Concept: Push vs Pull Payment
Payment transactions fundamentally depend on who initiates the payment and has more control over it. This dynamic boils down to the roles of the Payer and Payee:
- Payer: The party who initiates the payment.
- Payee: The party who receives the payment
Pull Payments:
In a pull payment, the Payer initiates the transaction, taking full control of the payment process. Examples include:
Example #1; Traditional Banking Services:
A customer visits a bank, fills out a payment slip, and requests a withdrawal or transfer.
The Payer selects the payment channel, whether it’s a physical slip, online transfer, or mobile app.
Example# 2: Peer-to-Peer (P2P) and Peer-to-Merchant Payments:
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The Payer directly transfers money to the Payee by choosing the amount, account, and timing. This system gives the Payer autonomy in deciding when and how to make payments.
Push Payments
In a push payment, the Payee initiates the transaction by automatically withdrawing funds from the Payer’s account based on prior consent or standing instructions. Examples include:
Recurring Payments: Subscriptions for streaming services or utilities, where the Payee deducts money at regular intervals.
Auto Payments for Loans or EMIs: Loan repayments or EMI deductions are triggered automatically by the Payee’s system.
This method shifts control to the Payee while offering convenience and ensuring timely payments for the Payer.
In short,
Summary: Both push and pull payments have their respective advantages:
Pull Payments: Offer greater control to the Payer.
Push Payments: Simplify processes for recurring transactions, benefiting both parties.
