Journey to Zero

Sep 2, 2022 by Izzy Howell

Paystand’s Journey to Zero is the culmination of our mission to build a next-gen payments structure — one that helps businesses break free of the legacy payments model by:

  • Eliminating transaction fees (saving you money)
  • Eliminating manual processes (saving you time)
  • Eliminating gate-keepers (creating an open industry)

    The Paystand Bank Network

  • What is the Paystand Bank Network?

The Paystand Bank Network is our direct-bank payment network. It makes it possible to use a zero-fee payment rail that gives you access to real-time fund transfers and automated payment settlements. The network enables secure, one-off or recurring bank payments that reduce chargeback requests.

  • Why is it safer and more secure for your company and customers?

Our Bank Network is more secure than legacy payment networks because it leverages cryptography and digital signatures to ensure the validity of each transaction. As a result, it’s free from human error and the effects of fraud and other malicious behavior.

  • Why is it free?

The Bank Network uses a digital format that allows for easier, faster, and more secure transactions than legacy options like debit or credit cards, helping you get paid more quickly and more efficiently. Because each payment is initiated by the customer, it shows a clear authorization and intent to pay instantly, therefore dramatically reducing the refund and chargeback requests commonly associated with credit card payments. It also ensures that good funds are verified prior to the moment the payment is made, eliminating the need for chargebacks and low administrative costs. As a result, the network is entirely feeless.

  • What is the Paystand Bank Network’s coverage?

Paystand covers over 90% of the US banking market and 98% of all commercial accounts, making it the most complete digital payment network available to businesses today.

  • Why do payers feel comfortable paying directly through their bank account?

Payers love using the Paystand Bank Network because it makes it easy for them to log into their bank account without leaving the Paystand checkout screen. They also do not have to manually remember and punch in their 9-digit ACH code, and they make fewer errors when it comes to selecting the wrong bank account (e.g., they never have to worry about accidentally selecting their savings account as a payment method). The Paystand payer portal from which they get to the checkout screen to select the Bank Network is also as easy as mobile banking: they don’t have to remember their login ID or passwords like they do on other buyer portals.

In addition, payees prefer our Bank Network, as it offers real-time fund verification and payment tracking, so you can immediately determine if your customer has sufficient funds to pay an invoice. This eliminates chargebacks, processing fees, and manual follow-ups.

Additionally, every in-network payment is recorded on the Assurety blockchain, creating a notarized record trail that is secure, verified, and digitally auditable. These records can't be altered, assuring your customers’ transactions are valid and free from tampering.

Convenience fees and incentives

  • Why pass convenience fees to payers / customers?

Passing convenience fees to payers / customers allows you to preserve the lifeblood of your company: your revenue.

Excessive B2B credit card processing fees are among the worst problems for merchants, because, most likely, the processing fees come directly from your business’s income. Depending on your company structure, the volume of transactions you make a month, and the value of each transaction, credit card payment fees may be more costly than you think.

  • How is it possible to pass fees?

In order to cover the cost of credit card fees, some companies choose to protect their net revenue by increasing the price of their products or services. This comes in either increased price surcharges for purchases or universally higher prices for all parts of a business.

However, Paystand makes it possible to pass fees altogether. Our bank-to-bank payment network eliminates the need for credit cards by allowing you to collect payments from your customers directly.

Most importantly, Paystand enables merchants to pass fees in an easy, gamified manner that is palatable to customers. At the checkout screen, customers have the option to either accept convenience fees, use the free bank-to-bank network, or (if the merchant so chooses) accept incentive discounts (essentially splitting the credit card fees) off the payment amount. This gives customers control and choices, and does not negatively impact them.

  • What are the results of passing fees?

Depending on your credit card processor, you can be charged anywhere from 3% to 5% of every transaction. Considering that most businesses aim to run at a profit margin of around 10%, this could mean you are sacrificing an exorbitant amount of your revenue — just to collect money from your customers. If your company is in a highly competitive market, high credit card processing fees could be cutting into even more of your net profit margin.

By passing fees, you quite literally make your company more profitable and protect your bottom line.

  • How is it different from surcharging?

Surcharging is when a merchant adds a fee to a customer’s credit card transaction. This is done to compensate for the credit card processing / interchange fees businesses have to pay credit card companies for using their payment network. Surcharging does not offer customers a choice to take other zero-fee payment options and does not give them control.

The Paystand Bank Network, on the other hand, allows you to move money electronically without paying any transaction fees and therefore eliminates the need to require surcharges from your customers. It also gives customers options to use the Bank Network or take incentive rebates (e.g., 1% off the payment) instead of the full credit card fees – mitigating the impact on the merchant’s revenue.

  • Where can they go to find information on why it's allowable for all states?

Check out our state-by-state guide here.

  • What kind of flexibility is there for different customers?

Merchants can control which customers to pass the fees to and which to offer incentive discounts. They can choose a set amount or percentage of fees, or different amounts for different customers, to account for different total relationship value, invoice value, or strength of the relationship. This makes it easy for merchants to adjust their tactics based on customers’ acceptance rates of their fees and or incentive rebate proposals.

Payer Incentives

  • Why offer an incentive to move your customers away from credit cards?

Implementing Paystand's Payer Incentives module creates significant shifts in payment behavior away from cards and saves businesses an average of 67% on punitive transaction fees.

  • How does it work?

First, it gives businesses the ability to set payment incentives (in the form of invoice discounts) for choosing the zero-fee Paystand Bank Network or other non-card methods.

Second, it allows businesses to set convenience fees for credit card payments at a rate of their choosing. Essentially, merchants are passing a percentage share of their savings on credit card fees to the payers. For example, if they save 5% on credit card fees, they may choose to offer 2% or more to the payer in the form of an incentive on the payment amount.

  • Why is it effective?

Oftentimes, we hear things like, "My customers simply won't pay any other way" or, "My customers just like paying over credit cards," but what we see from the data is that, when businesses provide more attractive payment alternatives, payers will choose them without question.

When you make things easier and more cost-efficient for your customers, there’s really no other option but for them to choose the option that’s best for them.

  • What are the results of offering the incentive?
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When customers do take advantage of the Payer Incentives module and incentivize payers via an invoice discount or charge a convenience fee on card transactions, 71% of all payments are made via ACH or the zero-fee Paystand Bank Network.

  • What is the average transition within the first year for customers passing fees & offering incentives?

Typically, merchants start seeing the majority of the shift in payment mix from credit cards to the Paystand Bank Network within three months. Beyond that, there are incremental shifts based on ongoing optimization of the fees and incentives percentages by customer segment and types as well as new payers. This is highly beneficial as the savings to the merchants happen within a quarter.