In the consumer finance industry, bills that are paid by consumers through a bank or other financial institution will sometimes lead to exceptions. Bill Payment Exception (BPE) is usually defined as a situation in which a Biller receives funds from a consumer, but is unable to post the credit to the consumer’s account. Although payment exceptions are generally not high in volume, they can still cause problems. Inefficient exception management can result in increased costs for both Billers and financial institutions and can lead to a loss of customer satisfaction due to long processing times.
The cost of exceptions can’t be underestimated, either. According to NACHA, the Electronic Payments Association, Bill Payment Exceptions cost Billers $720 million each year. NACHA also reported that some of the causes of payment exceptions are invalid consumer account numbers. Most bill payments made through a bank won’t lead to exceptions; they generally process quickly and properly because they are electronic. But 98% of exceptions occur when consumers provide incorrect information about the Biller to their bank, causing a payment to ‘drop to check.’ This makes the paper check payments that originate from banks the leading source of exceptions, according to NACHA.
Exceptions require manual resolution, which takes up valuable employee time and effort. For Consumer Finance companies that provide installment finance to consumers, exceptions can create costs on a cumulative level, month after month. In most cases, exceptions are merely a cost of doing business. However, the way in which they are managed can have a substantial impact on Consumer Finance companies. And in some cases, ‘drop to check’ payments can be avoided altogether.
Managing Exceptions Efficiently with Payments Technology
Exceptions could be managed more efficiently by enhancing communication between Billers, banks, and processors, but this would require large-scale changes to the payments environment. One way that Consumer Finance companies can alleviate the costs of exception processing directly is to receive and manage payments through an electronic payments solution, such as a billing platform.
Using a payments solution allows Consumer Finance companies to accept payments over multiple channels, such as debit or ACH, through an online Biller Direct portal. When consumers opt to make online payments directly through a company’s portal, this removes the risk of them imputing the Biller’s information incorrectly into their bank’s bill pay site.
Exceptions will still happen, so Consumer Finance companies need to be ready in order to manage them cost-effectively. A modern billing platform gives Consumer Finance companies the ability to manage exceptions, voids, and refunds with a complete and comprehensive audit trail. With access to comprehensive, real-time reports, exceptions can be identified and resolved quickly, minimizing costs.
Supplying Consumers with the Right Information
Although Biller Direct payments are ideal, some consumers may still prefer to pay their bills using their bank site. To minimize the number of exceptions they receive from bank-originated payments, Consumer Finance companies can provide consumers who make payments through their bank’s site with the same information they provide consumers who make Biller Direct payments. Doing so reduces the risk that a consumer will input incorrect information, which can lead to exceptions
Encouraging More Biller Direct Payments
In order to incentivize customers to make more Biller Direct payments, Consumer Finance companies can leverage the power of an electronic payments solution. Simple steps like making the user interface attractive and intuitive will encourage more consumers to adopt its use. Streamlining communication with customers can also encourage more adoption. By using email messaging and true electronic bill presentment, Consumer Finance companies can make it attractive and encouraging for consumers to go paperless and pay their bills directly on the company’s site.
Offering multiple payment methods, displaying security information, minimizing distractions, saving customer information, and making customer errors easy to fix are all effective methods for optimizing user experience on a payment site. If the overall goal is to reduce exception volume, Consumer Finance companies should take very measure to receive more Biller Direct payments.
Reduce the Cost of Payment Exceptions in Consumer Finance
While a bill payment exception still requires employees to manually resolve the problem, access to real-time reporting and a comprehensible audit trail gives professionals the tools they need to deal with them more effectively. Through the right technology, exceptions can be limited and handled more efficiently. By implementing the right electronic payments solution and making use of all of its features, Consumer Finance companies will see more customer adoption of electronic billing and payment, fewer work-hours spent managing exceptions, and a significant drop in costs.