Payments, money lending and financial transactions of all sorts have been present throughout history. In the very early days, payments took a physical form. Coins of gold and silver would have been the preferred payment of choice. Times progressed, and payment choices turned to cash and then cheques. For a long time, that is where we stayed. It wasn’t until 1994 where we saw the very first transaction online. However, today’s new payment technology is dramatically changing how we pay.
The days of waiting weeks for loan application approvals are over. Customers expect instant approval and a quick loan, or they will seek other solutions. With companies like goeasy and Greenbox Capital, how we borrow money is changing. Along with it, so are customer payment solutions. We are seeing the lending industry undergo a massive transformation.
In this article, we touch on the history of lending to help define new transitions taking place. We then delve into the customer payment choice considerations and wrap up with industry-leading solutions.
A brief history of customer payment choice in lending
Some might say that money lending and financial transactions haven’t changed much, but indeed they have. The idea of lending can be traced back as far as the Mesopotamia age. In 3000 BC, with no card, cash, or even coin, food was considered the payment choice by farmers.
While it might be a rare occasion in today’s world where one could repay a loan with a bushel of hay, the world of finance remains behind the times when it comes to customer payment choice. In looking at the traditional lending process, we can spot the opportunity to disrupt at every stage. From application to final loan disbursement, the tasks are complex, time-consuming, and paper-filled.
The time is now to get rid of “paper” and go digital. The continued decline in cheques and increase in EFTs means more Canadians are replacing cheques with electronic payment methods.
As paper checks fall fast out of favour, the door opens for faster and more secure methods.
The changing payments landscape
How we pay and get paid is changing. Regardless of industry, customers are choosing to pay digitally. The emergence of online shopping and business models such as Netflix and Uber have changed customer behaviour. We live in an on-demand world, where frictionless interactions have become the norm. If “every company is a tech company,” the traditional lending industry isn’t yet there.
Customer expectations have changed, and lenders need to adapt. The payment industry continues to evolve, lenders and loan recipients are often unaware of the changes that have occurred. Lenders need to keep up with trends and stay on top of consumer habits, including real-time payouts and instant loan disbursement. According to the Smarter Loans 2020 study, last year was the first year the majority of applicants received funds the same day they applied.
The evidence is mounting for an industry that once relied on physical cheques; this will no longer cut it. Customers expect seamless and efficient payment options that allow them to pay for their loans anytime, from anywhere. As payment technology improves, consumer standards skyrocket.
The message is clear. Lenders need to automate their technology stack and use loan management software (LMS) for a one-stop service solution.
Customer payment solutions lenders should look for
Lending companies have to reconsider their customer payment choice. Digital payment processing and state-of-the-art technologies, like automated payments, are just the start. In today’s world of payments, when your business is money, the need to meet customers with their payment choice is essential.
- Find a solution that will solve your business needs. Today’s LMS should be full service. Complete with invoice management, both risk and approval management and integrated payment technology.
- Look for variety in integrated solutions. Offering multiple ways for your customer to pay, including bank account payments, recurring payments, and credit cards, ensures lower drop-off and higher conversion rates.
- Look for a service provider that offers innovative technologies that can process real-time payment data.
- Remove the complexities. Moving funds between different providers is… well complex. Look for a solution that assures a seamless experience for all users.
VoPay’s industry leading payment solutions built for lenders
VoPay is the leading lending payment platform across Canada. Our developer-friendly API payment technology is the preferred choice by lenders and Loan Management Software companies alike. Utilizing technology like innovative payment gateway services helps lenders achieve their business goals in today’s digital world.
VoPay’s e-Transfer service delivers loans within 30 minutes. Our iQ11 EFT collections solution ensures recurring collections are automatically debited during the loan cycle, putting the lender in the driving seat for collections.
VoPay is proudly accredited by the Canadian Lenders Association.
To learn more about our solutions, contact one of our product specialists today!