 |  |
||
|
|
 New research reveals major impact of unpostable payments on bottom line initiativesSimple solutions can significantly reduce these exception items Unpostables—bill payments that billers receive but are unable to post to the correct customer accounts—have long been considered little more than an irritant by the payments industry. The figures offered up by Beth Robertson, research director, Global Payments Research Service, TowerGroup, in her symposium presentation seem, at first, to support that position. Robertson found that unpostables represent just 0.53% of all transactions. Nevertheless, in her illuminating research on the size and scope of unpostables, Robertson discovered that this irritating mosquito casts an elephant-size shadow across the bottom line for all stakeholders in the electronic payment process, costing over half a billion dollars annually. Robertson's research team conducted case study interviews with billers of all sizes, representing a variety of industries, and also surveyed bill payment processors, including banks and third parties. While the sample was relatively small, it was large enough to permit a meaningful extrapolation across the industry—and to uncover some good news, as well: the industry can reduce unpostables significantly with a little forethought and cooperation. |
|
||
|
Cost implications Unpostables cost all stakeholders, Robertson noted. For processors, the costs total over $14 million a year, which includes the expense of full-time employees (FTEs) to handle calls from billers, consumers, and originators investigating transactions; late fees; legal actions; and write-offs. For consumer service providers, the cost factors are similar, but because these providers are typically the first point of contact for consumers, costs run higher: approaching $131 million annually. Consumers, too, pay for unpostables—nearly $26 million annually in the form of late fees, service shutoffs, negative impact on credit ratings, and the time and expense to track problems. The impact of unpostables, however, is hardest on billers, whose costs include FTEs for handling consumer calls; collections; shutoff expenses; and write-offs. "Then there are soft costs around the customer satisfaction issues that can lead to an attrition rate that's up to three times greater for customers that have experienced unpostable problems versus the standard customer," Robertson noted. "From a dollar perspective, for billers, the unpostables cost is estimated at almost $363 million—a huge expense for the industry," she said. "If you look at the leading biller environment, about 800 companies that handle the majority of consumer transactions in the country, that equates to $453,000 per biller, which is also not insignificant." Multiple causes, multiple fixes Unpostables originate for a variety of reasons, Robertson noted. For billers, the higher the number of billing systems and account number structures, the greater the likelihood of unpostables. Add a recent merger, and the potential climbs higher. "The whole issue of changing of information— both from account structure standpoint, merging and integrating billing systems, and also merging and integrating operations—can often lead to the problem of bad data in the bill payment warehouses, and ultimately result in bad transactions," she said. Streamlining the billing systems and account numbering formats can drive down the unpostables rate. Robertson also recommended review of internal processes, proactive communication with processors about data changes, and customer education on the need to keep data current with the bill payment provider. Similarly, on the processor side, poor management of biller data—particularly given the large number of billers, and the plethora of account numbering structures tracked in a typical directory management system—can generate high unpostables. "Processors need to take both internal and external actions," Robertson said. Internal remediations include regularly updating biller information on the directory management system; transaction assessment and root cause analysis; tracking and categorizing problem transactions and, where appropriate, implementing autocorrection; and address validation. External steps include adding options in the user interface environment (e.g., automatic alert for account information that is incorrectly entered by the consumer) and tracking check payers to identify opportunities to move them to electronic payments. In summary, Robertson said, "It is important to take action to resolve these issues, and part of doing that is looking at the overall cost to your own organization, particularly if you're a biller, to actually quantify what the bottom line cost to your organization is, and to look at both internal and external solutions." 
|
||||
| Printer Friendly Version | Back to Top | |||
|
|
||||
