Every corporate treasure knows that there are new payment systems and services being launched each year (sometimes every month), while the usage of some of the older payment systems is declining, but not disappearing altogether, i.e. dying. This is causing costly problems for the bill collectors: which new systems do they accept? and how continue to process the older systems with the declining usage? The multi-payment system problem is increasing, e.g. there are now 8-9 different ways a consumer can choose to make a payment (up from basically two in the 1980’s). There are now specialist companies providing a fully multi-channel approach to bill collection, such as TransCentra in the USA and PAYOn in Europe, who collect all the data from the many payment systems and rationalise it before presenting it to the corporate’s back office A/R operations to post it cleanly with a minimum number of exceptions. These suppliers believe that there are clear lessons as to what to do, and what not to do in managing the multi-channel payment system problem not just for collecting consumer payment, but also for B2B payments as well.

How to deal with the older payment systems

The main lesson is that companies must not ignore the declining payment systems, e.g. the cheque, because many businesses and consumers will still want to pay by these methods. Companies need to continue investing in improving and automating the collection processes because the old systems keep changing and, mostly getting more complicated, to ensure that the costs of these payment systems reduces even as the payment instrument volume declines, e.g.

• the US Postal service have changed their mail collection schedules, so now to get cheques out-of-the mail and minimise cheque float, companies with a broad-based US clientele will most likely need a lockbox network with 5 or more points of receipt situated in the right receiving cities
• lockboxes technology also needs to be improved, e.g. the new TransCentra multi-scanning service, see. 

So on the old systems, companies need to make them more efficient.

Choosing and managing the new payment systems

The multi-channel payment set themselves a target of offering for each of the main new payment systems a cheaper alternative to building it themselves. The issue for the multi-channel providers is which ones to support and which not to. This assessment is based on who is likely to use the payment system, e.g. PayPal is widely used by consumers, but not be businesses.

Multi-channel payment system suppliers will always cover more of the new payment systems than most corporates, but a new payment system needs to become quite popular before it gains wide-spread support.

Overall lessons and the future 

Paul Dieglman, SVP at Transcentra believes that overall there are two lessons from the development of multi-channel services to date:

1. multi-channel payment system proposition for the biller is now a significant and important proposition, and that building it and managing it in-house is rarely cost-effective
2. it requires significant investment to continue to keep up with the developments and requirements of the old systems, and the requirements of the new systems.

Diegelman, sees the future of the multi-channel problem as, “Being not less complicated, it will get even more complicated as new payment systems are created in the consumer space. We are now up to 8-9 bill payment systems used by consumers. I suspect that we will go beyond 10 in the next couple of years.”

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CTMfile take: The fundamentals of bill collection systems are basically the same world-wide. Most of these lessons apply world-wide. Paul’s prediction of needing to manage more payment systems will happen to every corporate and in every country.