What is Account transfer? Explaining the mechanism and differences from bank transfers!

Account transfer is widely used as a common payment option, with high customer needs and a familiar payment method for a wide range of generations. By implementing Account transfer, you can expect to acquire new customers and reduce the workload of billing tasks.

On the other hand, there are drawbacks such as initial costs and the hassle of managing unpaid debts, so using Account transfer agency services is one option. In this article, we will introduce in detail how Account transfer works, its advantages and disadvantages, case studies, and the differences from direct transfer.

What is Account transfer?

Account transfer is a payment service also known as 'automatic account transfer' or 'direct debit,' and it has become a common payment method in Japan. Here, we will explain an overview of Account transfer. Also, let's review the differences between Account transfer and direct transfer, which are easily confused.

How Account transfer works

Account transfer is generally a payment method that automatically deducts fees from the customer's financial institution for regular purchases of goods and services. Many people have used it for rental rent or utility charge payment. The payment is deducted by the financial institution from the customer's account and then transferred to the merchant's account.

When payment with Account transfer, you must pay a fee to the financial institution, but since this fee is generally borne by the operator, customers using the payment do not incur any fees.

Differences from direct transfer

The difference between Account transfer and direct transfer lies in who moves the funds.

• Account transfer: financial institution transfers on behalf of the customer
• Bank transfer: Customers transfer directly to financial institution

Direct transfer is a payment method where customers transfer purchases of goods or services directly to the financial institution account designated by the business. Bank transfer is also called that. For bank transfers, customers must visit a bank counter or ATM each time a payment occurs, or use online banking to make deposits.

For bank transfers, the disadvantage is that merchants need to check the transfer history and confirm each transaction one by one, which can be a hassle in managing deposits. Also, since the customer is responsible for the transfer process, there are cases of forgetting payment or setting the transfer destination or amount incorrectly, which can be a major operational obstacle in contacting customers or delaying sales collection.

However, even Bank transfer payment using a virtual account method is linked one-to-one with the transaction, so there is no need to check each transaction individually and there is no worry about misdeposits.

Account transfer Flow

Here, we will explain in detail the process and steps for businesses to implement Account transfer.

contract financial institution or Account transfer proxy services

To implement Account transfer, contract with Account transfer agency services or credit companies that are linked with financial institution.

Since the financial institution accounts held by customers differ, it is common to connect contract with Account transfer proxy services or credit companies that can Account transfer multiple financial institution. During contract, you must submit the required documents for screening, and upon completion, you can use the Account transfer.

The scope of the review varies depending on the financial institution or Account transfer outsourcing service, and the review period can take anywhere from several weeks to a month.

Have the customer fill out a transfer request form

After passing the Account transfer screening, the next step is to have you submit the required information either through the paper makeup request or online.

The details to fill out on the transfer request form include financial institution name, account number, deposit type, account holder's name, address, phone number, and so on. There are two formats for transfer request forms: either use the ones prepared by financial institution or payment processing services, or use the ones you create in-house.

Transfer-related requests are generally written in three sheets, and the contents are automatically transferred to the second or third sheet, but stamping is required for each sheet.

Send the transfer request form contract ahead and wait for the result

Once you have filled out and stamped the transfer request form, send it to the financial institution or Account transfer proxy service that is contract and wait for the result.

If there are any deficiencies in the transfer request form, you need to resend the documents to the customer, have them correct them, and resubmit them. Common deficiencies include unreadable characters, missing correction seals, missed checks, and discrepancies between the seal submitted to financial institution and the transfer request form.

Even if the provider verifies and submits a transfer request form after verification, financial institution or Account transfer proxy services may point out deficiencies. If there are no issues with the content, the business operator registers the customer's account information in their own system and submits a transfer request to the financial institution or Account transfer proxy service.

Account transfer Case Studies

Account transfer is a payment service used in a wide variety of settings. Here are some examples of Account transfer.

Inter-company payment

Account transfer is a payment service widely used for B2B businesses, making it convenient for payment lease fees and more.

Each company can streamline accounts receivable and payable accounting operations, which also helps reduce administrative costs. Also, since transfers are made automatically, you can reduce the risk of your counterparty abandoning your payment.

Monthly tuition for extracurricular activities

Even for lessons where a fixed monthly tuition is charged, Account transfer can be considered the optimal payment service.

In some cases, tuition fees are collected using tuition envelopes, but in such cases, each case needs to be checked one by one, making management more labor-intensive. However, by Account transfer, verification work is eliminated, greatly reducing administrative effort.

Also, if you give your child the tuition in cash, there is a risk of problems such as losing it. To avoid such troubles and risks, Account transfer that do not require carrying cash are recommended.

Various school expenses

Many schools use Account transfer to collect various expenses such as school lunch fees, textbook fees, and reserve funds.

One of the advantages of introducing Account transfer at school is that you don't need to bring money to school, and like tuition, you can prevent troubles like loss or theft. Another benefit is that it reduces administrative tasks at school, especially in schools with few administrative staff, which can help ease the burden on teachers.

Real estate rental company

Real estate rental companies managing many properties also find Account transfer a suitable way to efficiently collect rent.

The advantage of using Account transfer for real estate rental companies is that they reduce the administrative work required to confirm rent payments, helping to resolve labor shortages.

Also, while Credit card payment have recently increased as a way to payment rent, there are still cases where you need to bring your own Bank transfer, landlord, or pay at a convenience store, all of which require extra effort for tenants. In that respect, with Account transfer, rent is automatically withdrawn, and tenants can avoid the hassle of going to the payment, which is a win-win for both parties.

Subscription Services

Account transfer may also be a good match for services that offer a monthly subscription such as music streaming, video sites, or software services.

Especially for services with many young users, it is possible that users may not have credit cards, so being able to payment with just a bank account like Account transfer is important to prevent missed opportunities.

Sellers of daily necessities

Account transfer is also suitable for businesses handling products that consume a fixed amount daily, such as supplements, health foods, contact lenses, and cosmetics.

Since customers generally need to reorder within a certain period, implementing Account transfer can generate continuous sales and make business prospects easier than relying solely on one-payment methods.

Benefits of Account transfer

There are various benefits to businesses implementing Account transfer. Here, we introduce the benefits of Account transfer.

Customer retention rates will improve.

Account transfer offers the benefit of increased service retention rates and long-term use of products and services. This is because Account transfer automatically deducts fees from your account, so every payment never feels tedious and stress during payment is reduced.

For example, with bank transfers, a fee is charged for every payment, and you need to complete the procedure at an ATM or internet banking by the deadline. If you feel that transfers are troublesome or the fees are wasteful during the payment process, you may be aware of canceling your product or service.

In that regard, Account transfer that is automatically withdrawn eliminates hassle, reduces the triggers for cancellation, and can lead to higher retention rates.

Billing-related management costs can be reduced

One advantage of implementing Account transfer for businesses is that automatic withdrawals can reduce billing-related administrative costs.

For bank transfers, if payment is not collected by the deadline, you must resend the invoice or send a demand letter. This task involves not only document creation but also printing, mailing, record-keeping, and management, which involves numerous workloads and human costs.

On the other hand, with Account transfer, the system automatically processes withdrawals, minimizing these transactions.

Improved recovery rates

By implementing Account transfer, businesses can automatically collect payments without customers doing anything, resulting in higher recovery rates.

For bank transfers and convenience store payments, customers often need to visit ATMs or convenience stores themselves or complete procedures via internet banking, so forgetting to pay is not uncommon. Even if a customer has the ability to pay, forgetting the payment results in an uncollected account, so Account transfer that are automatically withdrawn has a higher recovery rate.

Additionally, a higher collection rate reduces the hassle of reminders, which helps reduce the aforementioned management costs.

Reduce the workload of billing tasks

By implementing Account transfer, businesses can reduce the workload of billing operations and help cut down on manpower. By reducing manpower, it is also possible to focus employees on other tasks.

In Account transfer, you can request paperless billing by notifying you of the transfer date and amount in advance via email or chat. On the other hand, when paying using payment slips, you need to mail the form to the customer, which increases the billing burden compared to transfer.

Leading to an expansion of your customer base

One benefit of implementing Account transfer is that it expands your customer base by offering new payment options.

In recent years, services like internet shopping and subscriptions have become more accessible, making credit cards more convenient. Therefore, while some businesses focus on Credit card payment, others do not have credit cards.

Basically, Account transfer can be used as long as you have a financial institution account, making it an important payment method for attracting users who don't have credit cards.

Disadvantages of Account transfer

When implementing Account transfer, there are disadvantages such as time lag until deposits and the hassle of delays in initiation and unpaid payments. Here, we will explain each disadvantage in detail.

Implementation is time-consuming

Introducing Account transfer involves various procedures, which can be a cumbersome drawback.

Specifically, this includes contract with financial institution and payment processing services, as well as receiving and managing customer documents. Even when contract with customers via the internet, procedures and exchanges must be conducted via mail or online.

Also, since customers also need to complete the procedures, they may find it troublesome and stop using the service midway. However, since the initial registration process only requires effort, the subsequent withdrawal can be automatically processed, which offers significant benefits to both businesses and customers from a long-term perspective.

Businesses should explain to customers the benefits of Account transfer and encourage smooth procedures.

Troublesome when unpaid

There is also the disadvantage of incurring billing when unpaid payments occur, which can be time-consuming.

Although Account transfer is a payment method with a high recovery rate, there are cases where the account balance is insufficient on the withdrawal date and unpaid amounts occur. While prepayment reduces the risk of uncollected items, buy now pay later-type services always carry the risk of uncollected items. Since uncollected balances due to insufficient balances are beyond the operator's control, it is difficult to completely prevent them. Even if you specify an account with low cash movement, there are cases where you forget about transfers and therefore cannot deposit

As a countermeasure against uncollected Account transfer, there is a re-transfer service. This service allows automatic withdrawals and collection if the designated account has been deposited after the specified withdrawal date.

There is a time lag until deposit.

A disadvantage of Account transfer is that there is a time lag between transfer and deposit.

Depending on the financial institution or payment processing services contract, it may take about one month as described from the transfer process to the deposit to the provider's account. If you don't understand the time lag until deposit, you need to be careful as it could cause problems with your cash flow.

On Account transfer the other hand, some providers offer services that allow immediate transfer registration through online application, or allow you to set payment cycles according to the provider, so it's a good idea to check if such services are available when introducing Account transfer.

You need to manage your withdrawal account information.

When handling Account transfer as an payment method, the business must receive account information from customers and submit Account transfer requests to the financial institution.

Because they need to receive and manage critical information such as account information, businesses must implement security measures to prepare for information leakage risks.

However, some providers of Account transfer offer services that handle everything from receiving Account transfer requests to communicating with financial institution on their behalf. In this case, businesses no longer need to manage account information themselves, reducing management costs compared to operating in-house.

Account transfer Account transfer is recommended to use a proxy service!

Account transfer Proxy Services

When implementing Account transfer, we recommend using Account transfer proxy services to save the hassle of managing customer information required for contract procedures and transfers.

Account transfer Proxy service is a system where the service provider receives the amount withdrawn from Account transfer and transfers it to the business operator.

By eliminating the effort from calculating invoices to collecting them, you can streamline operations and reduce administrative costs. Account transfer Introducing a proxy service incurs a fee, but reducing Account transfer costs can provide even greater benefits.

GMO Payment Gateway's Account transfer Proxy Service

The Account transfer provided by GMO Payment Gateway handles procedures related to Account transfer contract, helping to reduce management costs and improve customer convenience.

Additionally, there is the advantage of being able to manage customers' withdrawal account information without the need for the business operator to manage it.

Furthermore, you can choose withdrawal dates up to four times a month—5, 6, 23, or 27—and since it supports Early Payment Service, implementing it can also help improve your cash flow.

If you want to simplify procedures and management related to Account transfer and streamline operations, consider the Account transfer of a GMO payment gateway.

Summary

In this article, we explained how Account transfer works, its advantages, disadvantages, and the differences from direct transfer.

By implementing Account transfer, businesses can increase customer retention rates, improve collection rates, and reduce the workload of billing processes, leading to cost savings. Additionally, by expanding the range of payment options, you can expect to expand your customer base.

On the other hand, there are disadvantages such as hassle when introducing Account transfer or when unpaid funds occur, and there is a time lag until deposit.

To reduce Account transfer procedures and administrative tasks, using Account transfer outsourcing services is recommended. By using Account transfer 's agency services, businesses can eliminate the need for customer account management and procedures, significantly reducing their workload.

The GMO Payment Gateway supports both transfer request forms and internet-based Account transfer proxy services, enabling instant registration without the need for a seal.

Take this opportunity to consider introducing Account transfer.