Stripe, a financial software as a service is launching a new infrastructure for bank transfers, which automates all reconciliation and creates a simplified refund process. It will be first made available in the EU, UK, Mexico, and Japan.
Traditionally, bank transfers require manual reconciliation, whereby teams of accountants are employed to match incoming bank transfer payments with outstanding amounts owed. Additionally refunding traditional bank transfers requires the manual setup of an opposite bank transfer.
The reliance on the payer makes bank transfers challenging for businesses. Unlike card payments that are initiated by a business for a set amount, bank transfers put the customer in control of the amount and timing. Customers might enter amounts that are incorrect or piecemeal—or, even worse, sent to the wrong business.
Reconciliation is manual, as recipients must find and match orders and invoices to incoming credits in their bank accounts (if those credits reach the right account at all). Businesses can spend hundreds of hours resourcing and accounting for payments, requesting additional transfers and information, and processing refunds from overpayments.
Stripe has built a solution that takes away the operational pain of receiving and manually reconciling transfers. Its also enhanced the bank transfers experience and made it easy to operate as a payment method (rather than a funding method) in the following ways:
- Automated reconciliation. Stripe provides a virtual bank account number (VBAN) for each customer, so that incoming transfers automatically map to the correct customer. VBANs are localised and regionally recognisable (e.g., they begin with “DE” for German customers). A reconciliation layer allows businesses to immediately see if a customer has paid too much or too little—and can resolve overpayments through the dashboard and API.
- Simplified refund and return processes. Stripe users can return a payment to a customer without initiating a new bank transfer from their account—a feature not natively built into the bank transfers scheme. With one API call or a dashboard click, users can refund a customer—no need to set them up as a payee.
- Integration directly into other processes, like invoices, subscriptions, and revenue recognition. Bank transfers are compatible with Stripe’s revenue management suite, further removing the operational burden for its users. Users can compliantly request a bank transfers payment with invoicing and grow recurring revenue with subscription logic provided by billing. revenue recognition streamlines accrual accounting so books can be closed quickly and accurately.
- Acceptance of other payment methods alongside bank transfers without additional code. Its new bank transfers payment method works with Stripe’s Payment Intents API, which means users can offer bank transfers from the dashboard—no additional integration required. This way, users can have a unified view of all incoming payments (rather than having to go into their bank account just to view bank transfers).
Beta users have freed up time and resources previously spent on reconciliation and accounting using bank transfers on Stripe. These savings can add up: Spicers of Hythe, a UK-based provider of corporate gift hampers, estimates that it will save its financial operations team more than 300 hours per year, which it can refocus on growing its business.
“We save around 1.5 hours per week of manual reconciliation, solely by not needing to match incoming funds with invoice references. However, the biggest value will come as we scale and don’t need to hire support staff to handle our growing volume of bank transfers.” said, Will Stenhouse, co-founder, Yorlet.
Go to Publisher: The Fintech Times
Author: Francis Bignell