7 Ways to Improve the Customer Payment Experience

The rapid increase in connected digital devices is changing the way people interact with the world and thereby making the customer payment experience ripe for innovation and disruption.

The idea of paying by check, or wiring money, has become an outdated concept. Instead, you will find customers asking for more than ACH payments, but also debit, credit and other mobile payment options, according to Preston Cecil, chief operating officer of Payix, a white label service that provides collections tools, payment processing resources, and business intelligence solutions to U.S. lenders and auto dealers.

Meanwhile, lenders like Prestige Financial Services are looking at how to use text and calls to facilitate payment, while startup Honcker looks at ways to personalize the experience for customers.

Here are 7 ways to improve the customer payment experience.

1. Go Digital

The first thing to understand is that customers want an electronic means to pay. Consumers are looking for a faster and more convenient way to pay bills other than writing a check.

“[Customers] love being able to go through their smartphone,” Cecil said. “The ability to connect to the world via their phone [is] very exciting for them and we see a high utilization rate.”

For Payix that also means that on their backend, they make sure lenders receive the lowest interchange rates available, and offer merchants both fixed-rate pricing and cost-plus pricing options. The reason for this is because many mid-level lenders do not have the means to invest in an IT team to build their own digital payment portal, but obviously still want to originate and collect payment, Cecil said.

2. Offer Texting

“Texting has become the primary reason we communicate with customers and it’s the preferred way,” Richard Hyde, chief operating officer, told the Center for Auto Finance Excellence. “It’s quick and easy and saves time.”

This is because it’s an easy, non-confrontational way to approach customers, and so far has been “very effective” for Prestige, he said with 60% to 70% of its outreach conducted through various digital channels. Although Prestige still incorporates some phone calls, this is done in conjunction with texting, Hyde said.

3. Give Them Choices

The easiest way to get someone to pay is to provide them an easy path, and this involves, in part, giving them choices of how to pay.

“Whether it’s online experiences, paying via a website or mobile application, you’re giving them additional means to pay,” Cecil said. “You want them to be able to whip out their phone and execute it.”

This means providing the option for ACH, debit and credit cards, but also newer P2P technologies like Paypal, Venmo, and Zelle. Payix conducted consumer research to understand how many consumers were willing to pay through their smartphones and the team was “astonished” Cecil said.

“It’s the present, not the future,” he said.

4. Be Transparent

Transparency is also key to the experience, and part of that involves no hidden fees or extra costs for customers to pay.

“What we offer that’s different, is for a consumer to actually see a lease payment specific to them for a specific car,” Nathan Hecht, founder and chief executive of Honcker told CAFE. “What we do is we give you a price that has no strings attached.”

Honcker is a New York-based startup that is both an aggregator and search engine for leasing services, and a platform for customers to consolidate their data and application process in one place.

5. Personalize It

Customers on the Payix app can choose to personalize their payment portal by uploading photos of their vehicle and customize push notifications to alert them about bill payment. Research showed the company that when apps can be personalized, customers use it more. “So we encourage people to put up photos,” Cecil said.

For Honcker, that means offering up three personalized lease payment options based on customer preference, Hecht said. The first option provides the lowest monthly lease payment which includes taxes, dealer fees, and bank fees. The second option builds on this by allowing all remaining fees and taxes to be rolled into the lease payment. The third allows people to pay just the first month, with nothing else rolled into the price.

6. Make it Seamless

Prestige Financial Services has been working to develop a new mobile app to make it easier and more “Amazon-like” for consumers to make loan payments, which is to say that they can do a one-click payment option.

“We’ll also include other features, that are already deployed on the website and expand the capacity of the mobile app to be more like the website,” Hyde said.

In general, borrowers want to make payment quick, easy, and convenient, Cecil said — “As few clicks as possible.” The company also does flow analysis on the backend of the mobile app to see when a customer exits a page without making a payment, or what’s not being used. “We are constantly looking at that and also listening to our lenders to see what their pain-points are,” he said.

7. Understand Your Customer

“I think different folks are going to respond in different ways, so we provide all the options to the lenders,” Hyde said. “Delinquent customers prefer to use nonverbal communications.”

Delinquent customers are not the only ones who prefer to be nonverbal, young consumers, and non-prime or subprime customers more generally also prefer textual interactions.

“Our usage of mobile is 30% to 35% … and the subprime individual mirrors the millennial behavioral,” he said. “They don’t want to talk to you, they’d rather email.”

Honcker too is better understanding the payment preferences of its customers. The app released the three-payment options within the first quarter is already seeing 80% of customers opting for the middle option, which includes taxes, monthly payment, and all fees rolled into one payment.

“I think for the moment we are going to remain at these three options,” Hecht said. “We may highlight that one is the easiest or best choice.”