Most businesses who invoice customers, also known as Billers, offer their payers a list of accepted credit cards, but other payment options, like online, mobile, IVR transactions, and written checks, are still prominent. Billers that process a large number of bill payments and rely on those payments as a major part of their cash flow are constantly faced with the challenge of reducing the average number of days it takes to collect: their day sales outstanding, or DSO. One way to address this challenge is to make it easier for customers to pay their bills by offering them more payment options.
This answer might seem simple, but a surprising number of Billers offer only one or two payment options for their customers. When customers have access to multiple ways to pay, they are more likely to pay on time and more likely to use the fastest, most accurate options available. Offering more payment options will increase the speed in which you receive and process payments. Understanding which options your payers prefer is the key to deciding what to implement.
Making the Switch from Paper
Checks and other paper formats are still some of the most common methods for bill payment. According to NACHA, smaller Billers receive more of their payments in paper form while larger Billers receive more of their payments electronically. Generally, larger companies are more likely to accept bill payments through electronic channels and tend to offer their customers more ways to pay their bills. Larger companies also have the resources necessary to staff and maintain live agents to answer billing calls, and are much more likely to invest in IVR to cut costs.
Despite this data, smaller companies are still using alternative forms of payment to deal with their billing challenges, with 10% of small Billers using ACH, 5% using web services, and 6% using credit cards or other. As technology becomes more sophisticated and affordable, the prevalence of electronic payments among smaller Billers is likely to increase. And although they are a reputable standard for bill payments, the costs and hassles associated with paper checks are inconvenient for the Biller and the person or entity making the payment.
For Billers looking for ways to get revenue faster, reduce the costs associated with processing, and decrease their average DSO, alternate payment options are exceedingly attractive. All Billers, whether they are large or small, can benefit from offering customers more payment options.
IVR and CSR
Keeping customer service representatives on staff to answer incoming calls and accept payments is an effective way to offer excellent customer service, but maintaining a dedicated staff can get expensive. Many Billers opt for the use of an interactive voice response service if they have the means to implement it. IVR interactions cost a fraction of the typical CSR interaction. According to the NACHA report, IVR is used most frequently by the utility and insurance industries, but it sees use in almost every sector.
IVR might be a good option if your customers are especially reluctant to use other payment options, but encouraging payers to pay online and through electronic channels is the best option when attempting to reduce costs and increase the accuracy of payments.
Online and Mobile Bill Payments
As Billers make the move away from paper and the world becomes more digitized, more and more people will expect to pay bills through an online portal. Americans are now paying their bills in more ways than ever before: according to recent United States Postal Service Diary Studies, the number of mailed bills and statements has been decreasing steadily. In 2008, The USPS saw a volume of 25.9 billion mailed bills and statements with only 1.8 billion bills and statements attributed to the internet. In 2013, however, there were 18.5 billion bills mailed and 4.8 billion sent through internet channels*.
Because of its speed and its ability to reduce billing errors and communication issues, online billing offers a number of exciting opportunities for Billers. Many Billers have already adopted basic EBPP services. If these platforms are dated, however, or they can't support a long list of payment options, there is a good chance the Billers who implement them aren't being paid directly by their customers and are receiving funds through third party platforms instead. Furthermore, Billers who are still receiving the bulk of their payments as paper are spending valuable time and money processing and waiting for payments. As time progresses, payers are moving in the direction of online payments. Billers need to keep pace by offering the most convenient online solutions available or they will risk being left behind by more adaptive companies. Offering online payments grants Billers a 30% greater chance of being paid.
Mobile payments represent the frontier of payment options: although they are already in use, they are still dwarfed by other forms of payment in every industry. Regardless, mobile payments are on the rise and are expected to double in volume over the next few years, and they are essential for Billers who want to attract and retain younger customers. Many young people don't own a checkbook, or even a laptop, and prefer to get online using a phone.
According to data from the Federal Reserve, the most frequently used mobile payment methods in 2016 were debit transactions, followed closely by credit transactions and direct bank account transactions.
Many Billers already operate an electronic billing solution, but if the services it provides are basic and the system itself is old, there is a good chance they are unable to accept mobile payments. It may be time for them to update their billing platform. Updating can be a process, but if the end result is a fully-optimized system that is capable of accepting mobile payments, the benefits will be well worth the effort. The trend in mobile payments is expected to continue on its present course. Billers who don't upgrade run the risk of falling subject to unnecessary costs.
A 360 Degree View of Payments for Biller and Payer
A good payment platform should also offer the Biller and the payer an integrated view of all their payments, no matter the method or channel being used. If a customer pays a bill via IVR, they should be able to log onto the Biller's site and see that their payment is reflected in their account data. The customer should also be able to store their credit card information for further use and schedule recurring payments. If they call customer support the next day, the CSR should be able to see every payment that has been made to that account through every payment channel available in a single, comprehensible portal.
Creating a full view of a payer's transactions is an integral part of enabling a premium payer experience, and it can all be accomplished through a billing platform. By offering them a 360 degree view of every payment, billing platforms enable Billers to give their payers the peace of mind they need regarding their bills. The overall purpose is to eliminate the confusion and frustration associated with traditional payment methods.
There are over 25 billion bills sent annually in the U.S. and 60% of Americans use three or more payment options to pay their monthly bills. There is another good reason to consider offering more payment options: direct benefits for the biller. Offering multiple channels helps to accommodate customer payment preferences, including the emerging preference for mobile payments. Payers tend to be more trustworthy of companies that offer multiple payment options. Billers who prefer to be paid directly by their customers instead of through a third party platform, such as a bank's, are more likely to receive direct payments from their customers if they offer more options.
When their payers have choices, Billers stand a better chance of receiving payments in a timely manner or through convenient digital channels, which process faster and are more secure than traditional paper ones.
*USPS Household Diary Studies 2005-2012