Payment processing overview
Moving money from your borrowers' accounts to yours.
Payment processing involves initiating payments, moving money, recording payments against the appropriate loans, and tracking failures and chargebacks to ensure the payments were truly received. LoanPro is integrated with processors for bank account and card transactions in the U.S. and Canada, making it easy for you to move money to and from borrower accounts.
This article will explain the basics of payment processing—how money gets moved from place to place. For more on how payments are logged in LMS, check out our logging payments overview.
Payment methods
In the U.S., most payments are made with either cash, cards, or bank accounts. If you're accepting cash or physical checks, you can use Cash drawers and the vault to manage those transactions. For electronic payments, you'll need to set up payment processors to handle card payments, bank account (ACH) payments, or both. Canadian lenders typically use electronic fund transfers (EFT).
LoanPro is integrated with several processors for ACH, EFT, and bank card transactions. For ACH and EFT, we also offer
Custom payment methods
If you want to accept other forms of payment, like foreign currency, pawn trades, or crypto, you can add them as new payment methods. This lets you note that a payment was made with that method, but it doesn't create the infrastructure to move Euros or Dogecoin
Your payment methods can be found by navigating to Settings > Loan > Payments > Methods inside your company account.
On this page, you'll see that there are options available for different payment methods. You'll also notice that methods such as "Credit/Debit Card" don't provide you the ability to edit or inactive them. These methods are hard-coded into LoanPro so that other features will work correctly. However, other methods, such as "Cash" can be inactivated by clicking the ‘X’ button.
If you'd like, you can create new payment methods that apply to your lending business. If you allow your borrowers to make payments with DogeCoin or through bartering, you can create categories for them. Just remember, these are simply ways to categorize payments—they aren't a payment portal for your borrowers to make payments via these avenues.
To add a new payment method, click 'Add' in the top right.
Enter the name of the payment method in the field provided and click 'Save' to save it. Your payment method will now be selectable when you log a payment on loan accounts.
Payment profiles
A payment profile is the specific account or card that a borrower has given you to make payments. (Bank card is a payment method; the specific card in your wallet is a payment profile.) They're a large enough topic that they're explained in their own article, Adding profiles.
To stay PCI compliant, you should only submit payment profiles to Secure Payments, either directly or through an iframe. When payment profile information is submitted, Secure Payments creates a token which LMS can use to reference the profile in future payments.
Payment processors
If you've never worked with a payment processing company, you may not be aware of what they are and what they do. Whenever a customer makes a purchase with a card or an e-check, a processing company is involved. The processor connects with the banks where the customer and merchant have their accounts, and then handle the actual transfer of funds out of one account and into another.
Payment processors in LMS work the same way: when a borrower makes a payment, it's the processing company who actually works with the banking network to get money from the borrower to the lender. We're integrated with several processors, giving you a wide range of options in function, availability, and pricing. There isn't one processor that does it all—most are limited in the type of payments they process, and none operate in both the US and Canada.
Payment lifecycle
Using a processing company to make a payment can be complex, but here's a breakdown of the steps for making a transaction in LoanPro.
- The process begins with creating a payment profile. Payment profiles are saved in Secure Payments, but they can be created through the LMS UI via an iframe, which is essentially a bridge into Secure Payments. Regardless of where you input payment profile information, the profiles are saved in Secure Payments. When creating a payment profile, you will enter in your payment information, such as bank accounts or bank cards. Your banking information will immediately be saved in Secure Payments, keeping your payment data encrypted and safe.
- Secure Payments tokenizes payment profile information and sends it back to LMS. LMS will store your token to be used to transact payments or manage the profile in the future.
- The next step is making a payment. From within LMS, you will select a payment profile from any of the customers associated with the loan.
- LMS allows you to choose a processing company when initiating a payment. You can set a specific payment processor to be your 'Default' processing company every time you make a payment, select a different processor manually each time, or set up automated rules that will determine which payments go to which processors.
- LoanPro has no part in the actual processing of the payment; it is in the hands of the processing company. Your token will be sent from Secure Payments to the processing company.
- The processor will evaluate your transaction and send a status response to LMS saying whether it was successful or failed.
Setup in LMS and Secure Payments
LMS and Secure Payments are integrated with a number of different processors, each specializing in one or more payment types. Here is a breakdown of which processors fall into which category:
| Processing Type | Available Processors |
| Bank Card Processing | |
| ACH/eCheck Processing |
Nacha (batch processing) |
| Canada EFT Processing |
CPA-005 (batch processing) |
Since your LMS and Secure Payment accounts are linked together, creating a processor in one will create it in the other.
Adding a Processor In LMS
In LMS navigate to Settings > Company > Merchant > Secure Payments. Across the top of the page are tabs for different payment methods. Select a method and then click 'Add Processor'.
For information on how to set up a processor for a specific payment company (e.g. ACHQ, LoanPaymentPro), navigate to the article on that company by clicking the link in the table above.
You will be taken to a page where you can select a processor. Under 'Processor Type', you will see a drop-down option with all of the available processors. Every processor requires different credentials, and you'll need to enter those here. If you'd like to set up a processor as your default, select 'Yes' for the 'default' field.
Adding a Processor In Secure Payments
To add a processor in Secure Payments, navigate to 'Processors'. On the left side of the screen there are three tabs labeled as Bank Card, Bank Account ACH, and Bank Account EFT Canada. Within those tabs, click the plus sign at the top right of the screen to add a processor.
Similar to adding a processor in LMS, you will enter in the credentials for the processor you've chosen and then click 'Save'.
Batch Processing
Lenders can also use the batch files send ACH payments to banks in bulk. The process of using batch files is a little more complex than using a processing company, but it's also less expensive. The payment profile that is stored in Secure Payments will be connected with the payment in LMS; this includes the amount, payment profile token, processor, authorization type, and Secure Payments Transaction ID. To create a batch file, you first need to create a batch through Secure Payments. The process of creating a batch transaction is as follows:
- Secure Payments assigns a batch ID to the transaction
- Secure Payments updates the transaction status from 'Pending' to 'Processing'
- You will need to generate the file, choosing JSON, CSV, or Nacha, or CPA-005 as your format. Secure Payments will do all the heavy lifting of formatting the file and inputting payment data.
Most US banks use the Nacha format and most Canadian banks will accept CPA-005 files, but some do not, so you will need to communicate with your bank to learn which files they accept. Once you submit your file to a bank, LoanPro will update you on your transaction status in Secure Payments. LMS will receive a status update with an R-code, which updates the transaction's status.
For more details on the specifics of batch processing, check out our articles on Nacha and CPA-005.
What are Nacha and the CPA?
The National Automated Clearing House Association (Nacha) is a non-profit organization that manages the ACH network in the United States. On their website, they explain that they govern "the thriving ACH Network, the payment system that drives safe, smart, and fast Direct Deposits and Direct Payments with the capability to reach all U.S. bank and credit union accounts."
Payments Canada, formerly known as the Canadian Payments Association (hence CPA), fills a similar role for in the Canadian banking ecosystem. As per their website, they are "the organization that underpins the Canadian financial system and economy by owning and operating Canada’s payment clearing and settlement infrastructure, including associated systems, by-laws, rules and standards."
Both of these organizations have created files that facilitate bulk transfers between banks — Nacha and CPA-005. Although the files bear those organization's names, lenders don't need a relationship with them to use the files. You can use Nacha or CPA-005 files without ever speaking to either group.
Using multiple processors
You can set up as many processors as you'd like in LMS and Secure Payments, which allows you to have several processors from the same company. Using multiple processors can be effective for lenders who want to send funds from different groups of loans to different bank accounts. This can help accommodate lenders who send payoff from different loans to different investors. To organize and keep track of which profiles are going to which processor, we categorize them into portfolios. Additionally, with payment routing, you can group processors together and assign loans to them.
Integrated processors
Here's a list of all the available payment processors and how they are used:
| Processor | Description |
| Authorize.net | This gateway provides service through a virtual terminal, allowing you to process credit or debit card payments. They will send return codes for failed payments and facilitate reversal of payment transactions. If you choose this service, you will need a merchant services provider (we recommend using Select Bankcard). |
| Repay | Secure payments is integrated with Repay, a processor that handles both ACH payments and bank card payments. |
| Payix | Payix processes both ACH and bank card payments. You aren't able to fund through Payix, but you can sign up for another processor along with Payix for funding. |
| FLEX | FLEX handles both card and ACH transactions, including same-day ACH. |
| TabaPay | TabaPay is a bank card processor that is cheaper than other credit card processors since they process their credit transactions through debit channels. TabaPay does not update when a transaction has been made. If a transaction does not succeed, the status will be set to 'Processing' unless you mark it as Failed or Voided. |
| LoanPaymentPro | LoanPaymentPro allows you to take payments and send funds through bank cards. |
| ACHQ | ACHQ is an eCheck processor with a convenient tool for automatic payment reversals. |
| Nacha |
Secure Payments can generate Nacha files for bulk processing. To use Nacha, you will need a relationship with a bank that will process Nacha transactions.
Once you create a Nacha file, you submit it to a bank that will process the payment. Once the Nacha file is generated, the rest of the process takes place outside of LoanPro and Secure Payments. Nacha shows you failed payments in LoanPro through R-codes when a failed ACH payment has occurred. When you submit a payment transaction to Nacha, Secure Payments will receive the transaction and send you a success response in LMS. |
| Actum | Actum processing allows you to process bank account and ACH payments. |
| Accept Global Pay/EFT Canada | This is another Canadian EFT processor that is integrated with Secure Payments. |
| CPA-005 | CPA-005 are the batch processing files used in Canada. When a payment fails, it sends rejection codes that indicate why a transaction failed. LoanPro allows you to set automatic actions in response to a specific code you receive. |
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