5 Benefits of Digital Payments for Loan Management Softwares

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 2021 Payments Canada study found that more than Canadians are increasing their use of online transfers and digital payment usage has grown significantly due to the pandemic. 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. Digital Payments for Loan Management Systems

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 software systems (LMS) benefit from digital 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, with Interac e-Transfer^® Bulk 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 VoPay's 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 Interac e‑Transfer^® Bulk

Lastly, Interac e-Transfer Bulk enable businesses to disburse loans and request recurring repayments instantly by only using email addresses.

Unlimited Interac e-Transfer^® payments can be sent in near real-time and up to $25,000 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's iQ11 and Interac e-Transfer solution today.

VoPay is proudly accredited by the Canadian Lenders Association.