Historically, consumers have only been able to make debit card payments on their consumer finance loans as a last resort. In many cases, the option of making debit card payments was simply unavailable, and debt payments could only be completed through checks and ACH transfers. Consumer finance servicers are usually hesitant to include debit cards as a legitimate payment option because of the processing fees associated with debit card transactions.
While consumer finance companies have made great strides in shifting to paperless billing, the primary driving factor was the cost savings achieved from increased operational efficiencies and a more streamlined process to speed up the time to revenue equation. As a result of driving consumers online to pay and schedule payments, electronic bill payment and presentment (EBPP) is becoming a consumer touchpoint to cross-sell, up-sell and for general marketing and communications.
Credit card transactions can fit into one of three different categories: Level 1, Level 2 or Level 3 processing and the Level classification can have a significant impact on Interchange fees imposed by the card brands. Typical retail and ecommerce transactions qualify at Level 1 rates. However, certain types of merchants that accept specific types of payment cards (commercial, business, government and purchase cards) can see reduced interchange fees by submitting additional Level 2 and Level 3 data.
Joining with an electronic bill payment and presentment (EBPP) or digital payment partner is essential to doing business in today’s competitive environment. Channel sellers need the most innovative digital payment solutions on the market if they intend to compete. Most banks, systems of record (SORs), and integrated software vendors (ISVs) have already selected an EBPP partner. The question is whether that original choice is still the most suitable for meeting their client’s needs now and in the future.
Most banks, technology companies, and other types of channel partners already have an electronic bill presentment and payment (EBPP) partnership. But many channel partners will realize upon examination that they could be served better by switching to a new partner. If you’re considering the switch to a provider that gives you access to the most innovative payment services on the market and the ability to white-label those solutions for reselling, you may be curious about what your new partnership should entail. Here is what to look for in an EBPP partnership.
According to a 2016 article on PYMNTS.com, an online magazine that covers the payments industry, Integrated Software Vendors will need a scalable digital payments partner in order to succeed today’s disrupted markets. The article states that Integrated Software Vendors have historically “put together their solutions to help those businesses from an efficiency standpoint while leaving the payment piece to acquirers. Now, with all of the disruptors and security mandates in the space, they’re looking for partners to help them navigate those disruptions.”
You already know that your bank’s services need to provide your commercial clients with lasting value. But your bank could benefit by offering them more comprehensive EBPP solutions. Comprehensive billing and payment solutions should do more than process payments. They should contribute cost savings directly to your commercial customers, allow them to accept new payment types, and provide them with services that they can’t find at other banks.
Interchange fees are established by card networks to cover the costs and risks of processing payments made using a debit or credit card. The rates for interchange fees vary widely and are influenced by several factors. For Merchants, many of these factors cannot be directly controlled or influenced.
Less than a decade ago, Merchants were prohibited by card networks from offering card steering incentives to their customers. These practices would have allowed Merchants to save on costs by encouraging customers to pay with cards that were less expensive to process.
As a Merchant, the interchange fees you pay for accepting debit and credit cards depend upon a number of variables, including the rules of credit card networks, the method of capture for the payment, your Merchant category code, and more. But the most significant variable concerning your interchange fees is the type of payment your customer chooses.