It was my pleasure to participate in the recent Acquired.com Payment Pod Lending Focus Group. It’s a great space for Acquired.com partners like Flexys and other professionals from across debt collection to gain insights into future trends in the world of payments. The group has a special focus on breaking down customer challenges and solving pain points through the innovative use of technology.

What makes the Acquired.com session so relevant is that it's informed by consumer research from both the prime and sub-prime consumer markets. This helps hone product development towards real-world experiences and anticipate customer behaviour trends. It also identifies where customers may need help to understand new payment options.

Optimising collections payments with a customer focus

The intersection of new payment technologies and customer experience presents fascinating opportunities well worth exploring. The Acquired.com team highlighted a number of ways to optimise collections payments to make the experience convenient and flexible for customers:

Handling different payment types: enabling businesses to accept payments in various ways, like splitting a large purchase into smaller, more manageable payments.

Tailoring the payment experience: giving businesses the ability to customise how they get paid, making it easier for both the business and the customer.

Making payments smoother: creating tools that automatically send out payment requests when something goes wrong, so businesses don't have to chase after customers.

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Leaving traditional payment methods in the dust: does the future belong to VRPs?

Customer preferences are driving a shift towards streamlined and digital payment methods, with increasing adoption of Pay by Bank options and digital wallets.

“85% of people now use contactless payments with this fast extending into mobile wallets… with a third of adults using services such as Apple Pay and Google Pay”
‍UK Finance Summary UK Payments 2024

This reflects a broader trend of customers prioritising speed, security, and ease of use in their financial transactions. With this in mind, we discussed what it means for traditional payment methods like Direct Debits.

Acquired.com’s Product Manager, Lawrence Byers, took us through how adopting a payment ecosystem with Open Banking-powered variable recurring payments (VRP) can have dual benefits for customers and businesses.

For customers, the real-time payment status notifications with VRPs offer better visibility of all their up-and-coming payment amounts. This can help avoid expenditure shocks, manage obligations more easily or contact creditors early to come to an arrangement. Contrast this with Direct Debits, where customer engagement often occurs retroactively – consumers typically don't anticipate when a payment is scheduled, only discovering an issue after a transaction fails, which then necessitates them reaching out to their creditor to resolve the problem.
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For collections teams, VRPs offer the following advantages over Direct Debit:

• Streamlined onboarding with immediate mandate verification.
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• Pre-authorisation verification to confirm sufficient funds before charging.
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• Transactions processed without delay upon approval.
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• Customisable scheduling for optimal repayment timing.
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• Adaptable retry options for failed transaction attempts.

Although VRPs hold the promise of optimising payment collections and improving customer experience, challenges remain, notably the lack of public awareness concerning their functionality and distinction from established methods like Direct Debits. However, research suggests that this awareness is growing.
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“Faster payments and other remote banking projected to grow from 4.9  to 7.2 billion payments by 2033.”
‍Finance Summary UK Payments 2024

The future of payments and why it matters to debt collection

We are at a pivotal moment in the take-up of innovative payment options that are already revolutionising the customer experience. As we approach the tipping point (like we did with contactless card payments), creditors must plan to meet customer expectations. My key takeaway from the focus group is that traditional methods like Direct Debits will face increasing competition from quick and convenient digital payment methods. And as trust grows, so will demand.

Discover how Flexys can transform your collections process with our advanced digital payment ecosystem.