Despite the rapid rise of the Internet in recent years as a way to both issue a bill/invoice to customers and get it paid on-line, many organisations are not giving their customers much convenience or choice in terms of ways to pay (and not always on-line ones).
In terms of limited convenience, some businesses will send out a bill via email but then expect customers to call in on the phone to make a payment (and then have to staff up to take that call). Even worse, they may encourage customers to send a cheque (and then have to staff up to receive the paper, reconcile it and deposit the cheques at the bank). Having used an on-line channel in the first instance, this simply serves to take customers back to very traditional methods to pay (and also limits the options by which payment of a bill can be made).
And when it comes to choice, consumers like to have many options as possible when paying bills. Hence, writing a cheque might be a valid option but involves writing it out accurately, stamping and then posting it and waiting for the money to be deducted from a bank account. Paying bills at the post office may also be a viable choice but is far less attractive if the customer knows that they may have to queue for quite a while to do it. By making other payment choices available, many customers will therefore elect to pay online by a debit or credit card or by using Internet banking and save themselves time and hassle in doing so.
In terms of available technology, as we are now able to issue a bill electronically (and save the manual time and effort of typing up invoices, stuffing envelopes, stamping them and sending them out) then we should ideally look to give the customer simple ways to stay online to make a payment-this can deliver both greater convenience and choice. So how can this best be done? There are essentially 3 options:
First, an organisation can seek a merchant account with their bank or building society and, once approved, use their facilities to offer several online payment options. Banks/Building societies like merchants to use internet banking, so these days will offer relatively easy ways to make BACS transfers and direct debits for example. They will also issue credit cards for merchants to use and a PDQ machine for some to accept payments (as long as the merchant can staff the machine so that credit and debit cards can be processed). Although this solution undoubtedly diversifies the payments options to customers, none of this is necessarily with some merchant cost of course. Most banks will expect quite a lot of up front security, minimum monthly fees and what might be quite high per-transaction rates unless they get a lot of customer business from a given merchant. They also will not usually offer much more than some very basic payment records.
Secondly, and the first choice of many online websites with a shopping cart for example, is for a merchant to sign up with a Payment Service Provider or PSP. A PSP (such as Worldpay, Global Collect or PayPal for instance) will usually make a wide variety of payment options available via debit or credit and may have the added benefit of allowing customers the opportunity to pay in several different currencies. This can therefore be an attractive option for those merchants who just want to effectively “outsource” the online payment process to a third party. Once again however, although PSPs offer diversified payments options to customers, it can be expensive (with transaction fees of 4% or more in many cases). In addition, a PSP will often also have minimum fees (either monthly or even per transaction) and not offer an on-line billing functionality or capability.
As a third choice, an organisation can work with an online billing and payment aggregation company (such as Payswyft). The main benefit of this option is that the customers of an individual merchant can see an electronic or digital version of the bill at a single web site and then click on the bill to then select from a range of ways to pay or settle it. On a well-designed site these ways will include not only debit side and credit card options but also the ability to pay by dynamic debit and even cash. Furthermore, because the whole site is dedicated to bill presentment and payment, there will be a number of additional services that are useful to the merchant. This is likely to include customisable alerts and reminders (for both merchants and customers), searchable and date-range-able analytics and reports on all transactions and effective bill-matching capability. In this option there are no minimum fees and merchants will make for each transaction according to what the customer chooses to do.
Whatever a merchant elects to do, convenience and choice will greatly improve the customer experience when paying an pnline bill and is likely to decrease internal costs of handling by more traditional payment methods, as well as accelerate cash flow. However, merchants should be careful about how they go about increasing convenience and payment choice as there can be significant up-front costs to be considered-which with care and the right options, can be kept to an absolute minimum.
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