Pay By Text Solutions: The Bill Collectors Best Friend
Late payment collection is a problem almost every service business faces.
Some stats:
- Businesses write off an average of 4% to non-collectible debt
- The success rate of reaching a customer for payment related issues on the 1st attempt [phone call] is 5%
- 39% of invoices are paid late
The traditional methods of using a live operator to initiate collection calls has inherent issues:
- Difficulty in reaching customer
- When the customer is reached the call can quickly become confrontational and there is risk of losing that customer
Of course, a business has the right to collect on fees owed and should have a formal policy to do so. The question is: Are there more effective, economical payment collection options?
If you read the title you know that we think so.
Pay by Text or SMS payments (Short Messaging Service) offer are a means of paying for services or goods via a mobile phone text message. A customer receives a text advising them payment is either due now or past due and prompts them to initiate payment via a website interface or additional text messaging.
If the customer clicks on the pay now link they land a secure microsite with their relevant customer information eg Name, address, amount due etc.
Most people in the US and Canada have seen TV special or commercials asking for donations through text messages. A charitable organization like the Red Cross accepts donations via just text a message or number to make a $20 donation.
Businesses now realize paying by text offers benefits to both consumers and the business itself. With 98% open rates, 95% read rates it’s easy to see why Pay by text and SMS Payment Solutions are such attractive customer billing options.
Using Pay by Text or SMS, you can send a message of up to 160 characters to another mobile device.
Research from TransparencyMarketResearch.com showed that Pay by Text accounts for a majority of financial transactions conducted worldwide, and that pay by text payments conducted through SMS are expected to experience a yearly growth rate of over 28% totaling $385 Billion in revenues.
Well over 80% of Americans use text messaging, making it the most popular activity performed on a smartphone. Despite that popularity, most billing organizations ignore texting as a paperless payment channel.
Mortgage lenders, Insurance companies, utility, telecom, financial lenders, the rent-to-own industry, property management and many more can all realize significant operational savings, as well as collections revenue uptick by implementing a Pay by Text Payment Solution. Payment collection via text messaging is a great way to offer customers convenience as well as reducing payment collection costs.
How do Pay by Text Payment Solutions Work?
Text to Pay solutions allow your customers to opt-in to receive a text message containing information (e.g. current balance and due date). Customers opt-in to either receiving pay by text messages or solely bill payment/late payment text reminders.
- Customers opt into receiving texts around their account. This may mean making changes to existing agreements so that all new customers may be contacted via text. Legacy customers do need to give permission-there are ways to encourage this consent
- When current charges come due or are late, text messages can be sent to all clients opting-in to the SMS payment channel. The business would be able to customize rule sets and workflows. Eg “When bill is 2 days late initiate outbound text to pay campaign”
- Customers wanting to pay an invoice via text interact with their phone. In some cases, they could be directed to a secure payment page to enter relevant data [eg credit card or ACH]. In other cases, if they have a payment account associated with their text to pay account payment can be made using securely stored payment data
- The customer and business receive receipt notification. If using a management software reconciliation can be automated if your software has integrated the Pay by Text | SMS payment solution into the platform
Your customers will appreciate the convenience of 10-second payments and your business will benefit from fewer delinquencies and shortened payment days outstanding.
What are the benefits of a pay by text solution?
For the customers:
- Pay by Text Payments are quick and easy to use.
- After the initial setup, there is no need to have a payment method on hand — it can be saved (tokenized) in a secure environment.
- Text payment reminders are efficient and simply retrieved.
- No longer have to keep track of invoices sent via snail mail.
- It is secure, with no personal details or account details are released.
- Customers no longer need to be divulging sensitive information over the phone.
- The consumer doesn’t have to enter their credit card or bank details, or even have a bank account.
- Customers don’t need to remember any passwords or usernames like sites such as PayPal. Payments by text are very simple.
For the Business:
- The merchant can accept payments from any of the billions of mobile phones capable of texting worldwide.
- Improved customer satisfaction.
- Instantly access a powerful payment tool with your customer’s cell phone number (information most likely on file).
- Merchants can receive payments from customers without a bank account or credit card on file.
- Can be used to build upon customer loyalty through:
- SMS marketing messages
- Discounts
- Coupons
- Merchants no longer need to worry about:
- Verifying customers’ identities
- Chasing payments
- Cards being denied
- Reduce the number of late payments and collect receivables faster.
- Remove human error associated with manual processing.
- Avoid data input mistakes (e.g. card and checking account numbers)
- Motivate more customers to go paperless.
Payments by Text Case Study
An auto insurance company implemented an outbound SMS payment | Text to Paypayment collection program.
When the premium payment was 2 days day late a text was sent to the customer advising the payment was due as well as the importance of continued coverage.
A second outbound text to pay was sent when payment was another 2 days late.
The insurance company simply securely uploaded a csv file from their billing system containing relevant policy and customer information. Another option is to integrate via API for seamless data communication.
If the customer had already opted into the pay by text solution they could simply use the securely stored payment method. If a new user, they are walked through the payment set up.
As part of the Pay by Text payment solution, a settlement file with relevant details is made available to the insurance company, allowing them to reconcile payments in an automated fashion.
A significant decrease in live collection calls was realized as well as a drop in policy cancellations.
Both of the above resulted in reduced labor costs as well as the costs involved in policy cancellations. All from an easy to implement Pay by Text solution.
The improvements in operational efficiency result in higher profit margins. Better collection rates improved cash flow.
What to Look For in a Pay by Text Provider
Every provider should offer data security and PCI compliant text to pay payment solutions. Here are more to look for:
- No code, self-service: Set up your message content, reply logic, fail-over settings and gateway integration without the need for any code. This gives the business control over their flows, no need for any managed service charges or change fees. Workflow design is straightforward and infinitely customizable
- Pay by Text Virtual Terminal: Using 2-way texting allows the customer to ask questions in real-time. You can text a link to a secure payment collection page and the cs rep is able to confirm payment immediately.
- PCI Compliance: Payments by Text |SMS is not typically a PCI compliant route. Instead, send trackable links to custom microsites to securely collect credit card details via smartphone browsers delivering your customers a secure, rich, branded and PCI compliant experience.
- Stored Payment Method via tokens: For recurring payments, the ability to offer stored credit card details provides a more seamless experience and makes the payment process more convenient for the end-users.
- Fail-overs: Link in voice or email if SMS delivery fails or if payment fails. Text to Pay is an extremely effective way to reach your customers and delivery rates are high, but SMS delivery is not something that can be guaranteed. Therefore the ability to switch to another channel such as voice or email is beneficial if an SMS fails through carrier network issues/maintenance, or bad numbers.
- 2-way SMS: Set up automated SMS replies based on chosen keywords, allowing customers to respond for more information or speak to an agent.
- Network quality: Chose a Text to Pay partner with quality carrier connections that specializes in highly business-critical communications, not marketing. It is also wise to always have a dedicated number unique to your campaigns. Telco carriers have spam filtering and call volume restrictions designed to protect their end-users. The right partner who truly understands this space can advise you on the correct numbers to use and assist you with any compliance questions you may have.
- Global Number Purchase: Purchase numbers in the regions where your customers are located, improving international deliverability and response rates.
So if your collections department is overworked and tired to death of calling late-paying customers, consider implementing a Pay by Text solution. You can cut costs, increase revenues and improve customer retention rates.
For more Information visit https://www.agilepayments.com/sms-payment-provider-solutions/