Consumer Finance companies that don't accept debit cards as a form of bill payment have an opportunity to better serve their customers. Debit cards have become a mainstay for American consumers; so much so that many consumers now carry less than $20 in cash on a daily basis. A 2016 Gallup poll indicated that Americans do still use cash for some of their everyday expenses, but only 14% of Americans use cash to make most of their purchases.
There are a number of reasons that consumers don't use cash and checks, but the most prominent two are security concerns and the convenience of other payment methods. A wallet can be stolen, and once the cash is gone there is no way to get it back. Checks can be forged or get lost, which creates a security risk. But if a card is lost or stolen, consumers can keep their funds secure with a simple phone call. Consumers are now relying on their debit cards, which means Consumer Finance companies can make payments easier by accepting debit cards.
Becoming a Cashless Society
Part of the reason we are becoming a cashless society is that there has been widespread implementation of electronic payments technology. Another reason is the continual rise of the debit card. More than any other payment method, consumers are using debit cards to make purchases and pay their bills. A debit card can leverage the power of a consumer's entire checking account, allowing them to make large payments in a single swipe, tap, or click, without having to carry hundreds of dollars.
According to a 2014 survey by the Federal Reserve Bank of Boston, debit cards are the most popular payment instrument among U.S. consumers and account for 30.8% of monthly consumer payments. And consumers aren't just using debit cards for everyday purchases; they are also a primary payment instrument for making bill payments.
Over the past 20 years, there has been a steady shift away from paper methods of bill payment, such as cash and checks. Millennials and other younger consumers use debit cards almost exclusively, and they rarely pay using checks unless there is no other option. In fact, when younger consumers need to make a finance payment, they can find it difficult to pay their bill if the company does not accept debit. If younger consumers are any indication of the future, then we are truly becoming a cashless society.
An Opportunity in Consumer Finance
By accepting debit cards, Consumer Finance companies can avoid costs and accommodate those customers who rely on their debit cards for paying bills. Including a debit-only option for payments along with ACH can also help Consumer Finance companies avoid high fees without having to accept credit cards.
Younger customers will be more satisfied by the inclusion of a debit-only option because they are accustomed to having multiple ways to pay their bills. Additionally, debit card acceptance will help Consumer Finance companies gratify customers who adopt the method early and accommodate customers in the future. As more and more customers opt to pay their bills using debit cards, the more reliable electronic payments a company will receive.
The biggest advantage of accepting debit cards is the fast approval times of debit transactions. Paper check transactions usually take 2 to 3 days to process, but in reality, they can take even longer. Consumer Finance companies that accept debit cards won't have to wait as long for funds to be transferred to their account. Debit card payments usually take only 1 to 2 days to process and they are far more secure than check payments. The debit payment channel processes quickly, improves cash flow, and decreases the risk of payment exceptions.
Make Payments Easier by Accepting Debit Cards
In order to obtain the capacity for debit card acceptance, Consumer Finance companies can use an electronic payments solution. The best payments solutions can be implemented swiftly, granting the company new payment channels, faster payments, consolidated reporting, and a better way to serve their customers.
Once an electronic payment solution has been put in place, customers will be able to make debit payments on their accounts from anywhere and at any time. Today's consumers have come to expect multiple options for making a payment from Billers. With the advent of electronic payments, older payment methods, like cash and checks, have become unsustainable. A fully implemented payment solution can help Consumer Finance companies accept payments online and receive more debit card payments, which will lead to more satisfied customers, reduced DSO, and an increase in cash flow.