A huge factor often overlooked by credit managers and agency owners is not the process of convincing a past due account to pay, but the pitfalls and hurdles in actually accepting the payment. We live in a modern age where people can borrow on account from their smart phone, transfer certified funds by email, view statements online and yet, many companies are still expecting the cheque in the mail …
In some cases, companies try to take payments in a more
comprehensive manner, but shoot themselves in the foot by not making their
payment process intuitive for both the customer, and their credit staff. Ease of use is a huge part of making the
customer comfortable with paying their account, and retaining the customer for
future business. If a customer is told ‘we
can’t accept your payment in that manner’, something has gone wrong.
So, I believe that means that creditors need to have
multiple avenues to allow payments to flow into their company, and do
everything they can to make the system smooth.
Here are my thoughts and experiences with different payment methods in
Canada.
Mailed Cheque/Money
Order: Ah, the old ‘cheque in the mail’ … this payment method will never truly
go away as long as consumers are wary of technology and sharing banking
information, even though ironically that data is available once the cheque
arrives at the creditor. Regardless,
there should always be the option to pay by cheque for those customers who need
it. This isn’t necessarily the first
option you want customers pursuing, but you need to have it available.
To make this payment option viable, you need to process and
note accounts on a daily basis, and educate your credit department on what is a
reasonable turnaround for a cheque to arrive via Canada Post – my rule of thumb
would be one week. Multiple promises to
mail a cheque should indicate a more immediate payment method is necessary …
In-Person Payments: It would be great if all our customers could
show up at our door with money in hand – in many cases, creditors such as hydro
commissions or local cable companies still rely on this method for receiving
funds. If a creditor wants smooth
transactions in person, they need to have a receipt/record system and hopefully
a debit machine for the more modern folks who aren’t carrying around that old
fashioned paper money.
Electronic Fund
Transfer (EFT): So, rather than wait for a cheque in the mail, you can take
the chequing information over the phone and process it through your bank or
payment processing company immediately.
There’s no guarantee the funds will clear (just like a cheque), but you
eliminate paper and the mailman from the equation.
The important thing here is to follow the rules set down by
the Canadian Payment Association (https://www.cdnpay.ca/)
in handling EFTs – you need to have recorded consent to take funds from a
customer’s account (a signed form, recorded phone call, etc), clearly identify
the amount and date, and you can only re-present the debt a second time. You also need to have security measures in
place in your workspace to make sure that personal banking information is
treated properly.
Pre-Authorized
Payment (PAD): Just like the EFT, pre-authorized recurring payments are an
excellent method for recurring customer costs.
However, just like an EFT, banking information needs to be kept
securely, and consent needs to be clearly identified. Because this is a recurring payment schedule,
the terms (or number of payments) needs to be identified by the customer, and
whether the payment amount is fixed (the same every time) or variable (changing
based on use, etc).
Credit Card: Just
as convenient as EFTs, consumers often wish to make payments by credit
card. This can be more challenging than
PAD/EFTs, as you must be PCI compliant with consumer credit card information if
you are storing that data or running virtual credit card payments without the
customer present with card in hand, and the cost of processing credit cards for
the creditor is significantly higher than a PAD/EFT. A credit card can be used for fixed or
recurring payments, but recorded consent is absolutely necessary before running
the credit card payment.
Interac e-Transfer: A
lot of creditors don’t know about this process, or aren’t set up to receive
these funds, and that’s a shame. In the
third party debt collection environment, or for industry segments with high
rates of returned cheques or charged back credit cards, this is definitely a
payment method to consider. Imagine if
you will, a customer emails you certified funds with a password that you can
receive and deposit into your bank, all in minutes. The cost is negligible, the payment
processing trail is clear, and everyone wins.
Of course, just like any other payment method that handles
funds, it needs to be secure – payment passwords should be regimented and
separated from the staff who actually handle and process the funds, so two
layers of security are in place – while payments do not display banking or
credit card information, these emails should be treated like cash and
reconciled accordingly.
Western Union: When I moved to Kingston Data and Credit three
years ago, I tried to open a Western Union account for our company, because in
some cases it was still a viable payment method – overseas funds transfers, convenient
locations across Canada and the US, in a certified fund transfer. However, it has significant downsides –
payment notification isn’t until the next day, the customer needs a code to
transfer the funds, and the cost is exorbitant ($15 in Canada for a Quick
Collect payment). I believe this payment
method is being phased out as customers move to Interac e-Transfers at a tenth
of the cost or less. I found out that
Western Union is no longer accepting new third party collection customers in
Canada … I’m not horribly saddened, but it’s just a sign that Western Union is
on the decline in Canada.
If you can receive payments by Western Union, I definitely recommend
having it as an option, but beware it’s pitfalls. As the payment is customer-driven, there isn’t
a lot of security necessary, but ensure you are recording your daily payment
faxes on a timely basis.
Streamlining Everything: This is a good starting list of payment methods to accept –
there are other options out there (UseMyServices, Square terminals, PayPal, cloud invoice systems, and so
on), but this should cover the majority of mainstream options available to most
creditors. The important thing to consider
as you accept various payment methods is to make any option simple and
intuitive for consumers and your staff.
If an EFT payment is an option, but your company requires a physical
original signed EFT authorization form, that kind of defeats the purpose of
being able to take a payment over the phone.
If your staff need 15 minutes to process a single credit card payment,
you may need to improve your process to keep your productivity. Having multiple payment options is good for
every company, but it needs to run smoothly for everyone.
If anyone has any questions or comments about payment
processing from the credit management side of the table, I’m certainly
interested in chatting – I’ve worked with clients and agencies that have
amazing systems, and others that are challenged, and I’m always happy to share
what I’ve seen and experienced.
Thanks kindly!
Blair DeMarco-Wettlaufer
Kingston Data and Credit
Cambridge, Ontario
226-946-1730
No comments:
Post a Comment