What’s now (and next) for consumer payments?

How to modernize your consumer billing and receivables

If you’re a B2C business, creating a modern billing and payment experience can reach valuable customers and set your company apart. Younger buyers, in particular, consider flexible payment options and convenient digital tools as “table stakes” when choosing their preferred providers. 

One-quarter of Millennials, for example, report prioritizing for payment those bills “with the least payment friction.” Another study notes that when given the option, 60 percent of consumers have used a digital wallet (such as  Apple Pay or Google Pay) to pay their bills, attracted by the ability to “pay instantly.”

Cash and checks are also in flux as more consumers opt for cards or digital methods. Six in 10 Americans now expect to see a cashless society in their lifetimes.

How to stay current with B2C expectations

Given all the options, moving your consumer receivables forward can seem overwhelming. Where should you start? Which payment methods should you accept? How can you offer consumers more choices, while at the same time, keep your processing costs and accounts receivable (AR) workload under control?

A step-by-step approach will make the process manageable. 

Step 1: Make digital-first a priority

Before making any changes, look at your customer base and get a better understanding of how and when they want to pay you. Consider also your business model. 

  • Are you a “receipt-only” business where purchase and payment occur simultaneously, such as a coffee shop, an auto repair facility, an online bookstore, or an e-ticketing site? 
  • Or, are you a “receivables” business like a dentist’s office, insurance company, or utility that needs to issue regular invoices, creating a longer and more complicated consumer collection cycle? 

Once you know more about your target audience and their payment preferences, you can choose the right electronic payment options. Security and ease of use will be two important criteria so you can make digital payment convenient for consumers, without adding fraud or other risks to your business practices. 

Step 2: Streamline your AR workload

Adding new billing and payment options is not without its challenges, especially when B2C companies work with numerous payment providers. It can be difficult to create a streamlined and cost-effective solution across many vendors and systems. 

As your business invests in electronic billing and payments, involve your bank in an open dialogue about your receivables goals and challenges. Many times, simple changes can make a big impact for AR teams and your bottom line. 

For example, if you’re a receivables business that issues customer bills, make sure you’re using digital invoices with a “pay now” button. Your bank can host the electronic payment options of your choice on a secure website that’s branded to your business. A “pay now” feature can significantly increase payment speed and reduce the hassle of accepting checks. 

If your customers pay through online bill pay sites, you can optimize your cash flow and increase straight-through processing with a bank-hosted electronic lockbox, or “eBox.” This service aggregates and standardizes all the digital payments you receive through online bill pay sites. Instead of checks and missing information from these third-parties, you receive electronic deposits and consolidated posting files with the account and invoice numbers you need.

Step 3: Keep modernizing

The consumer payment landscape continues to evolve, as do customer expectations. Fortunately, payment billing and innovations are keeping pace.

Savvy B2C businesses are keeping tabs on solutions such as buy now, pay later (BNPL) short-term financing at point-of-sale, faster payment options like the FedNow service, and new ways to integrate mobile devices into the B2C purchase experience.

Consumers appear ready to take invoicing and payments by SMS text messaging into the mainstream. They recognize that a text or email reminding them a bill is due makes it easier to pay on time. They also value “pay now” links embedded in reminder messages which make it easier to complete an online payment.  

These and other payment innovations give B2C companies a range of ways to satisfy consumers, optimize your cash conversion cycle, and differentiate your business. Your bank can help you navigate the options and choose the solutions that best meet your specific needs.