31 January, 2020
Managing electronic payments from consumers wasn’t supposed to be this way.
Billers dreamed of consumer payments digitally flowing through their accounts payable departments, with complete transparency and tracking and without the need for human operator intervention.
The reality is less than ideal.
For most billers, managing electronic payments from consumers costs too much, takes too long, creates compliance risks, provides inadequate visibility and results in a poor customer experience.
The root of the problem is the traditional batch-mode payments solutions used by many billers. These solutions make settling the electronic payments made by consumers far from simple. Most payment services providers will transfer bulk sums of money into a biller’s bank account. The bulk sum represents payments made on all outstanding invoices, as well as the acquirer’s fees.
Separating the acquirer’s fees, reconciling payments and invoices and updating the general ledger can become laborious and time-consuming. Poor visibility into payments also opens the door to compliance issues. And some traditional batch-mode solutions don’t support all electronic payment methods.
The issues of inefficient electronic payment processing have come to a head as more consumers migrate from paper checks. Payments made through the Automated Clearing House (ACH) exceed 6.8 billion, and Americans still write slightly more than 2.5 billion checks, provide their debit card information to pay nearly 2.2 billion bills, and use their credit card information to pay another 2.2 billion bills. That’s according to Aite Group’s report, How Americans Pay Their Bills: Sizing Bill Pay Channels and Methods.
Managing electronic payments from consumers shouldn’t be hard work or take lots of time.
A Better Approach to Consumer Payments
An omni-channel payments platform that provides granular detail on individual transactions can transform the way that billers manage the electronic payments that they receive from consumers.
Consider the case of a medical cost sharing organization with 120,000 member customers.
Each day, the medical cost sharing organization receives a lump sum of money from a payment services provider that collects money online from the organization’s member customers. The medical cost sharing organization then settles the batch payment using a reporting engine that parses the data to determine the payment amount made by each customer, and any fees to the acquirer.
Managing and settling individual payments made by consumers takes the medical cost sharing organization lots of time, even with the reporting engine from its payment services provider. These long reconciliation cycles make it hard for the organization to now where it stands with its cash.
An omni-channel platform that provides granular detail on individual transactions offers a better, more flexible way to manage electronic transactions made by the organization’s member customers.
An omni-channel payment platform enables consumers to pay bills electronically via their preferred method, whether it’s card, Automated Clearing House (ACH) or Real-Time Payment (RTP). All consumer payments are aggregated onto a single platform for processing and settlement.
The omni-channel platform then provides granular visibility into individual payments. The platform provides complete transparency and tracking of consumer payments from receipt through settlement, without the need for pricey customized reporting engines.
Having complete transparency into payments provides greater control over the cash application process. What’s more, any charges for acquirers are automatically identified, segregated and settled, streamlining reconciliation. A bank account and sub-ledger for each customer is set up for each consumer, streamlining reconciliation.
A robust open Application Programming Interface (API) enables the platform’s functionality.
The medical cost sharing organization expects to spend a lot less time reconciling the electronic payments its customers make electronically by migrating away from its batch-mode solution.
The Benefits of Going Granular
Billers across industries can achieve significant benefits by managing and settling payments made by consumers with an omni-channel platform that provides granular detail on individual transactions:
- Enhanced cash flow: Real-time posting of electronic payments made by consumers can significantly accelerate funds availability while reducing the amount of unapplied funds.
- Improved productivity: Automating the receipt, processing, settlement and reconciliation of consumer payments and acquirer fees can save accounts receivable staff a tremendous amount of time. Omni-channel payments platforms also can determine chargebacks.
- Accelerated cycle times: Time is money. Omni-channel platforms eliminate friction in the payment lifecycle with robust workflow capabilities such as real-time instant messaging to the customer, automatic routing of funds, splitting of funds and routing of attachments.
- Streamlined compliance and security: Segregating acquirer fees eases regulatory compliance. Driving all payments through a single PCI-compliant platform also improves security.
- Enhanced customer service: Offering customers the flexibility to make electronic payments via their preferred method – including RTP – provides a better customer experience. RTP has the potential to significantly improve the overall customer experience in bill pay while improving efficiencies and liquidity for billers, Aite Group wrote in its report, U.S. Bill Payment Transformation: The Momentum Accelerates.
- Guaranteed funds: Once an RTP transaction has been approved by a consumer, those funds are guaranteed, and cannot be drawn back, as in the case of traditional ACH transactions.
These benefits are why the medical cost sharing organization and other billers are ditching batch-mode payment solutions for omni-channel offerings that provide detail on individual transactions.
Realize the Full Potential of Electronic Payments
Billers can’t afford the costs, risks or customer service impact of managing electronic payments from consumers with a traditional batch-mode solution. Contact +1 (423)-553-5200 to learn how our omni-channel payments platform can help your business achieve the full benefits of electronic transactions.