Get ready for instant payments: Focus on relieving pain points and creating value

Whether they’re utilities, insurance companies, lenders or healthcare providers, all billers have at least one thing in common, namely, accounts receivable (A/R) processes that on occasion go awry. Payment snafus can force organizations to devote significant resources, usually staff time, to resolve them. If these issues occur frequently, it could be time to rethink the underlying payment process to reduce their likelihood.

Instant payments provide just such an opportunity to resolve, or at least mitigate, a variety of payments-related pain points. The scenarios described below could assist in developing a vision for the A/R benefits in the return on investment (ROI) equation for instant payments.

Late payments and service shutoffs: C2B1 scenario

An electric utility or mortgage lender’s customer sends a check that is delayed in the mail and becomes subject to a late payment penalty. This may lead to an angry customer calling the biller’s customer service or A/R department to complain and ask for a waiver of the penalty. Up to 18% of customer calls to companies are bill-related,2 and handling such calls costs on average $8,3 in addition to the potential for customer ill will. Encouraging customers to use instant payments, even on the payment due date, can reduce the incidence of late payments and the need to handle a costly call from a dissatisfied customer.

In addition, instant payments are especially useful to the utility company when a customer’s account is so delinquent that they must make an immediate payment to avoid a costly service shutoff. Compared with other payment options that the customer might use, instant payments eliminate the possibility of the payment being returned. Instant payments also can provide immediate confirmation of payment and thereby potentially reduce the volume of customer calls to the biller’s A/R department to check on payment status.

Returned payments: C2B scenario

In any given billing cycle, some payments get reversed, or charged back, due to insufficient funds in the customer’s checking account, over-the-limit card account balance, card expiration or account closure. Offering instant payments as an option to customers could reduce the incidence of returned payments because they are irrevocable “push” payments, and customers can take advantage of them only when they have the funds to do so. In addition, instant payments can give billers an important tool to support the collection process. By including a scannable QR code that contains a Request for Payment (RFP) in collection communications, a mobile network service provider, for example, could offer customers a way to use their mobile banking app to initiate an instant payment to resolve the obligation immediately and with certainty.

Autopay aversion: C2B scenario

To reduce late payments and automate payments processing and customer account posting, many lenders, insurance companies and utilities, among others, encourage customers to sign up for automatic recurring ACH or card payments. Almost always, however, some part of the customer base is unwilling to do so; in fact, a study by Aite found that only 35% of consumer bill payments are set up to be paid on a recurring basis.4 This is due to a variety of factors, including consumers’ desire for more control over the timing of their payments and their cash flow. In addition, some have concerns about having their financial institution account number stored in the biller’s database.

For these customers, billers could update A/R systems to include in their customer billing statement a QR code or URL linking to an RFP message that the customer could scan or click to initiate an instant payment. Customers would control the timing of the payment, and they wouldn’t need to provide payment card or checking account information to the biller. And the biller could see a reduction in returned payments relative to all other payment options they offer, as well as reduced handling costs.

Posting errors: B2B scenario

A close cousin to late payment pain points are payments that are posted incorrectly. These situations arise primarily because the customer hasn’t provided accurate or complete remittance information with the payment.

Consider a commercial customer’s payment for telecommunications services that lacks the needed remittance details. This payment leaves the A/R department of the communications services provider guessing which account and which invoice(s) to credit. If the wrong account or wrong invoice is credited, the A/R department may end up reinvoicing and possibly charging that customer late fees or denying an early payment discount. Needless to say, this could lead to a poor customer experience.

Compounding the error, the customer’s accounts payable (A/P) department may pay the duplicate invoice, resulting in overpayment issues that need to be resolved as well. Reaching resolution entails costly staff time for both the biller and the customer.

Billers can reduce the incidence of, and costs associated with, incomplete or missing remittance information by sending customers an RfP message via an instant payments service such as the FedNowSM Service. This message could include account number and certain invoice details, enabling the automatic inclusion of the necessary remittance information when the customer makes the corresponding instant payment.

Using instant payments to send an e-invoice is also potentially beneficial to the commercial customer. It enables the customer to upload the invoice into their A/P system and automatically schedule their payment to take advantage of any early payment discounts or pay on the due date to maximize working capital and liquidity.

Time to focus on pain relief?

These payment scenarios only scratch the surface of the pain points encountered by billers and their customers alike. Even so, they can help stimulate thinking about how instant payments could provide tangible cost-saving benefits, notably reduced staff time spent resolving posting errors, returned payments and customer complaints, while improving customer service.

Taking advantage of the pain point relief instant payments can offer will require billers, as well as others involved in supporting end-to-end payments processing, to update a variety of systems and processes. Stay tuned for additional articles in our how to get ready for instant payments series that will help organizations explore opportunities, identify the systems and processes that may need updating, and work with key partners, including financial institutions, vendors and key customers to determine the ROI and get ready.


1C2B refers to consumer to business and B2B refers to business to business transactions.

2According to an article by Jeffrey Sauro (Off-site), a study of nearly 3,900 customer calls to more than 3,400 businesses in a wide range of industries found that between 12 and 18% of these calls were bill-related.

3Gartner’s 2019 Customer Service and Support Leader poll (Off-site) indicates that live channels such as phone, live chat and email cost an average of $8.01 per contact, while self-service channels such as company-run websites and mobile apps cost about $0.10 per contact.

4Aite, “How Americans Pay Their Bills: Sizing Bill Pay Channels and Methods,” September 2020.

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