What could be better than getting your customers to pay faster? Technology has provided many solutions for business owners looking for faster payment, from invoicing applications to online statements and bill paying.
The most efficient way to get payments quickly is with Electronic Bill Payment and Presentment (EBPP). Business owners need to know the differences between various types of EBPP solutions. As you can see from the graph above, consumers are increasingly using mobile devices to pay bills.
What Is EBPP?
Also known as e-billing and electronic billing, Electronic Bill Payment and Presentment is the process of creating and sending invoices that can immediately be paid over the internet or via mobile app.
Business owners need to know that there are multiple ways to enable electronic billing:
- Using a consolidated payments system
- Hosted biller-direct EBPP
- Self-hosted
In their post “What is EBPP”, E-Complish lays out the pros and cons of each type and the particular challenges, so choose carefully. The best choice for most business owners will be hosted biller-direct because it provides all of the advantages and eliminates most of the drawbacks.
Advantages of Biller Direct
For many businesses, the primary time their customers interact with them is when they are paying. This is especially true for recurring payments.
By making this as quick and painless as possible, businesses have the opportunity to improve customer satisfaction and reduce calls to support.
It can also improve cash flow by sending late payment reminders automatically. Payment reminders can be sent via email and also SMS text.
Saving your customers late fees by sending them a reminder via SMS benefits both customers and the business. Give them the ability to click one button to pay and they are highly likely to do so immediately!
One of the greatest advantages of Biller Direct EBPP is the ability to send targeted offers along with invoicing. Mobile loyalty offers can generate additional income.
Increased customer satisfaction results because bill paying becomes painless. Customers find it less stressful and time-consuming to immediately pay upon receipt on their mobile device or when logged in online.
Why Hosted Rather Than Self-hosted EBPP?
While you could self-host your EBPP process, responsibility for PCI compliance would then fall on your company and staff. The PCI Security Standards Council recommends (PDF) partnering with a provider of a validated P2P (peer-2-peer) solution.
“A major benefit of using a validated P2PE solution for mobile payment security is scope reduction. This means that a validated and properly implemented solution for processing your mobile payments may lessen the requirements for your annual merchant compliance with the PCI DSS. Scope reduction can dramatically reduce the cost and effort of compliance.”
If your company does not have the expertise to comply with the PCI security standards and manage your own payments system, choosing a hosted biller-direct EBPP provider can reduce risk and complexity.
Why Not Use a Consolidated Payments System?
There are multiple major drawbacks for small businesses using a consolidated system:
1. Reduced marketing capability reduces branding and the ability to send targeted offers and interact with your customers.
2. Customers may delay paying your invoice until they pay others at the same time because they have other invoices waiting.
3. There is greater potential for customer satisfaction issues caused by third parties.
While your customers may consider consolidated payments systems convenient if they pay other bills this way, the drawbacks outweigh that advantage.
The one reason you might want to use consolidated billing is if you wish to outsource billing functions completely or your business does not accept electronic payments and wishes to be paid by check.
How to Speed Up Your Cash Flow With EBPP
According to the statistics quoted in the E-Complish post mentioned above, EBPP users see:
- An average 15 percent reduction in missed payments
- Payment of bills on the same day they’re received from nearly half of all customers
This can increase customer satisfaction with your company, leading to greater brand loyalty. Ease in payment will reduce expenses for support personnel.
Beyond that, by sending targeted offers you can generate new sales from your existing customer database.
Companies with recurring payments can increase member retention. Long-term, encouraging your customers to use their mobile devices to pay recurring bills could increase their use for point of sale purchases.
By providing an easy way for your customers to pay their bills and interact with you, sales growth will be an added benefit.
Images: (Top) via Statista (Infographic) via Invesp
This article, "How to Speed Up Your Cash Flow With EBPP" was first published on Small Business Trends
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