Posted January 5, 2016This commentary originally appeared on AFPonline.org.
By Kathleen Romano
In today’s billing world, businesses need a comprehensive strategy to ensure timely, efficient payments, which enables them to manage costs versus cash flow, while also delivering stellar customer service. That effort becomes the playbook that guides the corporate team. Points are earned for keeping payments moving seamlessly and without any pain points.
At Verizon, ACH has always been a reliable, strong play for collecting payments from our customers because of its cost-effectiveness and ubiquity. But sometimes this go-to option isn’t chosen by the customer, and payment becomes less consistent and certain.
This is when speed becomes critical. When customers miss payment due dates, they need to pay us within the same day to avoid late fees, or in some cases, disruption of service. Historically, ACH has lacked the necessary speed to make this happen.
But that is about to change. The second phase of NACHA’s same-day ACH, which enables debits, will give us one more option. We will be able to manage our costs versus cash flow, and at the same time, deliver good customer service.
Biller key plays
Verizon sees three key scenarios for using same-day ACH. The first is around customers who present a high risk with a lower likelihood of payment. In situations where a customer may be delinquent, we could leverage same-day ACH to ensure we receive the owed funds quickly. It also will afford us the opportunity to confirm that we have cash in hand before extending service.
A second scenario supports our efforts to more quickly clear the checks that are processed in our lockbox. For larger payments that fit within same-day ACH parameters, we would be able to use the service to bring in cash sooner than we would with a traditional check or even with standard check conversion via ACH.
Finally, and possibly one of our strongest use cases, Verizon will be able to use same-day ACH for customers who are about to lose their service due to their accounts being in arrears. Customers who are in this situation often want to make an immediate payment, and to support our reputation and relationships with our customers, we will give those customers credit at that time. However, it is a risk to Verizon because currently in this scenario, we are not guaranteed funds. By processing these transactions through same-day ACH, we will get the funds quicker, and we’ll be assured that the customer legitimately should remain on the network and linked to services.
But same-day ACH is not only a win for the biller; it is a score for the consumer as well. We both are able transact sooner, assuring on both ends that we’ve gotten a good transaction. Right now, when customers make payments to us, they will frequently call customer service to confirm receipt of payment and that we’ve credited the account. With same-day ACH, the customer will be able to see via an online banking platform that the transaction has posted to his or her account sooner.
Going for the win
With all of these opportunities that come with same-day ACH, proper preparation supports a skillful execution. In order to implement, Verizon will make some changes to our systems to allow us to leverage same-day ACH; however, in the grand scheme of things, it will be a fairly minor change for us.
Even still, Verizon currently is developing an implementation plan to support rollout. In addition to assessing use cases, we also are spending time talking to our financial institution partners to discuss operational details like file requirements, new file submission cutoff times, exception resolution cutoff times, and reconfirming eligible items. We also are exploring our use of the effective entry date today to ensure that we’re leveraging same-day ACH appropriately, along with the other date fields in our ACH files. This work today will pay off as we move into full-scale execution around same-day ACH.
And practice makes perfect. Verizon sees huge potential with same-day ACH. Through its delivery, we will be able to expand our playbook, exploring new options as we head into the future of payments. It’s true what they say: same-day ACH really is a game changer.
Kathleen Romano is the executive director responsible for payments and bill printing at Verizon.