Since its introduction in 1984, GIRO transfer has grown into a reliable, low-cost solution for businesses in Singapore to manage their transactions. As an electronic direct debit system, GIRO allows billing organisations (BOs) to collect payments efficiently, minimising the hassle of manual transactions. It is now widely used for various business purposes, such as collecting client payments and paying levies for foreign workers. Despite its popularity, some businesses remain uncertain, questioning whether GIRO is suitable for their business operations. In this article, we’ll cover essential points to consider before adopting a GIRO payment system, helping you determine if it fits your business model and financial goals. But first, let’s take a closer look at what GIRO is and how it works.
What is GIRO payment?
GIRO transfer, or simply referred to as GIRO, is an automatic electronic payment transfer system which allows your business to make or collect payments from your customers or other businesses directly from your business account. It is one of the most popular methods for conducting financial transactions, particularly in countries that support the electronic banking system.
Interbank GIRO is a three way connection between you (the business owner), your bank and a billing organisation. GIRO is an arrangement your bank provides for you to make payments directly to a BO for any outstanding bills. A BO can be a government agency or a private company.
Now lets look at the six things you need to know before you set up a GIRO transfer for your business.
- You only need a bank account:
With the availability of so many cashless electronic payment options, you will ask what sets GIRO apart from other forms of payments? Well, for GIRO you only need a bank account to set it up. When you use other forms of cashless payments, you may need a debit card, or a credit card or even an app. But that is not the case with GIRO, with GIRO, you only need your bank account and have to set up GIRO transfer between your financial institution and your billing organisation. Once that is done, you don’t need to worry, the money will automatically be transferred every month.
- The billing organisation must be in partnership with the financial institution:
Since GIRO transfer is a three way connection between the customer, financial institution and the billing organisation and all of these three must have a tripartite relationship. This means that before you set up a GIRO transfer between a financial institution and the billing organisation, you need to ensure that there is a partnership between them.
- No fees required: This is another feature about GIRO transfer that you need to know. Giro transfer does not require any fees when you set it up. Although if there is insufficient funds in your business account to cover the GIRO transfer then you will be charged a fee.
- The bank does not require any further authorisation from you once the GIRO arrangement is set up:
The GIRO transfer process is automatic once the GIRO is set up. This means that your bank will not require any further instructions from you in order to process the payment. The money is deducted from your account based on the authorisation given by you and the billing information provided by the billing organisation.
In conclusion, GIRO payments present a straightforward, cost-effective, and automated way for businesses in Singapore to manage their financial transactions. With just a bank account required for setup, no additional fees for transfers, and the convenience of automatic payments, GIRO simplifies the payment process, reducing the need for manual intervention and helping businesses stay on top of their financial obligations. However, it’s crucial to confirm that your billing organisation has a partnership with your financial institution to ensure a smooth setup and operation. Additionally, businesses should be aware of the potential fees incurred if there are insufficient funds in their account. By understanding these critical aspects and weighing the advantages, companies can determine if GIRO aligns with their specific operational needs, offering a reliable solution to meet their financial goals while enhancing overall efficiency in managing recurring payments.
