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Limiting eCheck Chargebacks through BillPay

Merchants who accept payments online run the risk of having chargebacks in their accounts. This risk can be reduced in several ways but is impossible to eliminate completely. In this article, we’ll look at online bill pay options and how they could help mitigate the risk of chargebacks.

What is Bill Pay?

Online bill pay is a process through which a merchant pays multiple vendors through a single portal. Bill pay platforms allow merchants to input bills from all their vendors to one system and schedule those bills to be paid from specified accounts on or before the due dates. Platforms that offer this service often contribute to greater efficiency for merchants.

Some bill pay platforms offer virtual assistants to handle the data entry portion of which can further enhance the customer experience. This additional feature is enticing for many business owners because it contributes to higher productivity in the accounting department.

How Does Bill Pay Work?

Generally speaking, a bill pay platform allows the merchant to input all the vendors who supply their business with goods and services. Once input, the merchant can pay bills directly from the platform. The necessary information about each vendor may include:

  • Business Name
  • Employer Identification Number (EIN)
  • Address & Contact Information
  • Routing Number
  • Bank Account Number

This information is input during the initial setup phase for the platform, and each time a new vendor is being used. The data entry process can be time-consuming, but only needs to be completed one time. Once a vendor is set up in the system, you can simply pay your bill each month by clicking on the vendor’s name in the system and entering info about that specific payment or invoice.

Some platforms allow the merchant to send enrollment information to each of their vendors. The vendors can set up an account within the system without the need to share sensitive information with the merchant. In many cases, the vendor can also submit their invoices through the platform, which will go straight to the merchant’s account.

Once the invoice appears on the merchant side of the platform, they can click a few buttons and the bill is paid. If the invoices are not automatically submitted by the vendor, the merchant will have the additional task of scanning and uploading the invoice into the platform. Some platforms offer ACH payments while others will cut a physical check and mail it on behalf of the merchant.

Bill Pay for Your Customers

Bill pay can also be used as a payment option for customers to pay merchants for services. Merchants who choose to offer this feature to their customers may benefit by reducing the time and effort involved in collecting payments for outstanding invoices.

For example, many doctors’ offices and other medical providers offer bill pay to their patients. In this case, patients can go online and create an account with their doctor’s office. When they receive a bill for services rendered, they can simply log in and pay their bill at their leisure.

This is not only a convenient option for customers but also an easier method of collection for business owners. Allowing your customers this option has been shown to increase the percentage of payments collected while decreasing the time it took to do so.

Benefits of Bill Pay

Regardless of how you choose to use bill pay in your business, the benefits are convincing. Merchants who opt for bill pay features may enjoy several of the following benefits.

Saves Time

Aside from the tedious process of inputting vendors and getting the system set up, bill pay typically saves time. When bills are ready to be paid, it’s usually a matter of 3 or 4 clicks of the mouse and you’re done! Most bill pay platforms also reduce the reconciliation time for payments due to the aggregated data they store.

Reduces Chargebacks

When merchants allow customers to pay their bills via online bill pay, it can reduce the risk of chargebacks. Since it is the customer who sets up their account, logs in and pays the bill, it can be difficult for them to go back and request a chargeback from their bank.

Stopping Payments

For businesses offering recurring payment options or subscriptions, a bill pay platform can save subscriptions. In many cases, recurring payments are simple for a customer to set up but can be more difficult to stop. A merchant can choose to require the customer to speak with a service representative to stop their payment, which can result in saved memberships and conversions.

Reduced Days Sales Outstanding

Allowing customers to pay their bills online cuts down on the length of time between services rendered and payment collected. This is true for the vendors collecting money from merchants, and merchants collecting money from their customers. Bill pay can be a win-win for everyone involved.

Reduces Paper Checks and Cash

Using online bill pay reduces the need for paper checks and cash. This can cut down on the costs of printing and mailing checks. It can also reduce clutter in the office because most payments being made and received are online. Finally, it is also eco-friendly due to the reduced use of paper.

Saves Money

Bill pay can reduce the overall costs associated with an AP department. It saves time on labor, which results in fewer wages being spent. It also reduces the amount of paper and postage being used, which results in even more savings for the merchant. Customers also save money by using online bill pay, rather than mailing or driving checks to the merchant for payment.

Security

Online payments are more secure than paper checks or cash. This may seem like an anomaly but think about it. Cash can be lost or stolen, and checks have full routing and account numbers, which should not be shared with the wrong parties. Online payment systems with proper encryption, multi-factor authentication, and fraud detection are far safer options for both the consumer and the merchant.

Is Bill Pay Right for your Business?

Many businesses find that the benefits far outweigh any costs associated with implementing a bill pay system. For all the reasons listed above, merchants appreciate what a bill pay platform has to offer their business. However, a little due diligence can go a long way.

If you’re considering bill pay for your business, be sure to interview at least three different providers. Ask about the cost of their services, the features and benefits they offer, and the timeline for implementation. This isn’t an exhaustive list of items to consider, but it’s a good place to start before making the decision to move forward.