Deluxe corp small business owner views on payment options

Customer Research:
Small Business Owner
Views on Payment Options.
PRESENTED BY
Chris Clausen
Director - North American Payments & Transactional Solutions
May 2014
© 2014 Deluxe Enterprise Operations, Inc. All rights reserved. Proprietary and Confidential.

Table of Contents
 Speaker Introduction
 Deluxe Corporation Overview
 ePayments
 Deluxe Payments Research
 Federal Reserve Study
 Different Results
 10 Qualitative Key Learnings
 Summary of Findings
 Deluxe ePayment solution

Speaker Introduction
With over 18 years of experience in Financial Services,
including working directly for financial institutions and 3rd party
vendors/solutions, Chris brings expertise in the areas of
payments, branch operations, credit, collections, analytics and
call centers.
Chris Clausen
Director of Payments and Transactional Solutions
Deluxe Corporation

Deluxe Corporation Overview
Deluxe Corporation is a changing, evolving and growing company. Through strategic
acquisitions we have created a unique suite of services to help small businesses and
financial institutions attract and retain customers, including marketing services and
payment solutions. We help customers do more than compete against big business
– we help them win.
At Deluxe, creativity, innovation and entrepreneurial spirit combine with all the
resources and strength of a well-established company, creating the type of culture
expected at a start-up rather than a Fortune 1000 company. Our customer base
includes more than 4.5 million small businesses, 5,500 financial institutions,
and 6 million individual customers.
The new Deluxe® eChecks powered by VerifyValid™ offer cutting-edge technology that
combines the best of check writing with the convenience of email delivery,
giving businesses a fast and easy solution.

ePayments
It’s no big secret,
payments are changing.

Deluxe Payments Research
 The focus of today’s session is to review learnings from our
Primary research efforts, including both qualitative and
quantitative methods.
 This research used existing Deluxe customers, lapsed Deluxe
customers and non-customers.

Key Quantitative Findings from Deluxe’s Primary Research:
Lapsed customers identified their reasons for using fewer checks:
 In 2008, 42% said because business was slower than usual
 76% said because they were changing to alternate payment methods
80
70
60
50
40
30
20
10
0
2008 2009 2010 2011 2012 2013
Business Slower
Alternate
Payment Method

Key Quantitative Findings from Deluxe’s Primary Research:
ALL respondents identified the top 3 new methods of payments:
 80% in US and 73% in Canada have changed to electronic bill payments
 38% in US and 51% in Canada have changed to credit card payments
 36% in US and 54% in Canada have changed to automatic pre-authorized payments

Federal Reserve Study
Key Findings from the 2013 Federal Reserve Payments Study:
10
8
6
4
2
Checks written by Counterparty
 B2C - checks declined 9.6% from 2006-12, or using a shorter time frame from
2009-12 the decline was more significant, 16.0%
 B2B – checks declined 5.5% from 2006-12, or using a shorter time frame from
2009-12 the decline was more significant, 9.2%
http://www.frbservices.org/files/communications/pdf/research/2013_payments_study_summary.pdf
0
2006
2009
2012
B2C
B2B
Billions
Years

Different Results
WHY?
Federal Reserve Results:
volume of checks written is
not decreasing at an
equivalent rate
Deluxe Results: alternate
payment methods are tried
in substantial numbers

We believe the answer lies in the qualitative results...

Key learning #1 - Qualitative
Small businesses have an established AP process which is critical
to maintain because it’s tied to their accounting software.
 Accommodate both sophisticated and non-sophisticated AP processes
 Solution must be software agnostic
 Remittance data obtained from accounting software
 Accounting software change is not easy and often expensive
 Separation of controls
Payment Solution Criterion:
Solution must not require a fundamental change to AP processes
and must integrate easily.

Small businesses do not want to worry about whether the payee
will have trouble negotiating a payment.
 Time is a huge opportunity cost
 Adoption likelihood linked to confidence
 Acceptance issues can have a negative impact on a small business’ reputation
 Unexpected fees can equate to acceptance issues
Payment method must be broadly accepted.

Small businesses expect tangible evidence that
payment has been made.
 Payment deadlines are frequent and sometimes unexpected
 Spend significant sums to ensure speedy payment
 Desire to hold funds and control release
 Immediate payment often required by suppliers to release
goods or provide services
 Payment delays result in tremendous frustration for
both SBs and payment recipients
Payment immediacy.

Small businesses want and expect to be able to provide
remittance data with the payment.
 Without remittance capability, a solution is viewed as consumer design forced
onto businesses
 No extra money to reconcile payments
 Timely reconcilement avoids future work
 Remittance data avoids misunderstandings and difficulties
linking payments to invoices
Robust remittance data can be attached and sent with payment.

Small businesses do not want to ask for or force their payees to
sign up for a payment solution.
 Not a payment educator
 No time to help payees sign up for a solution
 Payee acceptance limited when sign up required
 Sign up hampers payment immediacy
No payee signup/membership required.

Small businesses do not want to use a payment method that
results in new or unexpected fees for the payee.
 Fees limit acceptance
 Fees are often charged back to them
 Fees limit usage
 Complicated fees are not good for business
 Should offer one payment method to consumers
or other businesses
No additional payee fees.

Small businesses do not want to force their payees to provide
sensitive data in order to enable payment.
 Empathize with payee
 Often cannot force payee to provide sensitive data
 Security risk of obtaining sensitive payee data
 Security risk of storing sensitive payee data
Payee does not have to provide sensitive data.

Small businesses do not want to become payment experts – that is
not why they went into business.
 WANT THIS:
o Intuitive process
o Easy to understand
o Easy to learn
o Easy to implement
o Simple for both them and their payees
 NOT THIS:
o Learning U.S. payment system infrastructure intricacies
o Facilitator between payees and financial institutions
o Spending time implementing payment method
Simple implementation.

Small businesses worry about security…a lot. They do
not expect to have to become payment security experts
to trust a payment method.
 Don’t want to worry about payee sensitive data, but do anyways
 Respond well to tangible evidence of payment security
 Payment facilitator is expected to manage security
 Security is table stakes
Secure – considered table stakes.

Small businesses do not want to have to sort through the vast and
constantly changing world of ePayment solutions.
 Bewildered by payment methods, providers and potential business impacts
 Want trusted brands to bring forward best solution
 Concerned about fraud risk with unknown brands
 Worry about wasting time on payment fads
Endorsed by trusted name(s).

Summary of Findings
1. Easy integration with AP software with no fundamental change to AP Process
2. Broadly accepted payment method
3. Payment immediacy
4. Robust remittance data can be attached and sent with payment
5. No payee sign up required
6. No additional payee fees
7. Payee does NOT have to provide sensitive data
8. Simple implementation
9. Secure – considered table stakes
10. Endorsed by trusted name(s)

Summary of Findings
Small Businesses want all of these criteria
to be present in an ePayment solution before
switching all payments over, but they often
have trouble articulating this!

Deluxe ePayment Solution
Why did Deluxe select eChecks as its Small Business ePayment solution?
ALL 10 criteria were met PLUS:
Significant cost savings for the customer
Additional separation of controls for customer – control is key
Keeps the Financial Institution at the center of the relationship
New protection available for the bank of first deposit

Deluxe ePayment Solution
To learn more about eChecks, please go to:
deluxe.com/echecks/
or call us at
800.631.8962
Thank you for attending today’s session!

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