’s don’t have time to be dealing with infuriatingly ridiculous banking systems, but there is some hope for us yet.
#1 Reserve Bank instant transfers for all
The Reserve Bank has been working on a system that will allow instant bank transfers, NPP or New Payments Platform https://www.rba.gov.au/payments-and-infrastructure/new-payments-platform/
If you pay someone now, it will appear in the recipient’s account in real time. It’s like the future. This system has been in the works for something like 4-5 years now since being announced.
It truely will have a substantial impact for SME’s, but, we’re still waiting. I can order something online on Friday, have it delivered to me from the other side of the world, and it will get there faster than that payment made Friday that doesn’t clear until Tuesday. But if I want to pay someone, which is essentially a piece of data moving at light speed, it still can take a long time.
A cash payment courier service could be quite lucrative until this one gets off the ground?
#2 Existing banking system
As a business customer, the favourite feature of our Australian bank is just how much they seem to hate us.
Not only do they make it as difficult as possible for me to do business, on a quiet week they penalise us for that. Actually I have never had so many calls from the bank as the quiet week we had an account slip into temporary overdraft overnight. They never call me to help me, or my business, despite the four figure fees they charge our business annually for the pleasure of their company.
Now Paypal’s penetration in bricks & mortar isn’t nearly as substantial as their online presence. But when I realised all I need is a password to pay for products online, suddenly the time shaved off an already busy week was thanks to these guys.
Paypal’s invite only business finance products are also superior to anything I’ve never seen from my banks. They understand my business much better, and they reward me for doing business with them. Whenever reasonable we encourage payment in Paypal. Their fees can bite a bit, but when you’re treated well service wise, it’s just overall a lot easier.
#4 Credit card payment online
We set up and manage a lot of this for our clients. It’s the norm and preference for many online merchants. However, when you want a reasonable degree of control with those activities and use a provider such as Payment Express as your payment gateway (we are a development partner of these guys), you invariably also need to have a merchant account. Which comes from your bank. Which is of course a blocker as far as I’m concerned as you need to be established to get the full benefit.
Banks want you into a long term online merchant contract, often these will require a separate merchant account from the eftpos one in their stores, and they want to audit your site and approve it before they’ll let you use their product on it. The bank audit part wasn’t around when I first delved into ecommerce and I am fine with it, but it adds 4 weeks to the process. In contrast once that’s done providers such as Payment Express can do their part in a matter of hours or days.
Accepting credit cards online using a standard bank model can therefore be out of the range for many SME’s, and generally I have found that using Paypal only can be a comparable price for 50 sales per month, considering the fixed costs of a more traditional method.
#5 Bank transfer on a website
This is quite an old concept, but this and number 6 are top of my list fo favourites. I first came across this when purchasing airline fares, Poli came up as an option and out of interest I clicked it.
This method essentially allows you to pay immediately online, but instead of paying with your credit card you pay with a bank account (think: via internet banking). This approach has become so simple and streamlined now, I use it for a range of things now regularly. We use a product with our clients called Account2Account by Payment Express, and it’s a matter of clicks to not only by from your account direct, but usually save on credit card surcharge too.
#6 Transferwise.com – international transfers for business owners
We don’t have any relationship with these guys, but we are an advocate of their products.
With regular international bank transfers a necessity for our business on a weekly basis, I am constantly frustrated with the inflexibility and expense at which these services are offered.
Transferwise comes from some of the team behind Skype. They are genuinely interested in looking after what clients want and being properly innovative and not in a legacy way.
I can transfer $1 between approved countries if I want to do such a ridiculous thing. Not only will it cost me just a few dollars to do so, in some cases I have seen payments out of Sydney after hours landing in our NZ bank account the same night.
It is so easy to use, and it offers Poli too to allow me to transfer funds with no credit card surcharge, no manual transfer process, and have the outgoing funds authorised immediately.
It is effectively an international bank transfer that can take as little as a few hours. Kudos to these guys – the product is really quite simple! But it is their approach and rate of approach to service offering improvement that is impressive.
Undoubtably online banking has a long way to go. But with an innovative space given some flexibility, the banks are going to be absorbed by the Fintech movement and the innovators are gonna innovate some amazing banking productivity tools.