Find the Best Way To Pay To realize the advantages of new payment types, auto retailers often start with payables, exploring options to manage private-party, used car purchases, efficiently process customer refunds, handle marketing and advertising expenses, and pay contractors, suppliers and vendors. Processing a paper check creates additional steps for both parties and exposes them to a higher risk of fraud or loss. By moving away from checks, funds can be managed more efficiently, and the transaction can be completed more quickly. Over the coming years, dealers will need to continue to embrace consumer’s universal push for agility and immediacy. The pressure for the same instant fulfillment that customers experience at other kinds of businesses will extend to every aspect of the way auto retailers market, sell and close purchases. As buying becomes more digital, customers — accustomed to the Zelle and PayPal experience — will start to expect the same speedy movement of funds for an auto purchase that they see in other transactions in their daily lives. Yet buyers’ preferences are only one factor to consider in your approach to payments — speed of execution, fees and the risk of payment reversal are part of the equation as well. Payment options need to align with delivery and fulfillment and integrate with your documentation process. For now, merchant services remain the preferred means that auto retailers use to secure payment for deposits, in-person sales, and parts and services. A familiar choice for customers, it can be implemented in both face-to-face and e-commerce settings. Key Business Payment Options As you consider the best type of payment for each purpose, keep in mind that a bank like Truist can accept a single file with multiple payment types and then separate and direct each payment where it needs to go. That consolidated payments approach could simplify the time your finance and technology teams spend staging payments. Payment Type Payment Description Impact Real Time Payments Electronic payments through RTP member banks • Immediate, irrevocable settlement. • Low transaction cost. • Minimal incidence of fraud(0.1% of all RTP payments according to The Clearing House).3 Same Day ACH Electronic payments through any financial institution • Same business day settlement up to 2:00 p.m. • Low transaction cost. Purchasing and Virtual Cards Individual cards or virtual card numbers issued for one-time or repetitive payments to OEMs, vendors and service providers • Same-day settlement to seller. • Extends days of payables outstanding. • Lowers administrative costs. Checks Paper-based payments • Variable settlement. • High end-to-end cost. • High incidence of fraud — 63% of businesses have experienced check fraud.2 WVADA News 23
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