Consumer financial behavior is changing, and it is trending toward online payments. Not only are consumers rapidly adopting online payments to make their monthly bill payments, they are beginning to use a variety of payment channels in unison. According to a survey by NACHA, the average number of bill payment methods consumers use increased from 2.9 in 2014 to 3.6 in 2015. Consumers are adopting multiple payment channels because they enjoy having multiple options to pay their bills. They tend to pick the payment channels that are most convenient and intuitive. As technology natives, younger consumers, such as Millennials, are more likely to adopt electronic channels because they represent the fastest, most convenient method for paying bills. As more Millennials enter adulthood and begin making bill payments, Consumer Lenders such as Auto Lenders, Non-Prime Lenders, Consumer Leasing Providers, and Mortgage Servicers will need to adopt multichannel payment methods to accommodate all of their customers.
Multichannel Payments Improve Cash Flow
Consumer finance companies are able to offer services to their customers that they can’t find anywhere else, such as sales financing, rent-to-own arrangements, and short-term installment loans. Receiving accurate, on-time payments for these services is essential for maintaining the type of cash flow that encourages growth. However, according to a global survey of Consumer Finance companies conducted by Ovum, an independent analyst firm, 76% of Consumer Finance companies face growing competition in payments due to the need to meet consumer demands. To improve cash flow and encourage growth, Consumer Finance companies should offer consumers the most convenient billing and payment options available in addition to traditional channels. With more options for making payments, consumers are more likely to pay on time using the channel they prefer. Additionally, many of the payment innovations now on the market are designed to reduce the costs of more traditional channels by encouraging consumers to adopt. For example, accepting payments through an interactive voice response system (IVR) lowers call volume and reduces a company’s need to maintain live agents. Consumers who prefer to make payments over the phone can continue to do so, at less cost. Accepting ACH payments through an online portal reduces the number of costly check payments a company receives, as consumers can use their account information online instead of mailing a check. Debit cards are the most popular payment instrument among consumers, and accepting debit payments through an online portal is also a possibility for Consumer Finance companies. Mobile bill payments are also becoming more popular. A 2016 Federal Reserve study indicated that, of the mobile payment users surveyed, 65% claimed to have paid bills using a mobile device. Consumers use mobile bill payments because they allow them to pay their finance bills from anywhere and at any time. Mobile payment acceptance doesn’t require the production of an individual app, either. In fact, Consumer Finance companies can leverage an existing online payment portal for mobile payments by making it mobile-optimized.
Multichannel Payments Improve Customer Satisfaction
Multichannel payments help consumer lenders by allowing them to accommodate every customer payment preference and improve customer satisfaction in the long run. Those customers who choose to use traditional payment methods may continue to do so, but future customers will be more likely to adopt fast and convenient channels like online and mobile. The convenience of these channels will help companies retain existing customers and satisfy new ones. The longer they are available, the more likely customers will be willing to adopt them. To implement new payment channels effectively and to ensure they are up to security standards, Consumer Finance companies can partner with a certified payments solution provider. Payment professionals will ensure that new payment channels can be managed efficiently alongside other existing channels. Through clear reporting and fast exception management, multichannel payment technology can not only increase cash flow and improve customer satisfaction, it can lead to a more comprehensible payment model overall, ensuring that Consumer Finance companies remain competitive in an evolving market.