A major regional telecommunications company needed to broadly improve payment behavior and operations across multiple business lines. The large, complex organization wanted to alleviate several issues:
- Speed up time to payment
- Reduce bad debt expense
- Increase the number of customers using recurring payments, lowering support costs associated with one-time payments
- Save on costs associated with credit card acceptance, without taking away the option to pay with a credit card
The company wanted to aggressively take control of these challenges with a solution that solved all of them across multiple business lines simultaneously, but with minimal risk. Because most customers already paid with debit cards, card detection accuracy was critical to ensure those customers wouldn’t be surcharged in error.
After a period of intense research and multiple conversations with InterPayments, the company determined that the InterPayments surcharging solution was uniquely equipped to help them solve all these challenges at once. By implementing selective surcharging only on one-time web and phone payments, the company didn’t just save on the fees charged on those payments. They also changed customer behavior, moving many to recurring payments on ACH and debit cards. This migration, in turn, sped up payment time and reduced debt.
Despite being a first mover in the telecoms industry, the benefits of making this move to surcharging were too high to ignore. The company was well-rewarded for acting with enormously positive results for the bottom line. A huge amount of customers moved to recurring payments, as well as from high-cost credit card payments to low-cost debit cards – from over 60% of the customer base to more than 80%. Those who still paid with a credit card for one-time payments accepted the charge, resulting in combined savings of $1 million every year. And the unique InterPayments commitment to maximum surcharge accuracy ensured a great customer experience for debit and credit card payers alike.
Surcharge Program Overview
Industry: Telecommunications and Internet Service Provider
Size: 500-1000 Employees, over $100M in revenue
Location: US Regional
Customers: Businesses and residential customers, B2B and B2C
ERP/Accounting Software: CSG Forte, Five9
Who to Surcharge: One-time payments on web and phone only
Time to Implement: under 4 months
Considerations: Recurring payments, changing payment behavior, debit card detection
About the Company
A major regional telecommunications and internet service provider, the company provides critical phone, internet, and television services to businesses and residences. The company works across multiple states and counties. The company prides itself on being community oriented, providing service levels for every income level, and has won awards for its dedication to the communities it serves.
Solving Challenges
|
Challenge |
Solution |
|---|---|
|
Changing Payment Behavior – The large number of customers relying on one-time credit card payments was having numerous negative effects, including long payments times (or days sales outstanding, DSO) and increased bad debt load. The company wanted to change this behavior, but without using a heavy-handed approach like refusing credit cards. The company didn’t want to risk alienating customers. |
InterPayments supported selective surcharging for the company, building a solution that only issued surcharges on one-time payments using a credit card. This subtle approach resulted in relatively few customers paying the surcharge. Instead, they moved to recurring ACH and debit card payments, reducing DSO and debt load while also saving on credit card fees. |
|
Maximum Surcharge Accuracy —The majority of the company’s customers were paying with debit card. Card type detection was critically important to avoid surcharging these customers, as errors would be both non-compliant and cause major customer dissatisfaction. |
InterPayments treats surcharging accuracy with the highest level of care, sourcing card type data from 10 sources on a continuous basis and regularly re-confirming the accuracy of each source. InterPayments also indemnifies against non-compliance from any card regulator. InterPayments also provided PCI and ISO 27002 compliance, for additional peace of mind for the company. |
|
Integration with Existing Technology — The company accepted payments into CSG Forte both via the web and over the phone. Over the phone, the company used the Five9 interactive voice response system. Surcharging technology needed to be implemented across this technology stack for multiple business lines using it in different ways. |
Interpayments provided agnostic, independent surcharging technology that can be integrated anywhere. InterPayments replaced the existing gateway virtual terminal with PayLink, an advanced virtual terminal and payment solution with surcharging pre-integrated. InterPayments worked with each and every software vendor to ensure seamless integration that left the entire technology solution in place. |
Results
Successes at a Glance
Fees Before Surcharging: $1.9 million annually
Surcharge Recovery: $50,000 annually
Customer Migration from Credit Card: 50% of those currently using credit cards
Savings from Customer Migration: $950,000
Total Savings: $1 million, or 53% of fees
Customer Attrition: 0%
Together with InterPayments, the company solved all of its challenges and received a massive margin improvement in return. In doing so, they showed that it’s important to treat surcharging as more than just a fee — it’s a versatile tool for improving payment operations.
The company saw a relatively small fee recovery from surcharges relative to its credit card volume—just $50,000. Instead, about half of its credit card-using customers switched to debit cards and ACH to avoid the surcharge. This eliminated credit card fees for the company on a huge section of its customers, resulting in total savings of about one million dollars, 53% of the company’s credit card fees.
The solution also went well beyond just fee savings. The number of customers moving to recurring payments also mattered a great deal to the company, providing more reliable cash flow that reduced days sales outstanding (DSO) and bad debt load. The company also received fewer phone calls for payments, decreasing customer support costs. And thanks to the InterPayments’ dedication to surcharge accuracy, customer satisfaction remained high.
The company now expects to receive high savings from all of these sources year after year, providing the same great service that its customers expect.
Interested in seeing how InterPayments can help your company? Contact us today.
To keep the topic of the article anonymous, identifying details have been changed.