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GoCardless partners with Xero on payments feature


At Xerocon, digital payment solution GoCardless announced a partnership to provide Xero customers with an open banking-powered instant payment option, to complement its core recurring payments solution.


27th Jul 2022
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The most recent data from Xero’s Small Businesses Insights shows that challenges to cashflow and late payments are still pervasive, with the average UK SME having a negative cashflow for four months during the year.

It is hoped that GoCardless’s Instant Bank Pay, alongside the broader suite of payments and access to finance tools on Xero’s App Store, will help tackle the late payments epidemic. 

Instant payments

GoCardless is already well-established on Xero’s App Store. Its recurring direct debit tool has acted as an efficient and reliable means of collecting payments for accountants and SMEs with a subscription model.

This has been particularly well suited to the trend of accountants moving away from billing by the hour and incorporating annual fixed-price retainers, with monthly costs smoothed out over the year.

Instant Bank Pay, a new account-to-account open banking payments feature directly integrated into GoCardless, allows Xero customers to add this option to one-off invoices, with funds settling immediately at checkout.

This is made possible by using the Faster Payments network, which allows funds to clear in seconds, compared to BACs, which takes three working days. 

Payment is frictionless, with customers clicking on “pay now” buttons or scanning QR codes and being taken to their bank accounts without needing to log in on separate apps or websites. 

Leigh O’Neill, executive general manager for global financial services at Xero, told AccountingWEB: “I expect [its use] will follow the trend that we see in people using invoice payments, which is smaller amounts of money and people that you want to pay quickly and regularly. We’re moving to instant gratification behaviours, with the mindset of ‘if I don’t pay now, I’ll forget to pay it’.”

Use cases for accountants are likely to include one-off or annual advisory-led assignments, including consultancy, R&D tax credits and business planning.

“The main advantage of Instant Bank Pay for SMEs and accountants is that GoCardless now has a convenient way to collect upfront payments or deal better with failed direct debit payments,” commented John Toon, technology strategy lead at Beever and Struthers.

Solving the late payments crisis?

Hearing about the Instant Bank Pay announcement, Matthew Gambold, managing director at ChadSan, a firm that already uses GoCardless said: “Enabling direct payments from customers will enhance the ability of small businesses to be paid on time and will allow them to better manage the cash flow challenges they face on a daily basis.”

Xero’s integration with Instant Bank Pay is part of a wider vision for working with ecosystem partners to help solve late payments.

The Xero App Store now has over a thousand apps across various categories, including payments, invoicing and financial services.

In a talk entitled Partnerships power the Xero platform, Ben Johnson, general manager of global partnerships, pointed out that this allows accountants to work with their clients to advise and assist them in implementing tools to get paid faster and access finance for cash shortfalls. 

He explained how the company’s app store has new functionality that makes it easier for clients to discover and recommend the most relevant solutions on a sector-specific basis: “You do not need to be a tech guru. There is a pathway for everyone. Even the bottom 25% of app users are significantly more productive.”

A stickier service, but other apps have similar functionality

Instant Bank Pay is an obvious solution for GoCardless and Xero customers using the direct debit provider for recurring payments. It’s simpler to incorporate a single tool for receiving payments than multiple ones.

“One of the biggest challenges for small businesses is the time it takes to generate and issue invoices and then chase payments using multiple systems,” says O’Neill.

However, several Xero apps, including iwocaPay and Crezco, also use open banking rails and the Faster Payments network to help suppliers get paid instantly. 

Unlike GoCardless, these vendors don’t charge users fees for getting their invoices paid via this method. Correspondingly, GoCardless Instant Bank Pay costs 1% on the value of each invoice +20p, with total fees capped at £4. 

Existing GoCardless customers will need to weigh its convenience and customer experience against its price point when deciding which payments solution to incorporate for one-off payments. 

While Instant Bank Pay is a welcome addition to the GoCardless toolkit for existing customers, it doesn’t offer new functionality not provided by other vendors.

Replies (6)

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By Hugo Fair
27th Jul 2022 11:55

"Payment is frictionless"? ; "ecosystem partners"? ; "open banking rails"? ; "stickier service"? ... what happened to using clear English?

More importantly, what is the message that the reader is meant to take away?
All I got was that "Instant Bank Pay .. doesn’t offer new functionality not provided by other vendors" - which is a bit of non-news comparable with "Man doesn't hit another man"!

Thanks (3)
By Paul Crowley
27th Jul 2022 12:12

If Xerocon was 6 months later, would this new thing have needed to wait another 6 months before being released?
Maybe there needs to be several Xerocons each year to help speed up all the new APPs

Thanks (0)
Replying to Paul Crowley:
Richard Sergeant
By Richard Sergeant
28th Jul 2022 13:59

please, no.

Thanks (0)
Richard Sergeant
By Richard Sergeant
28th Jul 2022 14:05

Hi Nick,

Does seem like a feature enhancement for GoCardless rather than a major partnership with Xero?
I'm just wondering, as if so, it does reduce the impact of this being Xero product development.

Thanks (0)
Replying to rsergeant:
Sharon Pocock
By Sharon Pocock
30th Jul 2022 10:14

Hi Richard. It was already a very new feature for GoCardless customers. The big news was the integration with Xero, so when you set it up, and send invoices to customers from Xero, they can click "Pay Now" and make an instant payment from their bank with a couple of clicks. Much quicker than customers going to their bank and setting up a BACS payment.

Thanks (0)
By indomitable
28th Jul 2022 15:25

Not sure I understand the 'big development' here and I don't think it will solve any problem

I use g0-cardless for our clients and they sign up for DD's. Some of them don't. For the ones that don't it ain't going to make a jot of difference if there is a 'pay now' button or not.

If they want to pay they will pay directly from their bank, not sure this will encourage anyone to pay quicker, we already have a paypal button - nobody ever uses it.

Am I missing something? Another well thought out solutions to a non-existent problem?

Thanks (0)