So how does it work
Carbone also described how the actual process works for customers in saying:
“A payment instruction is taken directly from the customer through their Sage software and is passed to Sage Payments which then runs the relevant validations and security checks before passing that payment through for clearing and settlement. Once the payment is cleared and settled the settlement details are fed through the Sage Payments service which then connects back into the customers accounting or payroll software to show the payment has been made. “
We asked Sage about transaction limits, which is possibly a key compliance area that will concern some business owners. This is an area that Sage has taken seriously and Carbone described their slightly draconian solution by saying:
“Yes, we have established transaction limits and daily limits based on industry standard best practices. Users cannot currently assign transaction limits. As you would expect, we are carefully implementing risk and compliance standards that balance customer requirement with organisational risk.
“To address customer needs, we have in place mechanisms to refer payment transactions that exceed standard limits for review and consideration for approval. Sage Payments is continually reviewing policies and procedures to best suit the needs of the various segments of customers we serve. “
It is perhaps disappointing that clients cannot set their own limits as this will no doubt vary per business. It will be interesting to see whether these vary and what feedback they receive on these from the initial customer base.
So why did they develop Sage Payments?
While the tone of this article may be highlighting some of the issues with the payments system there is no doubt that it will have its place. Sage carries out research regularly and in a survey carried out in February 2015 among 1,500 small businesses they found that on average eight hours a month is being spent on making payments.
Errors from re-keying, validating and processing through separate banking systems are no doubt responsible for this and suddenly the £10 a month seems a little more reasonable. It might have been useful to see how many transactions were completed in those eight hours and match that against the pricing model
Lee Perkins, EVP and Managing Director of Sage UK commenting in the press release explains further: “Money management has throttled growth for too many businesses who struggle to handle flow of cash in and out of their organisation.
“Until now, payments have been a significant drain on time for small and medium businesses, with firms spending over 8 staff hours every month making payments. With Sage Payments, we are empowering businesses by breaking down age-old financial processes revolutionising the way they make payments and enabling them to take greater control of their cashflow.”
The software has therefore been written and tested in less than 8 months and this has included extensive security testing to ensure that customer data is safe. We asked Sage about the encryption used for customer data, something that is becoming an increasingly asked question of application providers, especially in light of a recent Skyhigh Networks survey.
We asked what steps Sage has taken to secure customer data, Carbones response was: “At Sage, we take data security incredibly seriously. Our internal processes and external partners have data integrity at their core. Security and quality of design have been built into Sage Payments from the ground up and security has been architected into the product from the very beginning. We and third party experts have tested our service to validate robust security is in place in line with industry standards.
“We employ industry best practice in terms of overall security. We do not encrypt everything but we do encrypt, at rest and in transit, financial and account data, bank details (account numbers, sort codes etc) for customers and their payees.“
Conclusion
Sage believe that the new Sage Payment solution is ground breaking for SME business software and while no one appears to have a solution that is exactly the same, there are some similar modules out there. Seamus Smith, Business Leader, Europe, Sage Pay commenting on the new release said: “Sage Payments is the culmination of significant customer insight, technology investment and market research.”
“As an organisation we are uniquely positioned with the technical and business capabilities to broaden the range of services for small and medium businesses, providing them with the ability to move money from end-to-end simply and efficiently. We already help our customers to accept payments and manage their cashflow via partnerships with companies like Funding Circle and Market Invoice. Now with Sage Payments, we are giving our customers the ability to pay suppliers and employees from within their software for maximum control and accuracy.”
We did ask Sage who they hoped to target in the market with this change, but the response was evasive. Whether this turns out to be a defensive move against Xero, Quickbooks or Freshbooks (which also has an online payment option) has yet to be seen.
The fact that they have produced a significant module within the time period they have shows that while Sage may have been sleeping over the cloud over the last few years, they are definitely awake and in a rapid catch up mode now. It will be interesting to see what their next development is and whether it pushes them back to the forefront of the technology war in SME software.
