Push vs Pull Payments

“Pull” and “push” payments refer to two different methods of transferring funds between parties in a transaction. The main difference lies in who initiates the transfer and how control is exercised over the transaction.

  1. Pull Payments:
    In a pull payment system, the payee (the party receiving the funds) initiates the transaction by “pulling” the funds from the payer’s account. This method requires the payer to provide their account information to the payee, who then uses this information to request the funds from the payer’s bank or financial institution. Common examples of pull payments include credit card transactions, direct debits, and recurring billing.

Advantages of pull payments:

  • Convenience for the payee, as they can initiate the transaction when required.
  • Can be automated for recurring payments, which simplifies billing processes.

Disadvantages of pull payments:

  • Payers need to trust payees with their account information, which may raise security concerns.
  • Payers have less control over the transaction, as it is initiated by the payee.
  1. Push Payments:
    In a push payment system, the payer (the party sending the funds) initiates the transaction by “pushing” the funds to the payee’s account. The payer instructs their bank or financial institution to transfer the funds to the payee’s account, and the payee’s account information is not required. Examples of push payments include bank wire transfers, ACH transfers, and some mobile payment apps like Venmo and Zelle.

Advantages of push payments:

  • Payers have more control over the transaction, as they initiate it and can decide when and how much to send.
  • Payers do not need to share their account information with the payee, which can increase security.

Disadvantages of push payments:

  • Payers must manually initiate the transaction, which can be less convenient than automatic pull payments.
  • Recurring payments may be more challenging to set up and manage, as they require the payer to initiate each transaction.

In summary, the main difference between pull and push payments is the party initiating the transaction and the control each party has over the transaction. Pull payments are initiated by the payee, while push payments are initiated by the payer.

This page was last updated on May 1, 2023.

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