How Direct Payment Works

Direct Payment, or direct-debit, is the process by which your customer pays your directly from his bank account instead of writing a paper check. PaySimple's Auto-Recurring billing function enables your business to seamlessly implement a direct payment program and eliminate the unnecessary added costs of paper invoicing and paper check processing.

The process is simple

1. Sign Up
Your customers authorize your company in writing or online to debit payments from their checking account and provide their account information. (PaySimple provides you with these authorization forms, and can provide you with an online payment gateway.)

2. Test
Your company may perform a test run by sending your customers' checking account information, but no dollar amount, to their financial institutions via the ACH Network. This entry is called a pre-notification. You will be notified if any entries can't be posted or if any changes need to be made to the account information so that the first payment is collected successfully. (The PaySimple systems provides an easy to read report panel that shows you the status of all payments)

3. Notify
If the amount of the recurring payment varies, your company must send customers notification of the payment amount at least 10 days prior to the payment transaction or receive permission from your customers to waive their rights to notification. Similarly, if the date of the debit varies or is not specified in the authorization, a notice must be sent to your customers at least 7 days prior to the debit date. If the recurring payment has a set amount and date, the initial identification is all that is needed. (PaySimple automates this process, enabling you to invoice via email and automatically email receipts when payments are deducted.)

4. Post
After making any necessary changes, your company processes the live ACH transactions by delivering an ACH file, usually by transmission, CD-ROM or diskette to your financial institution. (With PaySimple posting transactions is easy! You simply set your batching schedule and we do the rest for you. You'll typically get access to your funds in 2-3 days.)

5. Transact
Your company's financial institution processes the ACH file, extracting any transactions for accounts at its institution and delivering the remaining transactions for network distribution one day prior to the Direct Payment date. (PaySimple does this all for you.)

6. Credit.
Your company's financial institution credits your company's account with the total amount of the Direct Payment transactions that were on the file on the same date the transactions are debited from your customers' accounts. (PaySimple does this all for you.)

7. Confirm.
Your customers' financial institutions report the transactions on their monthly account statement.

8. Reconcile. Your financial institution will notify you if any Direct Payment transaction is sent back for NSF or account closed, as they do today for checks you have deposited. (PaySimple provides an easy to ready transaction status screen that keeps you constantly up to date on the status of your transactions.)