General Questions About Direct Payment
Getting Started With Direct Payment
General Questions About Direct PaymentWhat is Direct Payment?Direct Payment is the safe and accurate electronic transfer, initiated by your company, of an authorized payment from your customers' checking or savings account into your account. What types of companies and organizations offer Direct Payment?More and more companies now offer Direct Payment to manage recurring payments of all sizes, from mortgage, insurance, and automobile financing payments, to monthly utilities, magazine subscriptions, and health club memberships. Isn't Direct Payment just for large companies?Businesses of any size can benefit, and should be offering Direct Payment for many reasons, including the fact that consumers are expecting it as a payment option. Will it cost my company money to offer Direct Payment as a payment option?As with any new system you put in place at your company, there will be initial costs to set up Direct Payment. These costs will seem small once you start realizing the cost savings of Direct Payment - an average of 11.5 cents per payment (versus checks) due to reduced processing costs. Do my customers really want Direct Payment?Many of your customers want Direct Payment because it will simplify their lives and take the hassle out of paying bills. In fact, in 2004, 54% of households already used Direct Payment for at least one payment, and the number of Direct Payments Payments increased 5.3 percent to 3.1 billion payments in 2005. Research also confirms that consumers who use Direct Deposit to receive their pay or benefits are more likely to sign up for Direct Payment. Getting Started With Direct PaymentWill my company lose the money that it collects in late fees?There may be a dip in late fee revenue, but you will gain your customers' goodwill and loyalty. And collecting money from customers may also save you money. With Direct Payment, you will pay less for collections and consistently have more of your money on the due date. How will my customers know the dollar amount that will be deducted from their checking or savings account?The dollar amount can be fixed or variable. If the amount is fixed, the sign-up process includes an initial customer notification. If the amount varies, your company is required to send the consumer a written notice of the dollar amount at least 10 days prior to the scheduled payment date, or have the consumer sign an authorization form to eliminate the need for the notification. How will my customers know the date the payment will be deducted from their checking or savings account?If the payment is going to be deducted on a different date than the scheduled payment date, your company is required to send a written notice 7 days prior to the scheduled date. Many companies select a day of the month, and simply state with their initial notification that if that date falls on a weekend or holiday at payment will be collected on the first business day following that date. In this case, no additional notification is required. |
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