Defining Flexible Payments and their Value


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For years, digital businesses have offered flexible payments, such as recurring, installment and deferred billing, with successful results. Flexible payments are a “win-win”. You gain timely payment assurance while your customers enjoy payment options and uninterrupted service. This webinar shares the features of flexible payments and some effective tools for securing payments, as well as proven customer retention strategies.

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  • Defining Flexible Payments and their Value

    1. 1. Increasing Your SalesWith Flexible PaymentsNancy GaumontBusiness Product ManagerChase Paymentech
    2. 2. © 2013 Chase Paymentech Solutions, LLC. All rights reserved.June 4, 2013Presented by: Nancy Gaumont, Business Product ManagerIncreasing Your Sales with Flexible Payments
    3. 3. © 2013 Chase Paymentech Solutions, LLC. All rights reserved. 2Today’s AgendaDefining Flexible Payments and their ValueEffective Tools for Securing PaymentsCustomer Service and Retention Strategies2
    4. 4. © 2013 Chase Paymentech Solutions, LLC. All rights reserved. 3Flexible Payments DefinedRecurring Results from a relationship between a customer and a merchant Customer is billed for goods and services within an ongoing and agreed uponbilling or service cycle Billing or service cycle and terms are known and agreed upon in advanceCard on File Results from a relationship between a customer and a merchant Customer submits payment information for the first sale Customer agrees that merchant can store payment information for futuretransactionsInstallment/Deferred Payments Installment billing is the process of paying for a product or service in portionsdue over a pre-determined schedule or time, usually for higher priced items Deferred payments or the “Buy Now – Pay Later” offers. Allowing consumers topurchase something now and try it risk free for an offered period of time beforebeing billed
    5. 5. © 2013 Chase Paymentech Solutions, LLC. All rights reserved. 4 Recurring payments programs Deliver higher lifetime customer value Decrease sales costs Card On-File Delivers convenience for your frequent customers with a faster checkoutexperience Installment and deferred payments Increase average order value Capture more sales Attract new customers with appealingfinancing terms Your customers gain Timely payment assurance Uninterrupted service Elimination of late payment feesThe Value of Flexible PaymentsBusinesses have used flexible payments foryears, with proven results
    6. 6. © 2013 Chase Paymentech Solutions, LLC. All rights reserved. 5Consumer Usage of Recurring PaymentsBill pay with cards is more popular than everHistory65 percent of credit card users arecommitted to using a credit card forbill payment,67 percent of debit card users arecommitted to debit for bill payment. Over 68 million U.S. households paidbills online in 2012For 24- to 30-year-olds, 63 percent ofmonthly spending is on a cardResearch confirms that thepercentage of bill payments madethrough the mail will decline to 31%by the end of 2013Source: Visa Bill Pay Marketing Resource Guide for Billers75 % ElectronicPayment25 % CheckPayment
    7. 7. © 2012 Chase Paymentech Solutions, LLC. All rights reserved.6Account Verification, Enhanced Authorization, PaymentBrand Tools, Account Updater and Authorization RecyclingEffective Tools for Securing Payments6
    8. 8. © 2013 Chase Paymentech Solutions, LLC. All rights reserved. 7 Account Verification messages are an effective means ofvalidating account numbers prior to authorizing for the fullamount Maximize sales by minimizing fraud exposure through the use ofCVV2 and AVS Cost effective: A verification message reduces potential chargebacksand related dispute fees; A Visa Verification message fee is $0.025 versus the $0.048 assessed formisuse of authorization when a $1 request is submitted without deposit MasterCard has no Verification Fee and assess a $0.055 misuse ofauthorization fee when not deposited Greater success opportunity since the payment brands routeverification messages directly to the Issuers Reduces holds on your customers’ “open to buy” Reduces adverse impacts on any fraud detection tools used forvelocity checking and benchmarkingAccount Verification Message
    9. 9. © 2013 Chase Paymentech Solutions, LLC. All rights reserved. 8Enhanced Authorizations Use Enhanced Authorizations, a free service, to: Safely establish recurring relationships by proactively avoiding declines offuture scheduled payments Example: when a prepaid card is presented to establish a recurring relationship, youcan accept the card for the initial payment and request another payment method forfuture payments or offer reduced service time frames that can be covered by theexisting balance on the card Automatically prompt for additional information that may lower payment costs Gain valuable insight into card-issuing country data that can help you managefraud Identify your affluent consumers so you can send them special messages andexclusive offersMOPs Card DetailsVisaMasterCardDiscoverJCBDinersInternationalMaestroPrepaidPayrollHealthcareCommercialInternationalAffluentSignature DebitPINless Debit
    10. 10. © 2013 Chase Paymentech Solutions, LLC. All rights reserved. 9 Address Verification Obtaining best possible interchange for certain rates requires AVS perperformed regardless of AVS response Card Verification Values Three-digit value on back of the card (4-digit on front of Amex card) Verifies card is valid and that buyer has card in his possession 3D Secure (Verified by Visa/MasterCard SecureCode) Reduces chargebacks and shifts liability to Issuers Reduces interchange costs by 15 Basis Points on ALLCredit Reward Cards with Visa and between 21-59Basis Points on ALL credit cards for MasterCardPayment Brand ToolsCVV example
    11. 11. © 2013 Chase Paymentech Solutions, LLC. All rights reserved. 10Account Updater Locks in Clients! The electronic exchange of accountinformation from participating issuers tocard brands, acquirers and merchants Updates card information for recurringpayments and account-on-filetransactions among participating Visaand MasterCard issuers Delivers new account numbers,expiration dates, closed account andcardholder advice in a timely, efficientand cost-effective mannerWhy AccountUpdates OccurPortfolio or accountupgrade ordowngradeAccount closureAccount renewal orreplacementAcquisition/ mergerBank portfoliotransfers betweenpayment brands
    12. 12. © 2013 Chase Paymentech Solutions, LLC. All rights reserved. 11Benefits of Account UpdaterProvides up-to-datepayment accountdata quickly andefficientlyIncreasesauthorizationapproval ratesRetains customerswith uninterruptedserviceImproves averagecustomer lifetimevalueReduces costs formanual updatesand collectionsImprovescustomersatisfaction
    13. 13. © 2013 Chase Paymentech Solutions, LLC. All rights reserved. 12Transaction RecyclingTake a Second Chance If the transaction is declined, retries are allowed up to fourtimes within 16 calendar days for any reason other than lost,stolen or pick-up Know the differences between soft and hard declines Hard declines include lost, stolen and pick-up What is your actual success rate for recycling? Monitor each code for success. For example, you may note thata generic decline takes three retries, while an over limit mightrequire four retries What is your success rate if you recycle on specificdays of the week? Work with your Account Managerto fully understand what will work best for you
    14. 14. © 2013 Chase Paymentech Solutions, LLC. All rights reserved. 13Checklist for Ongoing Transactions Ensure transactions are flagged with the recurringpayment indicator (02) when processing recurringpayments Keep expiration dates on file and submit valid expirationdates whenever possible Utilize Recycling, Account Updater, Verification andEnhanced Authorization services for Recurring andAccount on File transactions
    15. 15. © 2012 Chase Paymentech Solutions, LLC. All rights reserved.14Enrollment, Customer Retention and moreCustomer Relationship Strategies14
    16. 16. © 2013 Chase Paymentech Solutions, LLC. All rights reserved. 15Successful Programs Start at the BeginningEarly Enrollment Close the deal at the point of service Present electronic payment methods as the preferred way to payIncentives Offer discounts to customers who enroll in recurring payments Discounts are offset by the savings associated with electronicpayments over paper and reduced collection activitiesProgram Marketing Target most frequent payers/purchasers Highlight the financial savings (checks/postage) Highlight the convenience of automatic payments – enter data onceand never miss a payment Frequent messages have the highest impact on adoption
    17. 17. © 2013 Chase Paymentech Solutions, LLC. All rights reserved. 16Recurring Payment Program Retention Your efforts to convert consumers to recurring/card on filepayments does not end at the point of adoption Define and market against the drivers of consumer drop-outfrom recurring bill payment programs in each of your customersegments Example, income-constrained customers: Cash flow issues are the primary factor in late payments Automatic payments on debit cards can contribute to cash flowissues if the consumer experiences bank overdraft fees Bank overdraft fees are $25-$35, significantly higher than atypical late fee of $5. or 1.5% for recurring payments Consumers have a stronger incentive to avoid bank overdraftfees than a late payment fee Offer counter-incentives, such as discounts tied to remaining inrecurring payment programs
    18. 18. © 2013 Chase Paymentech Solutions, LLC. All rights reserved. 17Recurring Payment Program WithdrawalsCustomer Service is Key Handle recurring payment discontinuations promptly Clearly explain how long it takes to cancel the recurrence (frequently oneto two billing cycles) If a customer cancels service overall, be sure to cancel their recurringpaymentsUnderstand the Reason If it is a timing issue, can a new monthly billing date enable you to save theautomatic billing status? If it is a cost issue, can a different payment schedule – change frommonthly to quarterly or annually to monthly – help save the recurringpayment status? If the customer simply wants to control the payment timing and keep theservice, accept the cancellation and provide confirmation that theautomatic payments have been discontinued
    19. 19. © 2013 Chase Paymentech Solutions, LLC. All rights reserved. 18Service Cancellation ConsiderationsDetermine Reason Offer alternative to full cancellation for reasons such as job loss or notseeing value in service (free or reduced service for x months) Cross sell different price and service plans that may better meet thecustomer’s wants, needs and/or budgetWhen Cancellations Happen Provide cancellation documentation, including a cancellationconfirmation number to protect yourself from chargebacks Perform follow-up outreach at three, six and 12 months following thecancellation, offering incentives to return
    20. 20. © 2013 Chase Paymentech Solutions, LLC. All rights reserved. 19w w w. c h a s e p a y m e n t e c h . c o m Marilyn Mooney, VP National Accounts ( 636-628-0278With 19 years of experience in the payments industry, Marilyn has extensive knowledge of global payments, including cardacquiring and alternative payments strategies. Specializing in the card not present / ecommerce vertical . Meghan Bondy, VP National Accounts ( 703-323-0020Payments professional with over 10 years experience. Specialize in working on National accounts in the Card Not Presentvertical with both US as well as International processing; Social networking companies, Gaming companies, Fortune100/500 companies in B to B.
    21. 21. Questions?Email us:webinar@vindicia.comVisit us:Blog: community.vindicia.comTwitter: @VindiciaWebsite: