Middle market e-payment solutions

In today’s highly competitive payments processing market, financial services companies (financial institutions and remittance processors) are caught between the forces of shrinking margins, lower transaction volumes, and rising consumer expectations. High implementation costs for e-payment integrations hurt ROI calculations and limit consumer flexibility. At ChoicePay, we have completely re-engineered our processing engine to solve both problems.

When we started in 1996, taking payments over the phone or offering a web-based application for remote call centers was considered pioneering. Now, it is considered ‘table stakes’ to compete for the e-payments business of large billers including utilities, communications and insurance companies.

Consumer expectations have also changed. Let’s look at three individuals with different reasons for using biller direct bill payment services. First there is Michelle. It is pay day and she has several bills due. She uses her cell phone, waits to hear her balance and pays those bills over an IVRU for the convenience and immediate posting. Next is Blanca. She prefers to make payments in cash, though she is banked, at the kiosk located in her neighborhood grocery store. She likes the cost and convenience of paying multiple bills at one location, as well as getting a receipt in case verification is needed. Last there is Rick. He is sometimes less than organized, likes to pay by credit card for the points so he surfs to his biller’s web site to make a payment at the last minute.

For the past twelve years, ChoicePay has served biller clients by providing Michelle, Blanca and Rick with the ability to pay bills the way they want to: quickly, easily and securely. However, these customers have higher expectations in 2007. They want all their billers to provide the same access to the payment methods they find convenient. For the three individuals above, channels that do not offer same day posting or allow for different forms of payment are not the right solution. Thus paper checks are not the answer and neither are traditional bank web sites. Financial services companies and billers have been challenged to provide access to multiple payment channels – until now.

Beyond providing Michelle, Blanca and Rick with more convenient payment options, these groups are faced with business challenges that cannot be ignored. While the exponential growth of e-payments has created opportunities for companies like ChoicePay, paper processors have been squeezed in an industry facing numerous challenges:

• Dramatic pricing pressure.
• Saturated market in the large biller space.
• Shrinking paper volumes as e-payments grow.
• Unsuccessful e-payment initiatives due to complexity of implementations.

To address these challenges, ChoicePay is pioneering once again, introducing e-payment technology that simultaneously reduces new client implementation times and supports provisioning hundreds or even thousands of billers through a single processor. This technology provides financial services companies the opportunity to increase transactions by leveraging current relationships, as well as bring in new business from mid market billers unprepared to provide electronic payment services in-house. This unique e-payments solution facilitates: the replacement of lost revenue without a large upfront investment, increased stickiness and differentiation from a lockbox product offering that is highly commoditized, and a full end-to-end solution that only financial services companies are well positioned to capitalize on in the market.

Fast implementation

In the past, e-payments implementations have been complex enough to provide a barrier to entry or act as a loss leader for financial services companies. The initial setup process involves a multitude of potential channels, payment methods that run on the rails of different systems, and file exchanges with varying file formats, encryption and firewalls. For most EBPP solution providers, each of these selections requires IT resources to customize. Custom code means resource allocation, scheduling in the IT work queue, project management, overhead, and so on. This customization increases cost and time and the bandwidth of organizational processes required to bring a new biller live. All with implementation fees in the five to six figure range and implementation times measured in months.

Due to the upfront costs, billers have to be able to produce a certain number of transactions to justify the investment. Payment processors who make their revenue pennies at a time elect to turn away business because of low ROI based on this high investment hurdle. As a result, many mid-market companies are under-served, if not ignored entirely, because the volume for the required ROI just isn’t there.

At ChoicePay, we spent the last 18 months addressing this problem. Code historically custom-created per biller has been replaced with over 300 different variables and parameters established in the database for each biller. In developing a data-driven engine to maintain these variables, we eliminated virtually all of the IT work in the setup process. As a result, we were able to implement a national check recovery and collection company, CheckPlus Services, as a new biller taking live payments in one business day.

“We had to be implemented in less than three weeks and I couldn’t find anyone that could do what we needed in that timeframe,” said Chris O’Hara, CheckPlus Services’ President. “After a few days of information gathering, we were taking transactions the day after, which was a pleasant surprise to our team and significantly exceeded our expectations. With minimal upfront IT involvement from our company, we were able to remain focused on other projects in our IT queue.”

Once a financial services company is integrated with ChoicePay, the physical process of provisioning new billers becomes a data entry task – the culmination of the sales process rather than the start of an IT project.

Integrated channel options

With the growth of electronic payments, a large and growing variety of payment channel options are available to billers. While offering a variety of payment alternatives is attractive because of the quick receipt of payments, the growth of alternative channels has led to a proliferation of providers and associated integrations. It is not unusual for a biller to have a paper remittance processor, an online payments provider, an outsourced call center, several kiosk networks and a separate walk-in provider.

Each channel is potentially costly to implement and adds additional strain to a biller’s IT staff. Each implementation also adds additional daily reconciliation and treasury responsibilities. These inefficiencies can be avoided by selecting a processor that can provide all applicable channels, as well as the capability to consolidate payments in the future if additional vendors are desired or necessary.

ChoicePay believes billers are looking for a total service provider with the ability to integrate paper and electronic remittance processing, optimize interchange and ACH processing and deliver a single stream of payment data. Such a solution needs to offer:

• One time payments website.
• Enrolled payment support.
• IVRU (interactive voice response).
• Call center.
• Electronic bill presentment.
• Unattended kiosk networks.
• Attended walk-in payments.
• Mobile/SMS payments.

Once a biller accepts payments from any ChoicePay channel, new channels can be added at any time without additional integration effort.

Flexibility is key to mid-market success

Technology flexibility is the key ChoicePay holds to unlock mid-market e-payment opportunities for financial services companies, enabling:

• Faster, cheaper implementations.
• Broader market segment ROI.
• Selection from a menu of payment channel options that allows relationships to grow and broaden over time.

By partnering with a flexible provider like ChoicePay, financial services companies can provide a complete range of payment channel solutions for their client portfolio without exorbitant start up costs, significant IT allocations or lengthy implementation timelines. They can assist their clients in taking payments from Michelle, Blanca and Rick by phone, on the web or in person. Consumers, billers, financial service companies all have their unique problems solved.