By Sandy Jensen
Empire Bank
The automated clearing house (ACH) network, managed by NACHA - The Electronic Payments Association, provides a safe, secure and reliable network for billions of direct payments annually. It is commonly used by consumers for everyday bills, online purchases and insurance premiums. But with a bit more education and the ability to look beyond the obvious, many businesses may find new revenue streams by selling ACH services. And what business isn't looking to increase its bottom line?
Our first hurdle to tackle is the inconsistency of terminology used throughout the industry. Accounting departments have heard so many different terms for direct payment that adopting another one - and eliminating all the others - seems like a daunting task. A banker selling direct payment today needs to use several different approaches to gain understanding of the payment type. The reality is that everyone is talking about the exact same thing, and that is why consistent messaging is critical.
With so many terms floating around for direct payment via ACH, now is the time to demonstrate with tangible examples how financial institutions and other organizations will benefit when everyone speaks the same language. You may ask how this will benefit you and how consistency in terminology can increase your company's revenues. If you commit to the terminology now, generating new revenue with ACH payments will become much easier and more efficient, since customer awareness and understanding will rise.
You don't have to immediately go all or nothing. You can introduce new terminology in market segments that offer strong potential for adoption of direct payment via ACH. Thinking outside the box, several markets would benefit from this payment form. Property management and not-for-profit agencies are just two examples of completely different business models utilizing ACH to accomplish their diverse goals and objectives.
The rental market is hot right now. Traditional home loans are more difficult to obtain for various reasons. When families relocate for new jobs, selling their houses may be difficult, so they opt to rent them out. With a little creativity, property managers can benefit significantly by signing up new lessees to pay rent electronically utilizing direct payment via ACH.
The bills a consumer typically pays first are housing, insurance and utilities. The option of direct payment via ACH minimizes renters' late payments. Property management groups can provide more accurate forecasting, since they are not waiting for checks to arrive. Direct payment via ACH is cost-effective, because using less paper saves time on clerical activities. And fewer instances of insufficient funds mean money saved.
Sometimes you have to be resourceful to initiate change. Renters have preferred ways to pay. But when their leases come up for renewal, property managers may offer incentives to sign up for direct payment via ACH, for example by offering free Internet service for a month. It's a win-win situation for both the renter and the property manager.
The acceptance of both credit cards and direct payment via ACH will cover about 90 percent of renters. Then, property managers will see the benefits of forecasting and increased operational efficiencies.
With a tight economy, nonprofits need all the donations they can get. So why not offer them a quick, safe and convenient way to get that money? With direct payment via ACH, nonprofits may create payment opportunities across all of their events and causes.
With donors signed up for direct payment, organizations will build lasting relationships with them, extending their rates of donor retention. A potential donor may not have $100 today, but he may be able to give $10 per month to a charity for a year. The result: the nonprofit has solicited $120 from a donor who may contribute indefinitely.
Donors also find it convenient. For example, donors who travel a lot can automate their monthly commitments to their churches. Retirees, especially, have embraced this technology and love the convenience of it. Moreover, a donor's money goes further. Donors want to make sure every penny of their contribution counts. With direct payment via ACH, nonprofits can assure their donors that they are minimizing administrative costs.
These two examples highlight how a broader awareness and understanding of direct payment via ACH can help achieve business objectives. At the end of the day, consistent terminology leads to a better understanding of ACH payments, and that is necessary to sell any product. When you embrace the terminology of direct payment via ACH, you help customers realize that electronic payments are convenient and efficient.
The consistent use of the phrase direct payment via ACH will raise consumer understanding and adoption of this safe, secure, convenient and green payment method. If you commit to the change now, selling direct payments via ACH will be much easier in a few years when we all will be speaking the same language.
Sandy Jensen is Vice President, Commercial Banking Services at Empire Bank. In 1956, Empire Bank started with one location. It has since grown to 21 locations and over 35 ATMs in the Ozarks. Today, Empire Bank is a community bank with $1 billion in assets and committed to being the leading financial services provider in southwest Missouri. Jensen can be reached at sandy_jensen@empirebank.com.
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