How are VPs of Collections Slashing Costs?

by Phil Spradlin 0

The top 5 lenders accept debit card payments, and it’s no wonder. New data shows debit card payment processing saves them 12.5 percent – 25 percent compared to Automated Clearing House (ACH) or eChecks.

What is the Cost of Debit Card Payment Processing?

A comprehensive view shows debit card payment processing costs considerably less than ACH payments made over the phone. Federal Reserve debit card payment processing data tells part of the story. Look at the total cost of payments to include: processing, call center and returns costs.

Collection Method

How are VPs of Collections Slashing Costs

How Can You Lower Collections Costs?

Fact: accepting debit cards lowers collections costs. The cost of debit card and ACH payments comes in three categories.

  • Call center representative – debit cards cost less due to 80 percent shorter call times by eliminating the required ACH disclosures and recordings. Several organizations experienced 80 percent shorter call times for debit card payments, but one bank could not optimize their call center. This bank now focuses on promoting debit card payments through interactive voice response (IVR).
  • Payment processing – debit cards cost more
  • Returns – debit cards cost less because they immediately check if there’s enough money in the account to make the payment. ACH payments cannot check funds availability in real-time. As a result, ACH payments cause returns up to 1,000 times more often than debit card payments.

When added together, debit card payments cost less than ACH for payments made over the phone. It would be more costly for customers already set up on recurring ACH programs if they migrated to debit card, so leave those payments alone. To lower collections cost, add debit card payments in the call center (CSR) and IVR payment system.

The cost of accepting payments also includes the opportunity cost of missing payments.

How Can You Collect More Debt?

Never turn down a payment. Imagine a customer on the phone with a collector. The customer wants to pay, has money to pay, but either only has a prepaid card, doesn’t have a checkbook or can’t find the checkbook. To collect the most money, lenders add debit card payment options to their phone, mobile and web systems.

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