Consumers everywhere expect the same choices that they get cross-industries and services. They decide how, where and when they pay. Lenders have taken steps to rise to the occasion, adding new systems, billing and payment options to stay relevant and competitive, meet the digital demand and increase profits. But has it been enough? 

A 2018 Payments Canada study found that more than 80% of Canadian small businesses want more payment options. They’re willing to integrate new technologies into their operations and move away from cash and cheques—if they had other options. Conversely, in 2017, customers paid 78% of their loan payments electronically. What’s more is that Millennials—a majority of today’s workforce and borrowers—expect to do everything digitally, not paying their loans online but with their debit cards.

As more systems go digital to stay competitive and meet consumer expectations, how can the lending industry be more innovative? 

Loan management systems were designed as a streamlined way to evaluate, approve or deny, offer, provide and collect funds to and from customers. However, as with all digital systems and services, it’s time for an update. 

How loan management systems (LMS) benefit from digital bank payments

As the leader in payment innovation, VoPay’s technology offers a powerful layer that is designed specifically for the lending industry. Our iQ11 software is used for digital bank payments and loan collection and bulk e-transfers for disbursement. Here’s how LMS benefit from our software and digital payments:

1. Streamline disbursement and loan collection

VoPay’s API payment solution offers one centralized platform for all payment processes and loan collections. Businesses can easily send and accept money, set up and schedule payments, send bulk payments and review payment reports. Using our dashboard, users can view and manage multiple payments at every stage in their lifecycle from one single digital hub. 

2. Eliminate pre-authorized debits (PAD) initiation

When pre-authorized debits (PADs) were first designed, they were a convenient way to set up multiple bill payments and transactions. However, let’s look at the customer journey of setting up a PAD in Canada. First, whoever is setting it up has to fill out a PAD agreement in writing, online or over the phone. The bank then sends a written confirmation that acknowledges permission was given for the withdrawals. Three days later, the first withdrawal can happen. This process probably doesn’t meet consumer expectations today. Our Intelligent EFT/ACH (iQ11) payment service eliminates the pain points of PAD initiation.

3. Faster processing and reconciliation times

The Payments Canada study found that 54% of businesses believe they are spending too much time on payment processing activities. Our software makes it easier for businesses to be more efficient and effective with payment and loan processing. We’ve set up real-time acknowledgement and daily status reports into our dashboard for quick reconciliation. Likewise, beyond streamlining the signup and digital payment process through email, our funding process is near real-time. Businesses can now send funds within the hour or overnight, depending on volume, which we’ll cover in our final point. 

4. Reduces NSF and return transactions

Similar to the amount of time that it takes to set up a pre-authorized debit, it takes time for financial institutions to accept, review and process cheques—and even longer for the payments to reach its end recipient. Because of both our faster processing and reconciliation times and our use of digital bank payments, non-sufficient funds (NSFs) and return transactions are significantly reduced. Rather than using cheques or credit cards that are subject to longer processing times, we developed next-generation bank payments with our Intelligent EFT / ACH (iQ11) payment service. This informs the business in near real-time of whether there are sufficient funds but without ever sharing any bank account details or risk.  

Read more about the cost and risk of NSFs in our recent blog post. 

5. Enables efficient bulk payout

Lastly, our e-transfer bulk payout enables businesses to disburse loans instantly by only using email addresses. Up to 1,000 Interac e-transfers can be sent in almost real-time and up to 100,000 can be sent overnight. Plus, up to $10,000 can be sent per payment to multiple recipients all at once through our robust API. Not only does this streamline the bulk payment process, but it allows lenders and businesses to meet today’s consumer expectations for experience and efficiency. 

Learn more about VoPay today.

The rise of digital shopping triggered a world of innovations that boost security and consumer experience. Tokenization is among them. Of the 2.1 billion digital buyers worldwide, most of them may never know what tokenization means—or what it means for the future of their personal data security. 

The not-so-secret world of tokenization

Apple Pay, for example, became the market leader over Starbucks in 2019 with 30.3 million users or 47.3% of mobile payment users in the U.S. What those consumers probably don’t know is that Apple Pay uses tokenization. Apple customers take a photo of their credit card and load it into their iPhone. From this, Apple creates a random, algorithmically generated number—a token—that represents the credit card information. 

Likewise, in late January 2020, Visa released the Visa Token Service (VTS) that is estimated to process a combined e-commerce volume of $1 trillion. According to Visa’s Chief Product Officer, Jack Forestell, “as digital transaction volume grows, there has never been more urgency to build increased confidence in the seamlessness and security of online shopping. This is why Visa is committed to the success of the click to pay experience and the added level of security that tokens bring to electronic payments.”

Extra security measures for consumers and retailers alike are essential as more consumers spend online. Over the 2019 Christmas shopping season, for example, consumers spent $125.6 billion online. More than a third of that spending took place on their smartphones. Currently, 69% of U.S. consumers store a card-on-file or set up recurring billing with trusted retailers. 

However, storing sensitive banking and personal information is a security risk and liability for merchants, e-commerce sites, and retailers. That’s where tokenization comes in.

What is tokenization?

Tokenization adds a layer of security to consumers’ sensitive information, such as bank account and credit card details. It protects sensitive data by replacing it with a unique and randomly generated number. This number is called a token. Tokens help the organizations and retailers securely store and transfer information. 

Not only do tokens replace sensitive numbers and data with an algorithmic number, but they also retain the essential information. Think of them as a unique code to a lockbox full of information. The bank account and accompanying personal data are stored in a secure token vault. 

Rather than using credit card information to make digital payments or purchases, tokens are used. These tokens can be stored in and passed through e-commerce sites and wireless networks without ever sharing actual bank account or personal details. In fact, most retailers and e-commerce sites will never see or have access to a consumer’s actual bank information, even if the token is specific to that retailer.

Instead, they work with secure third-party technology companies that connect a token purchase back to the original bank account information—and arm themselves with enhanced security features. Which brings us to our next point.

VoPay on tokenization: The future of payments

Payment experts are seeing an uptick in tokenization as more organizations move away from encryption. This is because tokenization is a more cost-effective, secure, and user-friendly way to protect sensitive consumer data. 

VoPay’s Intelligent EFT / ACH (iQ11) payment service, for example, accepts tokens from numerous leading data aggregator companies including Plaid and Flinks. These secure API partners create and store their own secure tokens. This means that a user can skip all of the authorization access and bank account selection steps while they’re shopping online. This streamlines the payment check-out experience even further than ever before. Once a user has granted access and their data is tokenized, there’s no need to ever do it again. 

With VoPay’s next generation bank payment service, only tokens are ever shared between consumers and retailers—not sensitive bank account or credit card information. By streamlining this experience, security, and integration, we’ve been able to create one unified token that can unlock an entire digital ecosystem.  

Learn more about VoPay today.