Payment & Collection Newsletter

People Paying $1 Billion in Bill Pay Fees
People will pay more than $1 billion in fees in 2009 to have their bill payments delivered on the same day or the next day, according to Javelin Strategy & Research. Tens of millions of customers will gladly pay these fees in order to avoid late fees. In fact, electronic bill pay services that allow customers to pay their bill right before it is due will save customers $4.5 billion in late fees in 2009. The average fee for same day or next day delivery of a payment increased to $8.18 in 2009. In addition to the average payment fee, companies also consider payment processing costs and the regulatory impact when deciding how high of a fee to charge customers to pay their bills electronically.
Source: Digital Transactions News, October 7, 2009

Treasury Technology Can Pay Big Role in Recovery
"The crisis put treasury front and center with the corporates, and the crisis put global transaction services front and center within the banks. That's certainly the case at Citi," Gary Greenwald, Chief Innovation Officer at Citi Global Transaction Services says. "The daily lifeblood of the world's economy comes back to focus on payments, cash management and treasury. When the crisis hit, the corporate boards wanted to know their liquidity positions—how they could use working capital as funding sources. It really made treasury central. ... It became clear that transaction banking is what Citi does for its clients." Citi continues to introduce new innovations to assist clients in dealing with economic uncertainty. "Technology is not [just] support to a product but is, in many ways, the product," Greenwald says. "Tech is not just an item to be winnowed down to the cheapest level. Your tech spending should be optimized, not reduced. Tech for us is not an add-on, and it shows in the intellectual property we put into hiring people in the tech organization and on the business side where we see how we can commercialize opportunities to harness technology in different ways."
Source: Bank Systems & Technology, September 17, 2009

Collections IT Spending is Racing Ahead
Mortgage collections and loss mitigation IT investments are forecasted to grow 13% per year from the base of $350 million in 2008, according to research firm TowerGroup. With mortgage delinquencies and foreclosures continuing to rise to record breaking levels, now exceeding 13% of mortgages, mortgage companies are struggling to put into place a long-term IT strategy because of the urgent short-term needs. The most innovative mortgage companies in the U.S. are turning to the Internet to collect delinquent payments and negotiate settlements with debtors. Large increases in collections volume can be directed to a collections website much faster than new call center staff can be hired and trained. Intelligent collections websites can help companies combat the crisis in the short term while playing into long-term strategies due to their quick implementation times combined with the ability to fully customize the website over time.
Source: TowerGroup, October 5, 2009

Online Capabilities Provide Customers Peace of Mind
"Peace of mind" is a very important value for companies to communicate in marketing their online capabilities to customers, according to 75 half hour interviews with consumers. Peace of mind addresses not only the values of people who use online capabilities (e.g. online bill presentment and payment) today, but also non-users who have security fears. Tracing customers' thought process shows that the feature of real-time access provides the benefit of keeping customers in touch with their money, leading to the psychological consequence of being in control and worry-free which connects with the underlying personal value of peace of mind. Companies that dig deep into the minds of their customers to understand what motivates behavior at an emotional level will have a greater chance of delivering a persuasive message.
Source: Rockbridge Associates, Fall 2009

Mercedes-Benz Launched iPhone App for Car Payments
Mercedes-Benz launched an iPhone application that allows customers to make a car payment, calculate the amount needed to pay off the loan, locate dealers and find customer service numbers. Mercedes-Benz website describes it as the "coolest way to make a payment". Some people might hear this news and think "we better do something with mobile", but Forrester Research recommends that companies use the POST (People Objective Strategy Technology) method to determine which technologies they deploy. The POST method starts with the P, understanding the People that the company serves and how they use their mobile devices. People fall into six major categories in terms of mobile phone usage. 19% (Inactives) do not own a mobile phone, 35% (Talkers) only use the voice features of their mobile phone and 13% (Communicators) use no data service other than text messaging. The next three categories use more features of their mobile phones; categories do overlap. 19% (Connectors) send or receive email on their mobile phones but use the mobile Internet less than weekly. 20% (Entertainers) stream music or video and purchase music over their mobile phones. 12% (SuperConnecteds) use the mobile Internet and log onto social networking sites from their mobile phones at least once a week. After they understand the people they are serving, companies can then set their Objectives and determine what Strategy will accomplish their objectives. The final step is then to choose the Technology that will enable the company to meet their strategy. The technology decision comes last in the process, not first.
Source: Forrester Research, April 2009