PHOENIX — Recent figures suggest that consumers are back to
buying vehicles at a pre-recession pace, but their shopping and payment habits
are changing with the Web now the most influential source.

The consumer is now demanding different finance options on
their purchases as the average length of a loan is now 72 months for new
vehicles and 63 months for used. People are opting to pay bi-monthly; and Gen Y
are buying fewer, smaller and older vehicles. All are looking for more flexible
payment channels such as mobile and online.

A digital strategy is now a necessary component for the auto
finance industry and not just for the purchase, loan or lease origination. Auto
finance servicers need to be aware that these same Web-savvy consumers expect
to use online technology to pay their loan or lease, as well as to access
information and buy additional services or products for their car. The industry
must shift to electronic payment channels to offer more varied, convenient and
compliant options while still accepting paper checks and cash.

Mobile-optimized Auto Finance

Add to this the growth in mobile, and it's clear that the
auto finance industry must sit up and take note of these payment channels.

Customers are using their mobile phones to pay their bills.
The Pew Research Center cites that at least 50 percent of the U.S. population
now uses mobile smartphones, and an October 2012 Litle & Co. study showed
that 25 percent of consumers with a smartphone or tablet computer made payments
using their devices.

This number is a clear indication that the auto finance
industry needs to add mobile solutions in order to give customers the option to
pay however they wish.

Convenient and Flexible Payment Solutions

These proven payment technologies are already there and
available, and can enable auto finance companies to offer consumers the sort of
payment options which are available in other markets – from paying phone bills
to making bank transfers.

And the use of these payment technologies has an added bonus
in terms of customer service. They help build loyalty programs, deliver payment
alerts and enable people to manage their debts.

So auto finance companies need a digital strategy that wraps
into it a payment processing solution that manages ACH accounts, credit and
debit card transactions in addition to ways to automate acceptance of paper
checks, money orders and cash payments — the sort of service we offer our
customers.

But on top of this, there are new and consumer friendly
payment options available for auto finance companies to offer their customers.

Some options are listed here:

—Web payment portal: Used for single, future-dated and
recurring loan and lease payments, consumers are happy and comfortable with
payments via a Web payment portal.

—Mobile payment, mobile wallet and text solution: Supporting
mobile payments provides a convenient option to support today's on-the-go
consumer. The market is already seeing the growth in mobile wallets for the
maintenance of payment account information and loyalty programs.

The industry can leverage this technology to reduce costs
associated with traditional consumer billing — printing and postage time and
costs — sending time-sensitive notices and outstanding balance statements and
payment reminders. Through a mobile-optimized payment portal, customers can
perform a number of electronic transactions including making payments and
additional purchases.

The text functionality enables a finance company to send
automated payment reminders, balance due notices or post-dated check
notifications and make payments by return text.

—IVR: A solution that allows callers to interact with an
automated telephone-payment system to make ACH, debit and credit card payments
24/7. IVR is seen as key growth area and we recently conducted research that
showed that IVR is set to almost double from 33 percent to 60 percent this
year.

—Full Electronic Bill Presentment and Payment (EBPP)
Solution: For print, mail or email communications for statements and billing
reminders.

But What About Compliance?

Recent changes in the Consumer Financial Protection Bureau's
legal positioning has given the bureau a range of new investigative powers,
including the ability to review sale contracts, telephone recordings, account
transfers, training programs and scripts for employees, to name but a few.

Managing the constant flow of information, rules and
regulations can be challenging. Technology can assist in this area, as the
regulations and procedures for disclosure and payment receipt are transparent,
and can be easily and consistently provided.

All of these payment solutions enable companies to build
compliance into their payment collection procedures.

Customer Value

The challenges the auto finance industry is facing are part
of a consumer-driven revolution; the increase in the use of web and mobile for
payments in other industries is significantly impacting the automotive
industry, and taking a proactive approach to offer multiple, varied payment
options will be key in order to encourage customers to pay on time.

Vehicle sales in the U.S. are booming, with numbers
suggesting that we are buying cars at a pace not seen even before the
recession. Here, at, one of the leading on-demand payment processors, takes a
look at how advanced web and mobile payment technologies offer the auto finance
industry more flexible payment options in order to meet increased consumer
demands, while maintaining compliance with increasing regulatory requirements.

Editor's Note: Marya Ulis is the strategic alliance director at
BillingTree. More information about the company can be found at
www.mybillingtree.com.

Continue the conversation with SubPrime Auto Finance News on LinkedIn and Twitter.


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