Reducing Delinquencies: The Power of Personalized Payment Links

In the wake of the COVID-19 pandemic, a concerning trend is emerging among American consumers. According to an August report by the New York Fed, there has been a notable increase in delinquencies for credit card and auto loan payments, as reported by Roger Portela in Fintech Nexus News. In the second quarter, the rate of new credit card delinquencies surged to 7%, up from 6.5% in the first quarter. Similarly, new auto loan delinquencies rose to 6.9% from 6.5%. Moody’s predicts that these numbers may escalate further, potentially reaching 10% in 2024, driven by the economic challenges posed by rising prices and dwindling savings.

Yet, for many individuals, the hurdles in making timely bill payments are not at the macroeconomic level but rather lie in the micro details of managing their finances. A recent PayNearMe consumer survey revealed that 52% of respondents struggle to remember their login information, 42% have difficulty tracking due dates, and 30% find biller websites too complex to navigate.

Each of these seemingly minor issues can deter individuals from completing their payments, often leading to delinquencies. Alternatively, frustrated payers may resort to calling the biller’s customer service number, exacerbating long wait times, overworked agents, and increased operational costs.

One viable solution to this problem is to eliminate as many of these barriers as possible, streamlining the payment process from start to finish. Technology offers an answer in the form of personalized payment links.

Personalized payment links simplify the payment process by guiding customers directly to their payment screen in just a few clicks, without the need for passwords. According to research conducted by PayNearMe, 38% of consumers expressed that receiving a text message or email containing a payment reminder and a payment link would significantly ease the bill-paying process.

Implementing this solution is straightforward. With the support of your payments technology provider, customers opting into the program receive regular payment reminders a few days before their bill due date. These reminders include a personalized link or QR code. Customers can effortlessly tap the link or scan the code to navigate directly to the payment process. Furthermore, customers have the flexibility to choose their preferred mode of receiving the links, whether it be through SMS text messages, push notifications, email, or even a QR code printed on a paper statement.

Once your personalized payment link system is in place, data can be harnessed to fine-tune your strategies and gauge improvements. Here are three illustrative examples:

• Develop Targeted Messaging: While personalized payment links benefit all customers, those with multiple delinquencies or a history of customer service calls represent prime candidates. Identify these customer segments with the assistance of your payments provider and create tailored messages that address their specific pain points. For instance, messages could highlight the ease of self-payment with a personalized payment link, encouraging customers to opt for this hassle-free method.
• Agent Education: Empower customer service agents to recommend personalized payment links to callers seeking assistance with payments. Agents can ask, «May I send you a link to get you right to your payment screen?» and guide callers through the process. This hands-on demonstration can be remarkably effective, leading callers to sign up for personalized payment links. Consider introducing incentives for agents who successfully enroll the most customers using this approach.
• Strategic Timing of Messages: Maximize the impact of payment reminders by sending them on days most likely to result in successful payments. Analyze payment data from your own customers as well as industry trends to identify optimal days for sending reminders. For instance, PayNearMe found that end-of-week payments had lower rates of decline, likely due to most people receiving their paychecks at that time. By aligning reminder messages with these favorable days, you can boost the likelihood of immediate, successful payments.

Whether or not payment delinquencies return to pre-pandemic levels, organizations can motivate customers to make timely payments without the burden of costly customer service involvement. Personalized payment links offer a streamlined solution that simplifies a multi-step process, making it as intuitive as everyday mobile activities.

However, it’s crucial not to tackle this challenge alone. Seek out a payments technology provider that offers this service, complete with data-driven insights to enhance adoption and track progress effectively along the way.

In a world where financial stability remains uncertain, personalized payment links provide a beacon of simplicity and efficiency, ensuring that individuals can meet their financial obligations with ease.