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The Check’s Still in the Mail: Why Collections Isn’t Going Paperless

With the advantages of digital payments well documented in the collections industry, it can be easy to overlook more traditional forms of payment. Dave Yohe, Head of Marketing at BillingTree, explains how an effective omnichannel payment strategy should encompass all payment options – including paper-based checks and money orders.

Dave Yohe, BillingTree

With the emergence of self-service payment solutions such as Interactive Voice Response (IVR) and Virtual Negotiation, it can be easy to discount the older stalwarts of the payment world, like paper payments. In a recent BillingTree webinar, which looked at some of the payment processing trends revealed in its third annual Collection Agency Operations and Technology Survey, it was clear that paper payments such as paper checks, money orders, demand drafts and more, are still a key issue for the collections market.

The prevalence of paper The BillingTree research showed that bank-deposited paper checks were the second most common form of accepted payment - cited by 80% of respondents. Top spot was credit/debit card via agent at 84%, and in third place was a tie between credit/debit card online and cash on 72%.

Paper to e-check imbalance This trend was supported by webinar attendees, with 72% reporting they currently receive large amounts of paper payments –52% are receiving large volumes and 20% are receiving paper checks but starting to see a decrease. One eye-opening statistic in this year's survey is the popularity of bank-deposited paper checks vs those converted to e-check: compared to 83% of respondents bank depositing paper checks, only 35% convert paper to e-checks.

So clearly paper is still a common form of payment in the collections industry. For organizations that primarily service healthcare, the amount of paper checks received is high. On the webinar, Jennifer Lawson, client services manager at United Consumers Inc. (UCI), offered an explanation from the eyes of an industry professional:

“We deal with a lot of consumers who are older or elderly and dealing with Medicare deductibles or co-insurance, and are reluctant to make an e-payment. It's out of their comfort zone. And sometimes the payment is by a third party payment - maybe being made by a Mom or Dad helping out, and they would pay with a paper check."

For UCI,  the number of checks returned Non Sufficient Funds is low, but manual processing is still time consuming and expensive. UCI did, however, expect the newer generation coming through to be more comfortable with debit and credit card payments.

The generational balance of omnichannel In fact, recent FICO research has identified a roughly equal split in generations making up the credit population. It follows that these different generations will have different payment preferences.

Where the elderly population still produce the odd travellers check, the millennial generation are looking for automated payments at the click of a button. Agencies, therefore, are expecting their technology partners to provide a suite of payment offerings that cater to a variety of payment channels.

In collections, offering a path of least resistance for consumers becomes key to driving revenue. CEB recently reported 88% of consumers are likely to spend more because of low-effort interaction.  Similarly the less effort required by a consumer to pay a bill, the more likely they are to attempt to pay it.

You can download a full replay of the BillingTree webinar entitled “Checks in the mail and other payment processing surprises from the 2015 ARM survey”.

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