Lender Payment Processing Solutions

Is There a Recurring Payment Solution for Lenders?

Yes, lenders can collect overpayment from borrowers via recurring payments. Recurring payment solutions are a great way to streamline and automate the debt collection process and limit the administrative overhead and manual work required. 

Here are some common recurring payment solutions that lenders may use:

• ACH payments. ACH payments can withdraw funds automatically from a borrower’s bank account and are commonly used for installment loans, mortgage loans, and other loans with regular payments.
• Credit card payments. Some lenders allow borrowers to make payments using credit or debit cards. This option is popular since it’s convenient for borrowers and is an easy way for lenders to collect payments on a set schedule. 
• Direct debit payments. Direct debit payments allow lenders to pull the funds for payment directly from a borrower’s bank account on an agreed-upon schedule. While ACH and direct debit payments are similar, they have different processes and regulations.
• Payment processors. In some cases, lenders may choose to integrate with payment processing services like Stripe or PayPal to facilitate recurring payments. 
• Loan servicing software. Today, specialized loan servicing solutions exist that allow lenders to build recurring payment functionality into their platform. These options are popular for lenders who want a streamlined way to manage loans, collect payments, and generate payment schedules. 
• Third-party loan servicers. Finally, some lenders choose to outsource their loan servicing to third-party companies that specialize in collecting payments and managing loans. This is a popular option because these companies are experts in handling recurring payments and usually have the advanced systems necessary to do so. 

Can A Customer Pay a Lender with an eCheck?

Yes. Customers can pay lenders with eChecks (electronic check). As digital versions of traditional paper checks, eChecks are convenient, secure, and ideal for use in a variety of financial transactions, including loan repayments.

For the eCheck payment process to work, the customer needs to authorize the lender to initiate an electronic funds transfer from their bank account, and both parties need to agree upon a payment amount and date. 

How To Set Up Your Lending Business to Accept Payments

To start accepting payments for your lending business, you need to take steps to efficiently collect loan repayments from borrowers while also maintaining security and complying with necessary regulations.  

Here's a simple guide to prepare your lending business to accept payments:

Step 1: Choose Your Payment Methods

First, choose the payment methods you’ll offer to borrowers. Options commonly include ACH, eCheck, credit/debit card payments, direct debit, and wire transfers, to name a few.

Step 2: Ensure Legal and Regulatory Compliance:

Next, make sure that your lending business complies with all relevant financial regulations and licensing requirements in your area. To protect yourself, consult with an attorney or regulatory authorities to make sure you fully understand the specific requirements for your area.

Step 3: Set up a Bank Account for Your Business

To accept payments, you’ll need to open a business bank account. This is the account into which you will receive loan payments. Look for an account that offers business-specific functionalities. 

Step 4: Select a Payment Processing Partner

Once you have a business bank account, you’ll need to choose a payment processing partner or payment gateway to facilitate your electronic payments. To do this, research and choose a provider that meets the needs of your business. To stay competitive, look for a payment processor, like Seamless Chex, that offers competitive fees and robust features to grow your business. 

Step 5: Payment Gateway Integration

Next, you’ll need to integrate the payment gateway you’ve chosen with your lending management software or website. This integration will allow your borrowers to make payments quickly, easily, and securely online. 

By following these steps, you can set your lending business up to accept payments and manage your financial operations as efficiently as possible.