The pros and cons of taking manual bank transfers as a small business

You might not be thinking about taking manual bank transfers in your business, perhaps because they’re divisive – mostly between the business and the customers.

These bank transfers are used by various businesses including car dealerships, removal companies and professional services. They can be used by companies that use invoices as well as those who take payments directly.

We explore the pros and cons to establish if they’re right for you, your business and your customers.

What is a bank transfer?

By this, we mean a bank transfer where the receipient gives the customer their bank details and the customer pays through their bank’s app or online portal or through a bank branch. We’re not referring to direct debits or bank payments that an online retailer or a subscription service might use.   

Pros

Let’s kick off with the positives.

Some bank transfers carry low or no extra fees

A lot of your fellow small business owners will tell you that the best part of bank transfers is no extra processing fees – the money goes straight into your account. Be warned that you are likely to incur fees on international an high-value payments, though.

Easy to do

Most customers will know how a bank transfer works.

If they’re happy to do it, you just send them your bank details and wait for the sale to complete.

Responsibility is on the customer

If something goes wrong, the responsibility will be on the customer as they don’t have any additional protections, such as section 75 which covers credit card transactions.

Cons

Bank transfers aren’t all rosy glow, though. You’ll have to weigh it up with the following considerations.

It can take a while to go through or experience other delays

Some banks can take at least two hours to process, especially on higher value transactions. There’s also a chance that the customer sends payment to the wrong account.

Customers might go elsewhere

Only allowing bank transfers could make you come across as ‘dodgy’ and unprofessional. If it’s online, customers may also show trepidation if they think there’s a chance they’re paying into a scammer’s account.

Having a variety of ways to pay can put a customer at ease, even if they’re charged 1 per cent – 2 per cent in processing fees.

Customer needs to initiate payment

To ensure the payment goes through at all, you might need to stay with the customer if it’s in-person, which is waste of time for both of you, could anger your customer and prevent you from making a sale with a different customer. Even if it’s online, waiting for the customer can lead to delays and cashflow issues.

More admin

Trying to track which bank transfers have been processed when looking at your accounts is time-consuming, especially without references next to the payment as to what they are. This is especially true for those with higher volumes of sales. 

The case for accepting bank transfers

Tim Ryman, managing director of Masterclip

I’m fine with bank transfers because they save me from the card fees that can eat into profits. On low-cost items in particular, even small charges add up quickly and make a real difference to margins.

Bank transfers give me the chance to keep more of what I earn rather than losing it to processing fees. They’re also convenient for customers I work with regularly. Once they’ve set me up, they can make payments quickly and without hassle, which speeds up the whole process on both sides. It means I spend less time chasing invoices and more time focusing on the business.

The case against accepting bank transfers (at least for new clients)

Eric Hargreaves, owner of Your Choice Builders

I tend to avoid bank transfers from new clients specifically just in case payments are delayed or bounced.

It just creates stress and disrupts scheduling, particularly when materials and subcontractors are involved. We need to build trust first, so we’ll take payment through cheques or verified card payments provides a layer of security that allows both the business and the client to proceed with confidence.

This way, funds are confirmed upfront, and we reduce the chance of disputes or delays mid-project. Clear payment policies and a consistent approach have proven especially important with clients who are new or untested. Clear communication about expectations helps prevent misunderstandings and keeps projects on track.

Once a relationship is established and a client has demonstrated reliability, accepting alternative payment methods, including bank transfers, becomes feasible.

It’s about balancing convenience with practical risk management. Handling payments cautiously at the start and gradually expanding options as trust builds helps protect the business financially while maintaining strong client relationships and ensuring projects proceed smoothly.

I’m not sure whether to take bank transfers or not

As with other business decisions, this can be a case of giving it a try and seeing how it goes. If you’re taking recurring payments, wait until you’ve built a relationship with your client and then suggest bank transfer as an easier or cheaper way to pay.

Saying that, if you know your target market is sceptical about paying by bank transfer, then you’re better off avoiding as trust and word of mouth are still incredibly powerful, especially for a growing business.

So, consider costs, customers, time, security and admin – that should lead you to the right decision.  

Account-to-Account (A2A) bank transfers

Then there’s an account-to-account (A2A), which you can use at the checkout on an app or website, connecting to a bank’s app or portal to complete a transfer. James Simcox, chief operations officer and chief product officer for Equals Money, tells Small Business more.

Thanks to Open Banking, bank-to-bank transfers can now be made through account-to-account (A2A) payments.

These offer a lot of advantages for small businesses: they don’t carry card fees, are cheaper than mobile payment services like Apple Pay and offer faster and more secure payments. This is as true for business-to-business payments as it is for consumers buying from merchants.

Speed is key. Consumers and businesses have come to expect instant payments, so delays or failures in transfers can damage trust and drive customers toward alternative services. Traditional card settlements can take a few business days, sometimes longer for cross-border payments, and international transfers are especially prone to delays and high fees.

On the other hand, A2A Payments bypass card networks, don’t carry fees and can be made in real-time or same-day.

This improves cashflow. Because payments are initiated directly from a bank account, using APIs, transactions are secure, with no need for card entry or manual bank transfers. With real-time confirmation and payment data, merchants and banks can automate reconciliation. This cuts down on errors and back-office workload.

To encourage customers to pay in this way, small businesses can make sure that they are offering bank-to-bank transfers as a prominent or preferred option – either through their supplier payments platform or at checkout. This is a simple integration using standardised APIs that offer access to the UK’s Faster Payments scheme for domestic transfers, SEPA for European payments and SWIFT payments globally.

There is still some work to do before consumer adoption really takes off, though, despite customers enjoying similar benefits when it comes to speed and security.

The key challenge is competition with the traditional credit system, which offers costumer protection on purchases as well as convenience. This consumer protection is not currently available for bank-to-bank transfers.

To address this, the finance industry needs to develop more flexible and accessible solutions within the Open Banking framework that match the convenience and security consumers currently associate with credit cards. Bridging this gap will be essential to ensuring broader acceptance, delivering lower transaction costs and risks for SMEs.

You can read more about Account-to-Account payments in Why your customers choose certain payment methods and what you can do about it.

Key takeaways

• Accepting bank transfers from customers has perks such as fewer fees, simplicity and security.
• However, only accepting bank transfers can put customers off and lead to extra admin.
• Bank transfers are particularly suited to clients that you work with regularly and have mutual trust with.
• Account-to-Account (A2A) is done through open banking and offers a quicker solution.
• Consider costs, customers, time, security and admin when considering bank transfers for your business.

Read more

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Why your customers choose certain payment methods and what you can do about it – In this article, Zaki Farooq of PayFuture discusses the reasons behind why customers choose certain payment methods – and how you can tap into them

Five tips to get started taking card payments – Andy Macauley, chief operating officer of Handepay, gives some concise pointers to taking card payments