Your Customers Want to Pay Electronically and You Should Let Them

MasterCard Worldwide’s Steve Carnevale argues that credit card rent payments benefit both the customer and the apartment owner’s bottom line. He reveals, for example, why residents prefer to use credit cards, according to the company’s researchBy Steve Carnevale, MasterCard Worldwide It is clear that we are moving towards a cashless society. Electronic payments are replacing…

MasterCard Worldwide’s Steve Carnevale argues that credit card rent payments benefit both the customer and the apartment owner’s bottom line. He reveals, for example, why residents prefer to use credit cards, according to the company’s researchBy Steve Carnevale, MasterCard Worldwide It is clear that we are moving towards a cashless society. Electronic payments are replacing cash and checks as consumers increasingly turn to plastic and go online to make everyday purchases. While checks have traditionally been the predominant payment method for household expenses, such as rent and utilities, today more and more customers are opting to pay their bills electronically, through online channels and using one-time and recurring card-based payments.  Property owners and management companies that choose to offer electronic rent payment options to their customers have a tremendous opportunity to improve customer service and differentiate themselves in a competitive marketplace, as well as drive operational efficiencies and, ultimately, grow the bottom line.Saying Goodbye to ChecksStatistics show that traditional consumer preference to use checks, for everyday purchases and to pay recurring household bills, is declining as more and more consumers embrace electronic forms of payment.According to the Federal Reserve, from a peak of almost 50 billion in 1995, the number of checks written in U.S. fell to 36.6 billion in 2003, while the number of electronic payments rose from 15 billion to 44 billion. A 2008 study by Hitachi Consulting found that, from 2001 to 2008, paper-based payments decreased from 78 percent to 38 percent of all bill payments, while electronic payments grew from 22 percent to 62 percent. Today, in fact, according to MasterCard research, the majority of consumers (62 percent) indicate that their preferred method of bill payment is an electronic one. The shift to electronic payments is being driven primarily by consumers’ increased comfort with being online and the use of online bill-pay channels. From 1999 to 2007, the number of online households in the U.S. nearly doubled, from 45.3 to 86.4.  In addition, the number of online households that pay bills online rose from 3.6 million in 1999 to 42.3 million in 2007.As consumers continue to pay their bills online and receive them electronically, the use of electronic payments in all channels will likely continue to grow. And, as consumers make more everyday purchases electronically, they are likely to demand the same payment convenience and flexibility when they pay their household bills. Other factors driving the consumer shift to electronic payments are the convenience and security of electronic payments, and the desire to gain rewards and points by using their payment cards for recurring household expenses. According to MasterCard research, the main reasons consumer sign up for card-based payments are to not miss a payment due date (69 percent), save time by not having to mail a monthly payment (42 percent) and earn ongoing rewards (38 recent). It’s all about efficiencyIn addition to improving customer satisfaction, electronic payments have the potential to drive tangible business benefits for property owners and management companies. Electronic bill payments eliminate the hassles and reduce the costs associated with processing paper-based payments, reduce exposure to bad checks, and help ensure payments are made on time – which results in improved cash flow and faster revenue recognition. They also enable property management companies to address and resolve routine billing and account questions easily through instantaneous online access to customers’ complete account records. By accepting payment cards and e-payments, utilities can strengthen customer loyalty by keeping up with changing consumer preferences. Customers today want greater self-service access to payment and billing, convenience and rewards associated with payment card acceptance. Incorporating electronic payment options enables property management companies to differentiate by providing customers with greater self-service and easier account management capabilities.As property management companies look to build out their electronic payment programs to take advantage of these opportunities, they should consider incorporating recurring payments into their payments model. Setting up recurring payments for customers provides a stable revenue stream by helping ensure on-time payments. With anytime online account access and payment capabilities, customers can pay their bill faster and more conveniently from any location, avoid the hassles of missed or late payments and track their utility expenses easily. In fact, recurring payments are tailor-made for property owners and management companies, providing streamlined billing, more secure transactions and increased customer retention. Forty three percent of credit cardholders and 54 percent of debit cardholders use or would consider recurring payments, and 30 percent would switch providers if a competitor offered recurring payments. We’re here to help youIn response to growing consumer demand, issuing banks and payment card companies, like MasterCard, are working closely with property management companies to build and market effective, comprehensive and secure electronic payment programs that make it easier for them to accept payment cards, as well as realize all the benefits that electronic bill payment programs can provide. For example, MasterCard offers incentive merchant interchange rates, reduced fee structures and specialized service industry support services for the rental and property management sectors. The program delivers broad operational and marketing benefits and demonstrates how participating companies can achieve broad operational efficiencies through card acceptance.Payment card companies also offer valuable tools that help merchants maintain accurate customer data and make the maintenance of accounts and records easy to manage.  An example of this is MasterCard’s Automatic Biller Updater, which matches merchant queries about customer account information with issuer submissions on customer account changes, thus making sure account details remain updated.  This helps customers’ service remain uninterrupted, and helps merchants avoid payment declines due to account changes, which in turn helps reduce processing costs. To drive awareness and usage of card payments among consumers, issuing banks and payment card companies outline for cardholders the advantage of paying their bills with a payment card.  While traditional pay-by-check customers have in the past been slow to adapt to electronic payments, this seems to be changing through education on the overall benefits of electronic payments. Turnkey marketing campaigns, implemented in a structured approach by property management companies with the help of issuers and payment card companies through strategic channels, are also helping to increase broad consumer awareness of the benefits of electronic payment programs and increase usage.So why wouldn’t you?Regardless of industry, businesses today must differentiate themselves to thrive.  Providing customers with the option to pay their rent through electronic payments is just one of many steps management companies can take to create a better customer experience.  At the same time, electronic payments also allow companies to enjoy operational efficiencies that improve the bottom line.  For businesses working hard to attract and retain tenants, and to acquire rental payments quickly and easily, electronic payments are becoming a must have.Steve Carnevale is vice president, New Markets & Consumer Bill Pay, at MasterCard Worldwide

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