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.

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.