Finding a competitive edge in the market is a constant battle. You can learn a lot from your competition, but you can learn even more from other industries.
The payments industry is a prime example, leading the charge in terms of payment innovation. The key findings here is that technology is the key driver of innovation. Most high performing innovators have a greater focus on collaborating externally with different industries. In this case, a technology called ‘tokenisation’ became, and is becoming more and more of a standard in data security because of the threat of cyber attacks and cybercrime. Visa recently announced they have implemented full tokenisation solutions with their contactless payments. The Visa Token Service helps to build and maintain digital payment experiences while protecting consumers’ sensitive information from fraud.
Collaboration of ideas
The Australian Innovation Systems Report (2017)1 states that “Collaborative networks are essential to an innovation system. they provide a practical means for collaboration on innovation which in turn contributes to business performance.”
This kind of collaboration of ideas, especially in our digitally advanced and hyper-connected world, open the opportunities for a joint effort and the trialling of new innovations. The credit management industry is no different. In the last 5 years the industry has seen a sharp upturn in debtors favouring direct debit and BPAY payment methods. The Australian Institute of Credit Management (AICM) has also found that in 2018, payment times have been a key issue plaguing the industry.
Here, the payments industry can lend a helping hand. With powerful tools enabling an integrated payment solution, it lets debt collection businesses improve operating margins. It enables businesses to save time, improve cash flow, has multiple payment methods for customers and enables on-time payments. This flexibility alone means credit management businesses can work on having better client services and increased margins, which gives businesses a competitive edge.
Debt collection businesses know that if debtors are left to initiate payment to themselves, collection rates are extremely poor and unreliable, and this is why debt collectors are accepting those debts to collect in the first place. Debt collectors therefore need to initiate action rather than wait for the debtor to, and when you give them the flexibility and convenience by providing multiple ways in which to pay their debt, that increases the chances of recovering the debt exponentially.
As the demographic of Australia changes, the influences from skyrocketing house prices recently, there has been a 20% increase in Australians defaulting on their loans over the last couple of years, according to Experian. The research has suggested this worrying trend is being driven by the credit hungry attitudes of young Australians, with Millennials leading the pack.
Millennials were found to be around twice as likely as the average Gen X or Baby Boomer to believe they could not maintain their lifestyle without borrowing. They admitted they would use credit even if they could not comfortably make the repayments.
What does this mean for the debt collectors?
According to Illion2, one-third (31.2%) of businesses fail to pay their bills on time in the March 2018 1st Quarter. Alongside this statistic, 22% of Millennials were unable to make a mortgage repayment, which is twice as many as the overall market average (11%). By entering into a payment arrangement with debtors, it minimises the number of missed payments by utilising the direct debit feature. It is an easy to use system, making it easier to transact with for all parties involved. The process is straightforward and seamless, and can include multiple touch points to the debtor. The forms can be generated and prepopulated, sent to the debtor via SMS or email or through a mail merge and dispatch for a more traditional approach.
Ezidebit has found that once late payments become a standard in a debtors life, it is difficult to catch up. Automated, flexible payments offer consistency, as they can be tailored to an individuals circumstances. Automatic payments taken out at regular intervals means it can create a ‘set and forget’ consumer solution, improving payment times and reducing the time spent chasing up on overdue payments. Debt collectors can also configure automatic retry rules if the payments fail, making sure debt collectors get the best chance of receiving the payment.
Saving time and money
The collaboration of technology enables businesses to not only reap the benefits of having the majority of payments received on time. The most obvious is not having to spend so much time chasing delinquent payments, but there are also savings to be made in day to day account management.
The administration side of ‘setting and forgetting’ with a payment schedule, reduces the amount of time needed to spend in the account management side. To prevent the debtor from forgetting when a payment is due, automatic reminders can be set up. The integrated solution also offers the ability to change the payment schedule at any time with minimal effort.
Safe and Secure
Security is always an important consideration where payments are involved, and under legislation, an agency must handle all card data in a compliant way. Agencies may not realise they are potentially liable for any fraud or theft that occurs on a debtors card. For example Ezidebit holds a Level 1 PCI-DSS compliance (the highest level available) agencies can be confident that debtors’ data is secure and they don’t have to allocate in-house resources to compliance tasks.
With collaboration and innovation being the key drivers to a competitive advantage, the credit management industry needs to adapt, learn and implement to solve the issue at hand. Making payments easy should a simple, hassle free solution for everyone involved. Take the leap of faith before a competitor does.
- Office of the Chief Economist (2017) Australian Innovation System Report 2017, viewed 19 November 2018, https://publications.industry.gov.au/publications/australianinnovationsystemreport2017/documents/australian-innovation-system-report-2017.pdf
- Illion, 1st Quarter Analysis 2018, Australian Late Payments, viewed 26 November 2018, https://www.illion.com.au/wp-content/uploads/2018/08/Late_Payments_Q12018_Final.pdf
- The Problem With Millennials And Debt, by Dominic Beattie, viewed 26 November 2018,
Partnership Development Manager
Ezidebit, A Division of Global Payments
P: 1300 763 256
M: 0419 734 860