What’s the difference between push vs pull payments?

The payments landscape encompasses a myriad of purchase methods, each offering unique and distinct ways for businesses to process transactions from customers. Push and pull payments are two such examples of this and can be used to categorise certain payment methods, based on whether the payer or payee controls the movement of funds (more to come on this).

In this article, we’ll unpack the key differences between both payment types, provide examples of push and pull payments and explain how they work, among other things.

What is a push payment?

Push payments refer to any payment where the payer directly initiates funds being “pushed” to the payee. This means the payer can typically control the amount sent, when the payment is initiated and where the funds are transferred.

Push payments tend to apply for one-off payments, which include:

• Cash: this is the clearest example of a push payment and involves a customer physically handing cash over to pay for a good or service.
• eWallet or card purchases: this involves a customer initiating a purchase with an eWallet like Apple Pay and Google Pay™, debit card or credit card. During this process, the customer is in full control of entering their payment details for the transaction to take place, resulting in funds being “pushed” to the merchant.
• Bank transfers: for this payment method, a customer is prompted to approve an online payment by logging in to their banking app. By authorising the payment via their banking environment, the customer is effectively “pushing” the payment to the merchant.

How do push payments work?

Now that you’ve uncovered some of the different push payment types, let’s now take a look at how the transaction process looks for an eWallet or card payment:

• The cardholder initiates the payment online or in-store using their preferred payment method (e.g. eWallet, debit card or credit card).
• The payment gateway encrypts and performs fraud checks, prior to transferring this information to the acquirer. The acquirer will then safely transmit this information to the card schemes to carry out another layer of risk analysis.
• The acquirer securely passes the payment details on to the issuer to authorise the transaction. If there are no discrepancies found with the cardholder’s payment details, the payment will be approved, and this message will be shared with the customer and merchant via the payment gateway.
• Following the approval of the payment, the settlement process will be carried out.

What is a pull payment?

Unlike their counterpart, pull payments involve the payer providing consent for funds to be debited from their account and transferred to the payee.

Pull payment examples include:

• Direct debits: this involves the customer consenting to a merchant debiting funds from them on a regular agreed upon basis. In this instance, the merchant is in control of initiating the payment and, furthermore, is “pulling” funds into their merchant account. Buy Now Pay Later: this allows customers to pay for goods and services in instalments via a Buy Now Pay Later (BNPL) provider (e.g. PayPal’s Pay in 3), while the merchant is paid upfront for the purchase. For this, the customer provides permission for a BNPL provider to “pull” funds from their bank account on an agreed upon schedule until the payment is paid in full.
• Buy Now Pay Later: this allows customers to pay for goods and services in instalments via a Buy Now Pay Later (BNPL) provider (e.g. PayPal’s Pay in 3), while the merchant is paid upfront for the purchase. For this, the customer provides permission for a BNPL provider to “pull” funds from their bank account on an agreed upon schedule until the payment is paid in full.
• Recurring payments: this involves the customer setting up a fixed or variable recurring payment, allowing funds to be transferred to a merchant on a set schedule. While the initial payment is a push payment (when the customer first initiates a recurring payment), the subsequent recurring payments are pulled from the customer’s account to the merchant’s account.

How do pull payments work?

To further understand how pull payments work, let’s take a look at the payment process for recurring payments:

1. The customer provides consent for the merchant to pull funds by charging their card on an agreed upon schedule. This agreement will cover the transaction amount and schedule for funds to be pulled from the customer’s account, among other things.
2. After the customer has accepted these terms, the merchant securely stores the customer’s payment details in the payment gateway for subsequent transactions to occur. This removes the need for the customer to re-enter their payment information again for future transactions.
3. The merchant’s payment system will then proceed to pull funds by charging the customer’s saved payment card on the agreed billing schedule. During this process, the merchant’s acquirer, the card schemes and the customer’s issuer authorise the transaction before the funds are transmitted to the merchant’s bank account.
4. Confirmation of the transaction will be recorded through receipts, email notifications or payment history updates. Customers should also be able to manage their recurring billing to update payment details or cancel future payments if need be.

Difference between push and pull payments

Push and pull payments each come with distinct benefits for businesses, which is why we’ve mapped out the key differences between both to help you decide which one is best suited to your business:

How emerchantpay can help

emerchantpay is a PCI level 1 compliant payment service provider and acquirer, with over 20 years of experience in helping businesses navigate the intricate realm of payments. We’ll work closely with you to determine the best push and/or pull payments strategy based on the needs of your business and customers, which covers eWallets, subscription transactions, Pay by Link, MOTO and card terminals.

Beyond this, our all-in-one payments solution includes robust real-time risk management to mitigate fraud, alongside one-on-one support and access to industry-leading expertise to help your business accept payments seamlessly. Our in-house and worldwide acquiring services will help facilitate your entry into new markets, maximising your revenue on a global scale.

If you’d like to hear more about emerchantpay’s solutions for push and pull payments, please reach out to a member of our team today.