Nederland over op Instant Payments.... maar (nog) niet voor iDEAL

Europa heeft met SEPA standaard schemes geïntroduceerd voor verschillende soorten betalingen. Onze storneerbare automatische incasso’s zijn nu SEPA Direct Debits (SDD), en onze onherroepelijke directe overschrijvingen zijn nu SEPA Credit Transfers (SCT).

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More and more people do not have a regular monthly income. People switch jobs more often, go from project to project, or work in the gig economy altogether. As a result, the timing of larger bills or purchases becomes problematic. I need to pay or want to buy now… but I can’t right now. This is where supporting Partial Payments can help. Especially if you can seamlessly incorporate it into your flow, without it becoming a credit facility.

While cash flow remains crucial for businesses, it does increasingly compete with commercial metrics like customers signed or retained. After all, more customers means more data, it attracts more investment, and cash is not earning any interest these days anyway. Moreover, businesses compete on customer experience. Which is about convenience, part of convenience is flexibility, and when and how you can pay is a crucial form of flexibility.

Enter Partial Payments.
Paying for things in parts is nothing new, whether in advance or after the fact.

  • Layaway purchases were invented during the Great Depression in the 1930s. They let people make a first down payment, after which the seller put the item away while waiting for the remaining installments. If those installments did not come, the seller could put the item back up for sale. With different possible resolutions with the customer who came up short…
  • Financing of course has been around forever, the difference being that you received the product already and had to make payments on a loan; the couch only became yours after the final installment.
  • Payment plans in debt collection are also a common solution to give debtors some room while getting parts of the debt repaid.

So what’s new? A specific wrinkle is here is whether or not something constitutes a loan. That makes the business a lender, with all sorts of regulatory obligations as a result.

However, in many (European) countries a business can divide a customer’s payment into 3 installments without becoming a lender. The United Kingdom even allows 7 installments. Used the right way, Partial Payment essentially becomes a payment method to give people some breathing room. Without adding any complexity for the merchant, who leaves that to someone like us.

Examples

  • Recently we implemented our Partial Payments feature for a ticketing vendor who wanted to offer layaway tickets for music festivals. Young people want to secure their spot and benefit from the early bird prices… but can’t pay the whole thing right away. For a small fee they can pay in 3 parts. Great service, additional revenue, low risk.
  • A debt collection agency uses our Partial Payments feature to let people pay in 3 installments. They just have to send us one record, and we take care of the rest by automatically sending payment requests for the subsequent installments on the right dates.

But really, the concept can be used for any higher-value purchase or bill to accommodate customers. Just today a retailer with a dozen locations approached us to support a payment link in down payment invoices sent to customers ordering remotely, so that our real-time status updates dramatically speed up their ability to place the order. The rest of the overall invoice can be requested and paid on delivery. And yesterday we were approached for… funeral homes, who of course deal in large unexpected costs for their customers who in many countries do not have insurance for that.

Industry Standard

Interestingly, initiatives in both the UK and the EU are underway to codify what we do for a living into a technical standard called Request To Pay (RTP). It’s a model to govern the possible interactions between a biller and a payer. It primarily aims to enable smooth payment straight from bank accounts, but also acknowledges various other needs including this one. Pay in parts.

Standards take years however – why wait? Make customers happy with your great product or service, and let the money sort itself out. With a bit of help from your friendly RTP vendor.

Jeroen Dekker
ABOUT THE AUTHOR | Jeroen Dekker
Jeroen Dekker joined AcceptEasy in 2016 after 15 years at international B2B software companies as bridge between market(ing) and product. He was product manager and spokesperson for the Financial Crime Risk Management Solutions of Fiserv. Jeroen holds degrees from the Haarlem Business School and Northern Arizona University.

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