Direct debit is a popular way of handling regular payments as it lifts the burden of actually making the payment from the customer. All the customer has to do is ensure there are sufficient funds in the nominated account. Businesses like this method because it is relatively cheap and it reduces the number of late payments.
Some consumers are wary of direct debit, as changes made to the system several years ago mean they now authorise the supplier to withdraw the money from their accounts instead of authorising their bank to allow the withdrawal. This has led to situations where a company runs into trouble and ceases to provide the service, but continues to debit its customers' accounts. It isn't easy to prove to the bank that an authority has been rescinded.
| "We're very flexible about the file formats... it's really easy to remap fields. Rather than integration, it's really interfacing." |
This service is cheaper for suppliers than handling direct debits themselves, and -- without needing to change their back-end systems -- they benefit from online interaction with customers.
Toyota Financial Services (the financing arm of the car manufacturer) uses CommSecure as one method of handling personal and small business lease and loan payments. The motivations included a desire to give customers as many payment options as possible, to drive them to the Toyota Web site -- rather than bank sites for BPay transactions -- where they will see informational and marketing messages, and cost savings, explains Paul Bellantonio, business development manager at Toyota. "We want to get as many people as possible onto an electronic form [of payment]," he says, as it is cheaper for both parties.
Once pages on Toyota's Web site were modified slightly to link to CommSecure's server, customers could fill in a direct debit authority online, then print and sign it, and fax it back to CommSecure.
On receipt, fax images are checked for any alterations (an authority is not valid if there are any alterations to the bank account number, for example) and the signatures examined. After this matching process, Toyota's Onyx CRM-based customer information system (CIS) is notified that the customers have been set up for direct debits.
Each billing period, CommSecure processes the payments on behalf of Toyota and information about them is transferred to Toyota's SAP financials.
The system handles the traditional form of direct debit where the biller automatically draws the appropriate amount on the due date as well as the more flexible customer-initiated payments. Customer initiated payments allow the customer to control the exact timing of the debit (up to the due date), to select the source of funds from any pre-authorised account, and to individually approve each debit. "It gives customers control over their accounts," says Bellantonio, adding that the system is cost-effective for Toyota and its customers.
While the integration work was a joint effort, CommSecure's aim is to require no changes to the biller's system.
"We're very flexible about the file formats," says Alan Priestley, sales and marketing director at CommSecure, explaining that CommSecure can usually match its input and output with whatever the biller's software can produce and accept. "It's really easy to remap fields," he says. "Rather than integration, it's really interfacing."
| "The technology part of the integration only takes a matter of days." |
The nature of the process means some activities occur in real time while others happen in overnight batches. "We do in real time the things that are in real time," says Priestley. So when a signed authority is received, Toyota's customer information system is immediately notified that a customer has been set up for direct debits. Banks process direct debit transactions overnight, so details of each payment aren't transferred to Toyota's accounts receivables until the following day.
Implementation took about six weeks, athough "most of that was making sure we had the marketing look and feel correct," says Priestley -- the Web pages served by CommSecure had to exactly match Toyota's design. "We wanted the transition from our home page to CommSecure's page to be seamless," says Bellantonio.
"The technology part [of the integration] only takes a matter of days," adds Priestley.
Toyota has around 650,000 customers in Australia and around two million contracts which turn over every three years or so. Around 60 percent of customers use a traditional direct debit authority, but the company is trying to convert as many of the remaining 40 percent to electronic direct debit.
Toyota saves over AU$1 on each direct debit transaction processed through CommSecure, so there is room for substantial savings.
The initial take-up has been slow, but that was expected. Finance managers at car dealerships sell the loans and leases, so the company is working to educate them about the benefits of the system. So far, around 250 customers have begun using the CommSecure system, says Bellantonio, but the upfront costs were "reasonable" and Toyota expects to break even after 18 months of operation as usage rates pick up.
This article was first published in Technology & Business magazine.
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