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Wednesday 11 December 2013

Educating Customers to Adopt an Online billing System

Whenever a merchant introduces a new online billing system, however basic it may be, it is extremely important to educate customers in how to use it. Failure to do this will mean slow take up or even refusal by many ever to use the system.  
 
In the initial stages a merchant should ideally start to educate customers about the new electronic payment channel they have to offer and its specific features and benefits (which help customers to feel more comfortable to try it out) in general terms. The best way to therefore inform customers of a change such as this is to use every available communication channel and to do so frequently. For example, it may be a good idea to think about using some or even all of the following possible channels:

      Evolving several leaflet(s)/pamphlet(s)/brochure(s)/booklet(s) on what the new electronic payment channel is and how to use it
 
      Writing a letter to all customers about the new channel and how it is best used

      Sending one or a series of informational emails about the new service and its various features

      Designing your on-hold messaging to include information on your new payment service

      Putting special new payment channel/system FAQs on the main web site

      Putting a small advert and even brief explanatory information on the physical bill that is sent out to all customers

      Putting a Quick Response or QR code on all printed bills to allow customers to go straight to your new electronic presentment and payment channel (even from a mobile device).

Another important part of the ongoing education process is to ensure that internal support staff are well-briefed about the new online bill presentment and payment system and can help customers with their questions and early attempts to use the system. This is particularly important when customers raise billing queries or when they wish to make payments over the phone (and can be shown immediately what to do to make the same payment online each month quickly and easily, and even set it up as a recurrent payment if the individual wishes).
 
Customer education is often a forgotten part of introducing a new online billing system but with a little planning and effort it can make take-up considerably quicker and less painful for all concerned.

Thursday 5 December 2013

Taking the First Steps to Getting Customers to Use a New Online Billing Solution

Once a payment strategy has been developed by a merchant and the costs as a proportion of sales calculated carefully the move to a more electronic or digital system for presenting invoices and collecting payments can be planned and executed. 

But merely introducing a new web-based bill presentment and payment service (in any fashion) does not mean that customers will necessarily use it and we therefore need to plan to create reasonable levels of early adoption and conversion to the new online solution over time (so that it eventually becomes the dominant way to view and pay invoices and allow a merchant to realize the full benefits of this). In this booklet we will therefore describe some ways in which this can be done.

Initially Informing All Customers
Once an online billing and payment system is available, the very first step that a merchant needs to take is to inform the customer base that this new “channel” is available to use. Many merchants avoid doing this and expect their customers to almost “stumble across” the option or in some cases, inform customers only once at the outset and then fail to remind customers about the option again in any way. This may be fine for many of the “pioneers” and “early adopters” in the customer base but others will need greater “pushing” and more than one time, of course.

Segmenting the Customer Base
Although the same initial general message about the new online billing and payment system can be sent to all customers (and pretty much in the same language) some later messages may need to be tailored to particular parts of the customer base. For this reason, another important step in getting customers to use the new service at the earliest stages is to analyze and then segment customers so that specific messages to them may then be crafted.

This segmentation may occur in several ways but some examples are indicated in the table below with comments on what could then be crafted as a result, shown on the right hand side:

Segmentation
Specific communication messages
By age (if the data is available)
Although it is always something of a generalization, younger people are usually quicker to adopt internet technology and may like access to a billing and payment system via not only a computer but using tablets and mobile phones. And older customers may appreciate that a service support person will help them to walk through how to view their bill and make an online payment once, twice or even three times, if needed.
By the average length of time it takes the customer to pay
A customer who pays a bill quickly may be attracted to new system features such as bill scheduling or recurrent payment set up (set and forget). Alternatively, a customer who pays slowly or even late may appreciate that they can set up calendar alerts to make payments or even set up their own email alerts as wanted.
By the way they choose to pay their bill (by check, cash, credit card, debit card or ACH, if available)
Some customers like to pay by check, some by cash, some via ACH or direct deposit and some by card. Depending on the electronic solution, a merchant may be able to offer new payment methods (credit cards or ACH for example). The new payment methods are likely to help accelerate cash flow or even bring new customers to the table, in some cases.
 

 

Monday 18 November 2013

Electronic billing and payment-a win-win for everyone?

Electronic billing and payment is one of those rare organizational change measures that can create a number of so-called win-wins. The merchant wins on efficiency and effectiveness (and with the right solution on the cost side too) and the customer wins on speed and convenience (and can save a little money as well). Let’s briefly look at why.

For the merchant on the direct or visible cost side, there’s less paper, less envelopes, less ink and less postage when customers elect to discontinue getting a paper invoice. Even though these are often significant in and of themselves there are also even bigger potential cost reductions on the indirect or more hidden side of things...less customer support (handling queries or phone-in payments) and much less time spent on reconciliation and settlement. In addition, online bill presentment and payment has been shown to lead to much quicker settlement by the customer-which substantially aids cash-flow for a merchant. All these savings add up significantly on the merchant side.

For the customer they win by eliminating or simplifying the tasks of organizing bills, querying them, and storing them (in a good online system forever) and being able to make payments in many ways (all being possible both safely and securely and at a single web site, and ideally only with a few clicks). Digitally-based billing and payment means more free time for the bill payer, and less to worry about when dealing with paper (including having to put the bill or invoice somewhere safe, finding it when needed and even losing it occasionally).

And above and beyond the merchant and the customer in the relationship, the environment wins too.  Electronic billing is a simple but significant step that every organization can take with a little focus, effort and determination, and encourage their customers to make a small “green” contribution of their own.  Less paper eventually means less use of trees and less transportation (and gas), reducing a merchant’s carbon footprint. Not all customers will be happy to turn off paper immediately but some will and they will slowly encourage the others to do the same.

So, in summary merchants will save money on:

                  Printing paper bills

                  Fulfillment and postage

                  Undeliverable mail

                  Chasing as many late payments

                  Handling manual payments

                  Archiving paper bills

                  Reconciliation/bill matching/banking payments

And customers will save time on:

                  Checking and paying bills

                  Hunting for previous bills

                  Checking funds and means to pay

                  Writing and mailing checks

                  Waiting for a merchant to be open for business

                  Paying by IVR or phone

                  Worrying over lost checks and late delivery

And all this is “green” too.

Monday 11 November 2013

Implementing an Online Billing Solution

As banks and the rest of the financial services industry continues to evolve online systems and more and more individuals are comfortable using the web, as well as in using their smart phones and tablets to make a payment, all businesses have a tremendous opportunity to speed up their receivables process while lowering costs and improving efficiencies. This is best achieved by making as much of the electronic or digital technology that is readily available to us as possible (although we will need to determine exactly what this means of course).

There is no one-size-fit-all online billing system for every organization, as there will be many individual factors to be taken into account in every case. However, there are some common issues that need to be considered and it is these that we will look at in his brief article. In other words, having assembled a payments strategy and calculated the true cost of billing and collections, the next key question is therefore “what is the best way to go about implementing a more digitized approach to billing and payment for our customers?”

What are the Options?
There are several choices available to a merchant to start to issue bills electronically and to accept payments via the web. These include:
Migrating to an email and attachment based approach
  • Adding a third-party payment system
  • Building an online billing and payment solution (writing the software),
  • Buying a third-party piece of software for online billing and payment,
  • Outsourcing some or all of the billing and payment process to go more online
  • Using a cloud-based pay-as-you-go online service (such as BillSwyft for example).
All of the above are viable options and the best is likely to be the last of these in cost-saving terms. However, each organization needs to make its own choice in terms of what it is ready to do.
 
Important Transition Considerations?
Whatever online option is finally selected in terms of how to render change to current billing and payment practices, there are several other issues or considerations for a merchant of any size or type to think about. These include:

Size and Type of the Enterprise
Although almost all organizations issue invoices or bills to some degree, some products or services are supplied only after payment is taken at the point of sale. Most retail businesses are a good example of this. However, where customers are allowed to pay for goods and services after they have been supplied or rendered, an invoice needs to be issued promptly and efficiently and ideally options for payment should be many and easy to use. Having said this some invoice volumes are so small that the work involved to send them and collect payment is easily absorbed in one person’s job role. In these circumstances large internally built or third-party software solutions are unlikely to be economic.

Branding/Marketing Issues
Any business will need to decide how much marketing control they want to have over the look and feel of both the bill and the payment page or pages. In some companies, this may not matter very much and a generic payment site may be fit for purpose. However, if a brand is important or even if a company wants to maintain a very similar look and feel (including use of logos etc.) then an internally built, purchased software solution or full digital service such as BillSwyft is likely to give a merchant the most customization potential. 

Website Monitoring and Availability
A critical component to any company’s desire to adopt a more digital billing and payment approach is ensuring that site availability to customers is high. A couple of typical metrics to include are therefore response time and website availability or uptime. Clearly an internally built system or purchased piece of software will need to be well-built and well-supported to be available as needed. 

Customer Service
Many considerations need to be fleshed out when deciding on what type of customer service is needed for a given merchant’s customers. For example, is the system going to be user-friendly to all people who may be interested in using it? do you need 24/7, 365 days a year availability? Do you require international payments? or can your system quickly find a payment transaction when needed (and can it communicate easily with the customer –via online means, when necessary)? 

PCI-Compliance and other Risk issues
As with accepting credit or debit card payments in person (or via a phone call), any merchant accepting cards as a payment type must ensure that they are in compliance with the Payment Card Industry (PCI) Security Standards Council’s rules. The PCI Security Standards Council offers comprehensive standards and supporting materials to enhance payment card data security. The PCI Data Security Standard includes requirements for security management, policies, procedures, network architecture, software design and other critical protective measures, such as card tokenization and encryption.  All of these factors need time and money to manage properly if building an internal solution but are often already party of any third-party site.

Costs/Fees
One other important issue to think about when accepting payments via the web is costs or fees. Many businesses which operate on low margins could see those margins deteriorate even more as credit or debit card fees (direct and indirect) would add an additional (and perhaps unnecessary) layer of cost. Although fees are payable to process payments with an internally developed or software-based solution, third-party providers can also charge a courtesy or convenience fee. All fees therefore need to be carefully scrutinized ahead of time so that there are no surprises when a monthly transactional statement is sent.

Tuesday 22 October 2013

The factors that help shape choice in the online payment world

There are now many payments types or channels available to both merchants and customers (cash, cheque, credit card, debit card, pre-paid card, direct debit, Internet direct bank transfer, e-wallet transfer etc.). However, they all present different advantages and disadvantages, and these may be quite different for a consumer versus a merchant. However, by drawing together a range of international literature about payment systems and how they are used by people and organizations of all kinds, six attributes of payment products appear to be most relevant to the choices that are made of both merchants and their customers alike*. These six factors are:
capability
  • cost
  • convenience
  • coverage
  • confidence and
  • confidentiality
Let’s look at each of these in a little more detail.

Capability
Capability refers to the functional ability to actually use a particular payment type or channel. For example, capability in cash transactions (the oldest and most ubiquitous of payment types) relates to a person or an organization being in a position to hand over a payment (having cash in an acceptable denomination/currency) and then receive the payment (also in an acceptable denomination/currency of course). This becomes a threshold issue in non-cash payments, which often involve technical issues such as the establishment of a means of communicating over distance, ability to verify the parties in a payment transaction, and many other factors.

Cost
All payment systems involve some costs (including cash). Both consumers and merchants are likely to seek to use lower cost payments if they can. This is especially the case if they can readily know what the use of each payment will cost them (sometimes this is transparent and sometimes it is not of course). The cost of a payment is not always spread evenly between the parties. Vendors of payment products will often seek to make some approaches appear to be no-cost or low-cost to the customer-but this may or may not be true. The cost structures of payment methods also differ; some have a fixed transaction charge while others are proportional to the size of the transaction.

Convenience
Convenience refers to the ease of use or “user-friendliness” of a payment method. A need for registration before using the payment method, or the speed of payment (for example, the time taken to approve a payment) can be factors affecting convenience. Consumers generally view cash as convenient to carry for small purchases at the point-of-sale. This means that to be competitive with cash, electronic payments systems have to offer a high level of convenience (hence all the current interest in mobile phone usage for payments). Businesses however typically have a very different perspective on convenience to that of consumers. They are likely to seek payment products and services that fit reasonably well into their broader processes and systems.

Coverage
Coverage refers to how widely a payment method or system is accepted by merchants and other recipients of payments, such as businesses receiving payments from suppliers. An important objective for all payment types and channels is therefore clearly to be widely accessible to merchants, traders, consumers and other users without high-entry or ongoing costs. Similarly, consumers should encounter as few barriers as possible in undertaking transactions using the chosen system.

Confidence
This refers to a customer’s belief that a payment will be successfully executed and completed, and that the value of a payment method will be respected. Confidence rises where arrangements are secure and value does not ‘leak’. The confidence that consumers have in a payment method also depends on the associated payment channel. For example, online payments with credit cards differ from offline payments, in that the card is not physically provided by the customer and the merchant does not obtain a signed confirmation from the customer. Some card schemes provide a system of cardholder authentication, usually through provision of name, credit card number and expiration date. To prevent illegitimate interception, this information is typically encrypted so as to increase levels of confidence in the payment system. 

Confidentiality
As a payment type only cash maintains payer and/or payee confidentiality. Non-cash payments often involve the collection of information that becomes valuable. Users of payment systems are often concerned about the collection and use of this often personal information, and its potential release to other parties, if not properly secured. For example, in general, credit card payments are made via an identifiable account, resulting in the loss of anonymity. This means that some individuals are uncomfortable or unhappy about using payment types or channels which cannot reasonably protect their personal information (and may increase the risk of theft or fraud).

Summary
Payment type or channel choices are complex for both a given consumer or merchant. However, in this article we have described six factors which seem to be most influential in the decision-making process. Although these factors all stand alone, they are not necessarily independent of one another of course. In other words, the boundaries between factors are often blurred of “fuzzy”.

In addition, it is also worth noting that any one of these factors can be primary, depending on a given individual or organizational perspective. For some consumers and/or merchants therefore, cost and convenience may be first and second (with other factors making little difference). However, for other consumers and/or merchants, capability, coverage and confidentiality may all have equal significance, for instance.

*The report by the Australian Government called “Exploration of future Electronic Payments” was extremely useful in assembling and describing the factors in more detail.

Monday 21 October 2013

Different ways to pay online

Receiving Electronic payments incurs extra costs. When you pay for a good or service in a shop using a credit or debit card the retailer must pay a commission to the financial institution processing the card details; additionally there will be operating costs for the system used to process the cards. This is the same for non-retail merchants who accept credit or debit cards to pay for their products and services.

These systems are often costly, challenging to implement and sometimes technically difficult to understand. These hurdles represent a ‘barrier to entry’, which, if overcome, can give a merchant the competitive edge. 

Electronic business is real and continues to grow as a medium with over 35% of UK adults in 2012 having used the Internet to order tickets, goods or services.

There are several approaches to taking Electronic payments. These are:
•Traditional Card Payments
•Mail-order
•Online Payments
•Acquiring Banks
•Payment bureaus
•Secure order forms
•BACs
•Alternative payment options
•No payment option

Let’s look at each of these:

Accepting credit card payments
Many businesses can take offline Electronic payments through their credit and debit card facilities. All banks can process these transactions and some will also process Internet based transactions.

To take offline Electronic payments you usually need to apply for the appropriate facility from your bank or other payment processor or provider.

Here are some key electronic payment terms to consider:

•Merchant service: this is the generic term for the service provided by banks that allow you to ‘swipe’ credit and debit cards at your place of business.

•PDQ machine: this generic term for the machine that is used to ‘swipe’ a credit or debit card.

•Acquiring bank: once you have ‘swiped’ the card, the customer’s details are passed to an acquiring bank for processing. The acquiring bank checks the details of the card and authorizes the transaction. The acquiring bank is the bank that provides your merchant service.

Ten steps to setting up offline electronic payment:

1.Apply to a bank for a merchant service.
2.Negotiate the costs.
3.On acceptance, pay the set-up costs.
4.Receive and install a PDQ machine.
5.‘Swipe’ the customer’s card to collect their credit or debit card details.
6.Wait while the card details are passed to the acquiring bank for approval.
7.Ask the customer to sign the sales voucher.
8.Verify the signature and process the payment.
9.A transaction charge is automatically paid to the bank.
10.The customer leaves with the goods or service.

For electronic payment in a shop, the customer is present to sign the sales voucher. If the transaction takes place via the phone or the Internet, the customer is not present so there is an increased fraud risk.

Any merchant service (whether offline or online) is provided at the discretion of the financial institution concerned. There are few set rules as to which businesses can and cannot be approved for a merchant service. Be prepared to negotiate the product at a price that suits your needs. There is information in the Costs and Considerations section to help you with this.

Payments by phone, post or fax
Mail order payments involve more risks for banks and financial institutions than transactions where the customer is present at the point of sale. Consequently, acquiring banks usually ask for more commission per transaction (perhaps 3.1% instead of 2.79%) and a more detailed agreement on the fraud checks you use.

With proper planning, your mail order operation should be able to get a customer not present merchant service from your bank without difficulty. If you already have an offline service negotiate with your bank to avoid paying another set up charge.

The bank will approve each application individually but there are other equally valid options available if you cannot get a merchant service.

Taking online payments
All the electronic payment methods we have examined use an Acquiring Bank and Merchant Service to process the transactions. To take online Electronic payments you need to get a specific Internet Merchant Service and also a Payment Service Provider to collect the card details over the Internet. Let’s review these elements.

An acquiring bank: is a high street bank that offers credit and debit card processing services. They acquire the money from the customer, process the transaction and credit your account. You need to apply for a merchant service if you want a bank to handle your Electronic payments (other options are explored later).

Merchant Services fall into three categories:

1.Standard Merchant Service for use in shops when the customer is present;
2.Mail-order Merchant Service for customer not present transactions when the customer orders remotely by phone or post / fax;
3.Internet Merchant Service for transactions generated over the World Wide Web.

Obtaining an Internet Merchant Service from an Acquiring Bank is quicker and easier if you already have “offline” card processing facilities set up with the bank. In this case, just ask your bank for an additional Internet Merchant Service ID for use exclusively with Internet transactions. This process is normally quick, especially if the risk to your business does not change.

If you have no prior card processing the bank will carry out a thorough credit check (lasting anything up to 8 weeks). The delay can make it worthwhile using a Payment Bureau that can be upgraded when the Acquiring Bank application is ready – or when you feel your Internet turnover justifies the slightly higher fixed costs of an Acquiring Bank. Alternatively you could look at Post Paid Account services, some of which remove the need for an Internet Merchant Service ID.

When you obtain multiple merchant numbers for both online and offline, you may need to pay separate set up fees and rent a PDQ swipe machine for customer present transactions. The acquiring bank could charge around £25 per month for this rental. If you are getting a combination of these services negotiate the costs with your provider as they may only charge one set-up fee.

A Payment Service Provider (PSP): is a “virtual” PDQ swipe card machine that collects the card details over the Internet and passes them to the acquiring bank. To take Electronic payments over the web, you will need a PSP at a small cost. Some acquiring banks offer PSPservices as part of their product and there are other less expensive options available.

Your choice of PSP will depend on its cost and compatibility with your chosen e-commerce software solution. A fixed monthly fee starts around £10, but there are some cheaper option available starting as low as £0.05 per transaction. Usually, the higher your transaction volume the cheaper the rate you will be charged.

Acquiring Banks
As previously mentioned, the Acquiring banks are an essential element of taking Electronic payments. If you wish to take card payments directly you will need to apply for a Merchant Service with an Acquiring Bank.

The Electronic payments tool does not advise you directly about which acquiring banks to use as this is a decision that is determined more by your current banking arrangements than individual price or service differences between providers. Acquiring services tend to be offered by the UK banks as an additional service that runs alongside a suite of other services offered by the bank concerned. The banks look on the merchant acquiring service that they sell as one revenue stream of many.

For instance, a low rate for taking card payments may reflect that your bank is generating revenues from you in other respects – a loan interest would be an example. Rates for card processing are for this reason, highly variable and should be considered alongside all your other banking charges. Furthermore, because of complex rules governing the way acquiring banks assess risk (of allowing different businesses to take cards) it is difficult for the online payments tool to model or predict exactly what the costs might be.

Please click the following link to register for the free to use Electronic payments comparison tool. As the tool can’t be used to predict your exact acquiring costs, we have used a set of assumed values that you can change after you have spoken to your business bank about its likely rates. The typical rates we have used, produced in conjunction with the banking industry are:

Typical Rates
Setup Fee: £200
Monthly fee: £10 
Debit: £0.35 per transaction
Amex: 3.0-4.0%
Diners: 3.0%
MasterCard & Visa: 2.5%
Bond: £1000

You may also find that the following list of Acquiring banks useful in progressing your enquiries, either with your own business bank or with a new provider if your bank cannot satisfy a particular need:

UK providers
•Allied Irish Bank Mechant Services
Alliance & Leicester
•American Express Merchant Services
•Bank of Scotland
•Barclaycard Merchant Services
•DinersClub
•HSBCi /Global Payments
•Lloyds TSB cardnet
•Royal Bank of Scotland & NatWest Bank
•Ulster Bank

Overseas providers
•euroConex – Euro zone transactions
•Paymentech – US and Canadian transactions

Specific card type resources
•STYLE
•Discover
•Maestro
•Switch
•Visa EU
•MasterCard

A Payment Bureau
A Payment Bureau like Worldpay or Netbanx is a one-stop solution collecting and processing the card details on behalf of the business without requiring an Internet Merchant Service with an Acquiring Bank or a separate PSP to be set up. Their simple application process makes bureau services a popular choice for online payments and an ideal solution for a SMEs first step into e-commerce.

A bureau collects funds via credit or debit cards using ITS OWN acquiring service. The bureau collects money for multiple retailers (tens of thousands of retailers for a large bureau service) to achieve the trading volumes necessary to make the service profitable. The bureaus in the UK will generally accept most types of business with a business bank account and an address that confirms the identity of the business.

A bureau reduces the risk of accepting almost any type of business through one principle mechanism - the bureau holds the collected funds for 30 -60 days (settlement period) in the initial period of accepting a business. There is a cost to this in terms of cash flow to your business and possibly interest charges. You can accurately model these costs using the free online payments comparison tool. as factors such as settlement period and overdraft interest are included in the cost calculations.

As most fraud and refunds occur within the first 30 days after a transaction, this is a very effective means of reducing the exposure of the acquiring service that the bureau uses. In so doing the costs of charge-back recovery are minimized as the bureau can simply refund before the retailer banks the money. Additionally, the bureaus normally charge more for card payments, at least 4% for credit cards and 50pence per transaction for debit cards.

Advantages
•These services will accept most types of business
•Trading record or length of trading will not usually be an issue
•Fast turnaround for applications - a few working days compared to weeks - for a new merchant acquiring applications

Disadvantages
•Merchants’ funds are held for 30 - 60 days
•Transaction charges are higher( 4-8% )

Doing business over the Internet can be daunting but if you enable customers to pay for products online, you can generate actual revenues and make a return on the time and money you have spent developing your website. A bureau service is the simplest way to begin taking payments online.

You can also get the same service from a Post Paid Account provider as they use trusted third parties to bring all elements of the service under one roof. This usually includes all elements of payment management from billing the customer to chasing any late payments.

Secure on-line transactions
An order form is a simple page on your site that the customer fills in with details of themselves and the goods they want to buy. There is no automation and the fields in the forms are sent to you as an e-mail and do not use a PSP.

As a very basic method of taking orders through your online catalogue this can be very manual and labour intensive. An automatic ‘buy product’ button can take the user to the order form page where product details are already filled in but customers who want to buy separate products need new forms for each one and it soon becomes clear that a simple shopping cart product is more effective.

A simple form is NOT a secure way of collecting card details. To be secure you, the Merchant, must use a secure order form, which uses a secure server to email the customer’s credit card information.

Like the code machines used in World War Two, a secure server encrypts the message making it hard for criminals to decipher (and steal) credit card information.

An offline PDQ swipe machine, available for a small cost, will enable you to process the credit card details when you receive them.

 A slightly more advanced option is available by using a shopping cart software product as most carts have the ability to either store credit card numbers securely so you can view them over the Internet or send them securely over e-mail. By making use of an existing merchant account, payments can be processed by using a PDQ swipe card machine or by old-fashioned credit card slip.

Advantages:
•Secure forms require a minimal outlay
•Avoid paying for a Payment Service Provider facility.
•Avoid an extra internet merchant number for online transactions
•Merchants can manually screen orders as they come in and reject risky transactions
•Site superficially appears to be fully credit/debit card enabled

Disadvantages:
•Secure forms have limited use for more than one product on your site.
•Some bank acquiring services disapprove of merchants using an offline merchant number for Internet transactions so the merchant may be in breach of their acquiring bank’s terms and conditions.
•There is no “live” authorization of card details so incorrect details will still appear to have been accepted. Contact (by telephone) may then be necessary.
•Transactions are processed manually - time consuming.

BACS
This payment method is ideally suited to business-to -business (b2b) transactions with regular or repeat customers. It is already used to pay over 70 per cent of salaries of the UK workforce. BACS payments are usually processed as batches using dedicated software linked in with the banks system. Currently these payments can be facilitated directly through a business bank via a “file” of transactions or via dedicated software that links to the bank account making the payment.

The advantages of BACS

1.Regular automated payments
2.Reduces time and cost of administering bulk payments
3.Helps manage cash flow and improve financial control
4.Reduces risk of loss, late payment and theft for customers

At the enterprise level, BACS can be integrated with an e-commerce b2b purchasing system to allow automated settlement of accounts between organizations.

Benefits:

As the BACS process is electronic, it removes the need to write cheques, which can be a costly process, subject to human error. Payments can be made much later in a business day, up to 9pm and are cleared within two business days to any bank account. The payment method is suitable for customers who are making more than 150 monthly payments.

Other Alternatives

There are other ways of taking payments online which can allow payments from customers without credit cards. You can directly compare some of these alternative payment methods by clicking here to register to use the e-payment comparison tool.

These payment services can stand alone in certain cases but mostly exist alongside a mature PSP/Acquiring solution to give customers extra choice. Although less well established, they can offer substantial benefits to the customer. They may be worth considering if the other bureaus or PSP are not an option - risk is assessed differently by these services due to their added security or reduced susceptibility to credit card fraud.

Person-to-Person - consumers set up an account using their bank account details and the person-to-person solution will then allow eligible merchants to debit this account directly when you make a purchase. This form of payment is common on auction sites but can be used as a general entry-level payment solution. more detail...

Mobile Commerce - allows a sale that has been conducted over the internet to be confirmed by sending an SMS to the customers mobile phone. The customer will normally need to set-up an account to do this but once they receive the SMS they can then accept or decline the sale that will (on acceptance) be charged to their bank account or mobile phone bill. There is also a growing market in ‘drop-charges’ to mobile phones where the call cost is charged at a premium to recover transaction costs. more detail...

Pre-paid Cash Card - These cards can be ‘charged’ by the consumer using cash, credit / debit cards or direct debit from a bank account and then used at participating websites and high street stores. Commonly used when an e-cash environment is required for children without credit-cards but also useful for small transaction amounts (even down to a few pence) where the minimum credit card transaction charges would disproportionately affect the profit in the sale.

Micro-billing - Many micro-billing type payment solutions offer a premium telephone number billing service that is essentially pay per view internet content hosted in a private area of the web. Customers pay for this content via their Internet Service Provider (ISP) or their phone bill. Charges are typically high for this service and it is really only suitable for niche content areas.
 
No Payment Option
If you have no online payment mechanism, the customers manually contacts the merchant by phone or mail and refers to the online catalogue to place the order. Although less expensive, this method lacks efficiency, especially if customers want to order multiple products.

The expectations of online shoppers have grown in past years and a flawed system may deter customers from putting their trust in your product. They may feel the system lacks security and may be reluctant to proceed with their purchase.

A phone number for the customer to call is better than nothing, but are you missing sales by failing to offer an electronic payment system to your customers?

You may be surprised to know that you can engage with several online and electronic payment systems for very low or zero fixed costs. These providers charge you a fixed or percentage cost of every transaction with no monthly, annual or set-up fees. You can compare these providers with the providers that charge fees by registering to use the free online payments comparison tool. Please remember that even if a provider charges you no fixed fee, you may still wish to pay an e-commerce agency or web designer to implement the payment solution on your website.

Tuesday 10 September 2013

Will Mobile Phones Become the Dominant Channel for Bill Delivery?

There are now a multitude of channels available to customers to pay their bills. These channels include:

1. Print and mail (paper-based)
2. Fax
3. Email with embedded data
4. Data interchange (system-to-system)
5. Email with PDF and/or link to on-line
6. Online (customer portal)
7. Mobile (MMS; HTML; WAP; USSD)
8. Mobile via App
9. Mobile Tablet
10. Emergent technology (via cable TV etc.)

Only print and mail on the above list existed as an option until around 30 years ago when fax arrived and 25 years ago when email came along (both of which still have quite a strong following today). Data interchange options were mainly evolved and used in the B2B rather than direct Business to customer or B2C space but again are still around today as a strong channel, supported in the main by large international software companies, who have sufficiently large installed volumes to want to protect their position in the billing market.

Web based technology has driven the greatest change in the billing space in the last 10 years or so and seen the emergence of both consumer and merchant portals (for presentment and payment) and the use of mobile technology as 3G and 4G have made the internet available to mobile phones.

Even though each of these channels presents a new and perhaps better and more convenient choice to a given customer (and are often presented as the channel to replace earlier channel choices) in reality, they are often just additional options. In other words, consumers have shown time and time again that they like the extra choice but do not necessarily want to be driven too quickly to only one channel (however “efficient and effective” it is presented to be).

The implication of customers wanting lots of channel choice to both view and pay their bills is that the same bill may need to be presented and rendered possible to pay in several channels, at least for now.

 Today’s challenges
Some technology experts are starting to say that customers will be move rapidly away from e-billing to m-billing (m for mobile of course) in the next few years. Modern mobiles can certainly handle very complex tasks today - just look at the hundred of thousands of Apps available for all different platforms. These Apps can do complex tasks, even generating bills “on-the-fly”. A mobile can also handle a simple task such as bill presentment with ease today – in some cases on quite a detailed basis (even though reading it may present quite a challenge!). However, viewing a PDF bill attachment on a mobile (as opposed to a tablet) is often a long scrolling exercise, making it impractical in most cases. There is a solution to this but it needs the biller to solve the problem of displaying their bills in more flexible ways according to the kind of mobile platform to which it is being delivered. In this way, a customer can see a simple version of the way and then “drill into the detail” as they wish when they want to see itemisation. 

However, perhaps all of this is a false dilemma. In the final analysis, customers do not care if a bill is delivered to their computer, their tablet or their mobile (or even all three). In fact, many want to see it delivered in as many ways as possible to allow maximum flexibility, including by email or by PDF attachment and even in the physical mail or fax on some occasions. This multi-channel approach is therefore a customer centric approach. The challenge for billers then is how to provide as many of these channels as possible at the lowest coat possible. In the end there is only one solution to this –use a full digital bill presentment and payment portal such as PaySwyft for example. This not only means that a bill can be sent in all nine of the current channels above but means that a biller would be well-placed to take advantage of the new emergent technologies that will come along as in the near future.

Monday 2 September 2013

The Value of Encouraging Direct Debit Payments

A direct debit is an instruction that a bank account holder (usually a merchant) gives their bank to collect a variable amount directly from another account (usually a given customer). A direct debit is also often called a pre-authorised debit or pre-authorised payment. Direct debits are initiated by the recipient (merchant), as opposed to the Payer (customer), which means that the payer is not in control of the payment. This is quite different to a standing order, which tends to be set up by a customer as a fixed amount payment and can be cancelled by them at any time.

Direct debit payments have become very popular with large merchants in recent years (such as utilities, telecom companies and councils for example) because they allow the merchant to obtain an open mandate from a customer to transfer variable amounts of money out of a bank account on a regular basis.  This make direct debit apparently very good for the merchant (with high levels of control over customer payments). But is this really the case as in reality there are both pros and cons to consider?
 
ADVANTAGES:
DISADVANTAGES:
1. Having a direct debit mandate saves a merchant time as automatic payment is set up to occur regularly by a customer on a given date. The payment is also known and easily reconciled as thee are full records of the transaction.
 
2. Direct debits tend to avoid late payments by a customer (avoiding chase letters or phone calls or even worse, disconnection notices, and late fees and penalties.
 
3. Direct debit is cost effective for the merchant as a payment method (at least on the surface-see point 4 in disadvantages). A merchant typically gains the benefit of planned cash-flow at a very low cost (with direct debits costing between a fixed15-25 pence on average).
 
4. Direct debits provide more security for the merchant and the customer by being made electronically. This is both secure and proof of payment appears on the customer bank statement.
 
1. A customer needs to trust a given merchant to give bank account access to them or to want to sign a mandate.
 
2. A customer account has to have adequate funds to cover payments when they’re due. If this is not the case, apart from the loss of payment (and cash-flow) a reversal will occur (see point 4)
 
3. A bank account may be closed by the bank due to fraud or some other reason.  This will lead to reversal fees (see point 4 below.)
 
4. Reversals across UK direct debits run at about 4 in one hundred (4%) and cause considerable problems for the merchant. It may cost as much as £30 to set up a new direct debit with a customer. What this means in practice is that these 4 in 100 reversals have to be spread over all 100 (or £120 in total divided by 100 or £1.20 needs to be added to the 20 pence average cost). This means that the real cost of a direct debit is more like £1.40 on average.
 
5. If a Payer wants to change banks, a merchant will need to set up new direct debit mandates again which is time consuming. Also, merchants need to keep a record of any direct debit mandate from their customers for a 7 year period.
 

 There is an alternative to direct debit that is available at www.payswyft.com. This is called “dynamic debit” and is set up by the customer rather than the merchant. This payment method is most typically linked with a customer’s debit card (although a credit card can also be used). These recurrent payments can be made indefinitely on a variable basis like a direct debit, but has one major difference. A customer can set a maximum limit (say £50) and have the Payswyft system alert them (by SMS or email) so that they can approve the payment (or query it with the merchant before it is settled). As the cost of this debit-side payment is around 35 pence each time (and has almost no risk of cancellation, reversal or chargeback as transactions are run through the 3D secure system) they are a true win-win for both the merchant and the customer.

Saturday 24 August 2013

Can Merchants really turn off paper bills with digital billing?

Within the billing world, going paperless has been almost like a “Holy Grail” for many merchants, and especially those who are sending out thousands, hundreds of thousands or even millions of bills a month in some cases. And who can blame them? Merchants who send out more than just a few hundred invoices each month are typically spending a great deal of money on printing, putting invoices into envelopes, sending out reminders and/or statements, franking the envelope, having to engage in making sure bills are filed or stored properly and fielding calls from customers who don’t receive a the bill in the mail at all (so it has to be resent) to name but a few things.

By adopting a paperless invoice or digital bill only solution, a merchant can technically avoid all of the above and “switch off paper” immediately. However, despite the apparent significant  advantages to the merchant, this may not be the best way to go (and it should also not be the driver of the change to digital billing).

Most customers have been getting bills in the mail, or at least ones they can print if they are sent by email, for many years and many want to stick with a process that they well understand. Hence, any merchant that removes the option of receiving a paper bill risks losing a customer’s business altogether. Far better therefore to retain the option to receive a physical bill and either deliver it by cost-effective e-mail or allow a customer to retrieve it and print it for themselves from a central website.

With a cloud-based system such as PaySwyft, not only can any merchant post a digital bill but allow customers to print the bill whenever they like. Even better a merchant can email the bill if they so wish, including follow-up or chase bills. And once customers are using such a fully digital portal they can also use a whole range of convenient technology to manage their bill in more flexible ways. This includes:
Receiving a monthly e-mail notification when a new invoice is available to view.
  • Decreasing the possibility of mail fraud and identity theft.
  • Automatically calendarising or secheduling payments at a time or date to suit them
  • Set email and/or SMS alerts as they like
  • Store and retrieve all invoice and payment records whenever they like, forever
  • Make payment 24 hours a day, 365 days a year
  • Pay in a multitude of ways at the same portal and get a receipt there and then
  • See all of their invoices and payments when they want
  • Analyse invoice trends and patterns as they wish
This does not mean that they will necessarily “turn off” the paper bill, or stop printing it, but over time the resistance to doing so will clearly lessen. And in the meantime, not only is the customer getting a convenient service for free, that they can use at work or home on their computer (and save themselves time if they were previously paying by cash or cheque in particular), but a merchant is saving money on many fronts, including fielding less phone calls, accelerating cash-flow with earlier online payments and reconciling payments in a much more straightforward way than ever before. Given all of this, getting to a paperless world, if and when it happens, is only a minor bonus.