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As Lenders Pursue Riskier Borrowers, 3 Steps to Ensure You Get Paid

To drive revenue during a time of sluggish growth and increased regulation, U.S. credit card lenders are courting risky borrowers more aggressively than the past, reports The Wall Street Journal. Banks target these riskier borrowers as they tend to pay higher interest rates and generate higher revenue, but how do you ensure they pay you?

As Lenders Pursue Riskier Borrowers, 3 Steps to Ensure You Get Paid

Source: Equifax, The Wall Street Journal

1. Accept debit cards at a 30% lower cost
In 2014, a flood of subprime lenders have discovered a new way to accept debit cards, one that provides them the lowest cost, typically saving 30%. Banks accept debit cards for loan payments as it allows them to

  • Increase likelihood to pay, as customers are more likely to have their debit card with them as opposed to their checkbook. Checkbooks are required for customers to find their information to make an ACH payment.
  • Reduce risk and lower open to buy holds, thanks to a guaranteed funds model.
  • Raise customer satisfaction, as customers prefer debit cards to ACH 3 to 1, according to the Mercator Advisory Group.

2. Engage customers with search engines, QR codes and text messages
New technologies make it easier to collect payments from customers: 

  • Pay per click advertising to direct customers to your payment website has consistently proven to provide a positive return on marketing investment.
  • QR codes on paper bills directing customers to your mobile browser bill pay site have proven effective.
  • Text message bill due reminders circumvent SPAM filters. But be sure to only send them to customers who have not already paid or scheduled a future-dated payment. 

3. Offer a Virtual Collection Agent to reduce gross charge-offs by 10%
One of the world’s largest banks uses a Virtual Collection Agent to collect more than $1 billion in delinquent debt per year. The Virtual Collection Agent emulates your best live agent collector through a website specifically tailored to your collection strategies. One study found 45% of visitors to the Virtual Collection Agent had not been in contact with the bank in the previous 6 months or longer, enabling banks to collect from more customers than previously possible.

Ensure you get paid - accept debit cards, engage customers to make it easy for them and reach out to delinquent customers with a Virtual Collection Agent.