Prioritizing Relationships over Transactions: The Importance of Payments in Customer Experience with Deluxe

Announcer  00:00

Craig, welcome to the Treasury Update Podcast presented by Strategic Treasurer. Your source for interesting treasury news, analysis, and insights in your car, at the gym, or wherever you decide to tune in.

Craig Jeffery  00:18

Welcome to the Treasury Update Podcast. I’m your host, Craig Jeffery, and today’s episode is called Prioritizing Relationships Over Transactions, and we’ll be exploring the importance of payments in the customer experience. And I am here with Layne Kight from Deluxe. Layne, welcome back to the Treasury Update Podcast.

Layne Kight  00:39

Thank you so much. Happy to be here.

Craig Jeffery  00:42

The last time we spoke, we discussed layers of the cake. And in the show notes, you’ll find a link to our last podcast. In this episode, our discussion will center on relationships. Payment processing is not well in many cases, it’s not just a transaction anymore. It’s not just transactional. And many organizations and people find that it’s much better if the the overall experience is encountered. This usually takes the shape, or hopefully takes the shape, of making sure your payment process is part of your customer experience journey, certainly from a vendor provided perspective. But why is baking this in, I guess I’m back to the cake. Why is baking this in important to corporations as well as their customers? You

Layne Kight  01:27

You know, today we live in this age of choice, and coming from a place where oftentimes, businesses could have this kind of mandate of like around payments, of you’re going to pay me here on this time, on this date, using this method. But today, we live in such a globalized economy where where people have all of these choices. They can walk down the street and oftentimes find a substitute for whatever you’re looking at, whether that’s a power company, whether that’s, you know, an online clothing retailer, whether that’s your accountant, whether that is, you know, a medical provider, all of these choices now exist. And so in that age, everything from how do they get to their payment experiments, all the way through, how long does it take for my payment to process to what are my payment options? Do I have a payment plan like all of that is so much more important because they can just walk down the street and find somebody who makes it so much easier for them. We live in this day and age where all of these businesses talk about the customer journey and journey mapping, and oftentimes what I see is it starts with like the entrance point into whatever the service is, whatever the physical good is, and then ends when the good arrives. But there’s that last piece, that is that whole payment experience where, you know, we see so much friction today, depending on what businesses are doing. And so I think it’s of the utmost importance that as they look at that journey map, as they look at that customer experience, the payment isn’t just a bolt on at the end anymore. It’s part of that whole map of what the customer goes through, or what the client goes through in order to do business with you.

Craig Jeffery  03:18

I think we talked about this one other time in another conversation, but, you know, like ride share applications, absolutely compared to the prior experience, it was always this. It was a bolt on. Everything was broken, you know, broken into separate processes. But then it became, it’s part of it. It’s emailed to you. There’s no slip of paper, there’s no mess, and it still hurts because you pay for it, but it’s not, it’s, there’s not that you called it friction. I mean, that’s one example. So what are some other examples where, if it’s not baked in. It’s, it’s very sub optimal.

Layne Kight  03:18

You know, I’m a coffee guy myself, so I’m gonna, gonna bring it a little local. I know most of us, you know, there’s lots of, like, really incredible large coffee chains, but, you know, I’m a local coffee guy, and one of the things that I appreciate most about my local coffee shop that I go to on a regular basis is they thought about the payment experience. So when you go in to make a purchase or to, you know, enter their rewards program. They made it so simple. All you have to do if you’re ordering from your phone, which you know most of us do if we’re on the go to get some coffee. They make the payment options really, really seamless. So they allow you to enter a credit card. You can enter a gift card. My favorite right now is that everyone seems to finally be coming to the trend and understanding of the frictionless payment experience of like Apple Pay or Google Pay. You know, people have started taking incremental steps, where for a little bit it was take a photo of your card and then while auto OCR lift the information and auto populate. But now it’s as seamless as double clicking the side of your phone. You can pay via Apple Pay, or whatever pay, and then it just flows all the way through, and you’re not having to enter anything. And you know you’re paying via the method you want to pay. You see the receipt kind of pop up on the top of your phone. And it really is just seamless. And I mean, as we think about it, and like the day and age, where that is just one small business, right, when we think about the magnitude, as businesses grow and they have more customers, and the expectations around payments get a little more wieldy, should I say they expect something to be a lot more integrative, something to be a lot easier to use. You just take that one small example, and you look at it across like even like you said the ride shares, and it’s just like, wow, that is somebody who thought about beginning to end and creating an experience that leaves me saying, Okay, that was easy. I’m gonna come back rather than Okay, that was a lot more challenging than I needed it to be. Let me explore what another coffee shop or another business has to offer. That’s interesting. I wonder what that does to sales. Obviously, you have to look at the whole experience, but the payment process, removing friction makes it more appealing. I wonder what that does to additional sales? Yeah. I mean, I think we’ve seen some evidence that it really continues to boost sales. Like one of the you know, things we talk about all the time is there’s industries like healthcare, where, if the payment experience isn’t easy, there’s a lot of write off and a lot of bad debt expense that gets baked into people’s P&Ls and people’s balance sheets, but when you have that easy payment experience, you know some of the research has shown that people will continue to come back to your business because it is so easy, and that’s why we see the moves with some of these digital payment processes, things like electronifying Your bill pay payments different aspects like that of how we within payments, are learning how to make those friction points disappear throughout the process.

Craig Jeffery  07:09

I don’t know if you ever, if you ever drove on the Garden State Parkway in New Jersey, a long time ago, there was tolls. It seemed like every 500 feet, I remember it being a quarter, and you’d almost have to have a roll of quarters if you were traveling much of the state, and you would throw it, you would you would time it until you would throw it like 15 feet away, 10 feet away, whatever it was, and try to get it into that weird receptacle they had so that you didn’t have to stop or slow down. And then they had these transponders, these easy passes. So now you just go flying through at either 35 miles an hour, full speed, and it just takes the money out of your account so you don’t have to slow down.

Layne Kight  07:57

You hit it right on the head. I mean, that is the like perfect use case, right? Especially for payments. Like, when, you know, we’ve all heard the term lights out payments straight through processing. But even when you think about the journey, it’s the same thing, right? Of, how can you make the points from A to B, like all the sub points in between, disappear, or feel like they’ve disappeared. And, you know, unfortunately, I never drove up there, but I remember my parents, when we were going to the airport, it was kind of the same thing. You had to throw some change in there, and you tried to time it just right, but if you didn’t, you kind of stopped, and it created that, like, whole like, okay, is this worth my time? You know, is this really worth it. But yeah, everything has been evolving like that. Like you said, the easy pass, toll tags. We talked about it last time too, I think when we were discussing this. But it’s like payments in general, and B to B, it follows all the consumer trends. And everything you look at from a consumer perspective is, how can I spend less time? How can I make it easier? And that’s what we’re seeing with the payments. And really, that is what’s getting baked into that relationship, right? And I know we’re going to talk about it some more, too. But relationships and building that rapport with your clients, even in just a sense of like the touch points of logging into a website, making a payment, you’re building that ultimate relationship. And you know, I’m finishing my MBA right now, and one of the things we talk about all the time is how much easier and less costly it is to keep customers that you’ve already acquired. So building that rapport, building that relationship, becomes really important, not only from the power of choice, but also in the instance of maintaining your brand equity and ensuring that you have sustainable profitability through your clients

Craig Jeffery  09:53

Layne, could you just give us a quick overview of your role at Deluxe?

Layne Kight  09:57

Yeah, absolutely. So, my role at Deluxe. I am our Senior Product Manager for all of our digital receivables processing products, which is a mouthful, totally hear that, but like, let’s break it down into what I do. So I oversee all of our products that really help banks and businesses offer solutions that help their payers transition out of making what we would consider like legacy payments, like mailed in check payments, to really transitioning to some more of the digital product offerings that are in the industry, one being electronic bill presentment and payment, where you log into a website make your payment, and then another is helping digitize those online bank bill pay payments. So a broad scope, looking at real time payments, looking at all of the new and exciting things, but always from the lens of, how can we create relationships with banks and help our clients get paid faster? Through that lens and creating a holistic solution that makes sense for them.

Craig Jeffery  11:02

Does that include IVR, integrated voice response systems?

Layne Kight  11:06

You know, it does include an IVR too. You know, I like to think that’s part of the holistic platform, but as somebody who has a long time holdout on paying through an IVR and then transition to a digital product. I do manage that, and it feels really good.

Craig Jeffery  11:24

Is that, is IVR considered legacy, transition or current?

Layne Kight  11:31

You know, that’s a really great question, and in in the terms of my MBA professors, I’m going to give you the best answer. It depends how you look at it, I would say it’s somewhere in between, but, you know, you’re not mailing in a check. So I’d say it’s maybe a little bit new, but maybe a little bit dated too.

Craig Jeffery  11:50

Maybe transition hybrid. It’s on ramp.

Layne Kight  11:54

There you go. In the word of like, the world of like, hybrid learning, hybrid work situations. We can call this hybrid legacy and New Age payment technology.

Craig Jeffery  12:04

That sounds awesome. Well, talking about customer expectations, the idea of you want to pay, when and where you want to pay to make those things happen. And I was thinking we could probably go through some case studies of what are the expectations of people? How can those expectations be met? Whether it’s maybe focused on consumer but maybe there’s a business to business case as well. What are some examples or case studies that will help explain what we’re talking about here?

Layne Kight  12:38

I think a great one to start with is something we’re all familiar with, which is healthcare.

Craig Jeffery  12:43

This week, I learned healthcare is 20% of US GDP, and it’s expected to rise to 22% next year. I was like, wow, 1/5 of the economy.

Layne Kight  12:55

Healthcare is huge, and it’s something that, like we all have some level of experience with, right? It’s something that’s probably familiar to all of us. And, you know, let’s kind of call it like it is. Healthcare is confusing, right? You get an EOB in the mail, but it’s not a bill, and then you have to go pay it, and then it’s like, what’s my actual portion? And then there’s this whole insurance coverage, and it’s just kind of like this big, nebulous ecosystem, almost. And you know, it’s one of the industries where bad debt expense, where write offs are huge. I think I read something one day that was like, write offs can be anywhere from like five to 7% of healthcare systems revenue when and when you’re talking about 20% of GDP, that’s a pretty substantial number as you look at it. And so it becomes really important to think about that payments process. So, you know, as we started with, like, the nebulous, you know, here’s an EOB, here’s kind of what you need to pay. But do I need to pay this? And if in that process, you haven’t thought about, like, what does my payment experience look like? What does it feel like people are not going to pay you? Like, plain and simple, if you’re relying on them to get one paper bill and then remember to send in a check or walk into your office make a payment. It’s just it’s one of those friction points that creates that big write off threshold that we see. And healthcare companies that do this well, and where they’ve seen a lot of increase in their collections rates, are really optimizing and maximizing the ways that they can get paid. One thing I want to be clear on is we are not going to see paper checks go away. We’re not going to see cash and coin go away. Those still need to be payment options, because there are segment of your clients, or your customers, more than likely, that want to pay you that way. And it’s really important that you think about, okay, how do my customers, how do my clients want to pay me? And then make sure that you have options for all of those aligned. And that’s where we start to talk about it baking into that holistic journey as part of the map. One example is specifically when healthcare is the ability to take those online payments, so electronic bill presentment and payment something not necessarily new within the industry, but something that we’re seeing evolve in the way it works, right? So nowadays, when you look at healthcare websites, oftentimes there might be a micro lender that is baked into the payment process that says, you know, you have this really big bill. We understand if you can’t make it, if you make X amount on your first payment, you can then break the subsequent payments up into a payment plan. So that’s just one way that we’re even seeing, like incremental steps really start to take hold in that payment process. So it’s not necessarily the big technological jump that electronic bill presentment and payment was, but baking in those little features, those little things that create a better rapport with your client and understanding, those are starting to make their way into these payment processes as we look at industries like healthcare.

Craig Jeffery  16:15

That’s a great example. I always know on the healthcare side, it’s like, you wait for the you wait for the warning bill that says we’re going to refer this. And it’s like, okay, that’s the final bill, because the first 12 you got are all changing asthey’re getting paid. Are there other industries that you know, where you can think about the customer journey or the payment journey?

Layne Kight  16:34

One of them, I think a big one is, again, I love to give examples of things that we can all kind of sink our teeth into. You know, utility payments, rent payments, those are a big one. When I think of like utilities specifically, like so paying your power and light bill, obviously online payment options really mandatory. But then when you look at it too, it’s like, okay, online bank bill pay, right? That is a hassle for every business for the most part, because what happens is, like, Layne logs into his online bank bill pay system. He says, I’m going to make a payment for my water bill, and so I put in there Layne’s water instead of like account number or Kight water, or whatever I want to put in that number. What happens is, oftentimes, that’s what gets printed on the check for the account number that they need to pay. And it’s like, okay, well, that isn’t enough information. I don’t know what to do with this. And then it sits in an exception queue after it’s already sent in the mail. And so as you look at that, it’s like, well, that’s a friction point, because they cut my water off two days ago, even though I made my payment four days ago, because it hasn’t gotten there yet. And so again, so talked about last time with the layers of the cake and thinking about all those friction points. I mean, there are easy ways to reduce that, you know, with the use of, like an electronic lock box product, where those electronic bill pay checks stay as an ACH and don’t even drop out to paper check. So different ways like that, throughout even something as common as utilities, really important to reducing that friction, because if I made my payment four days ago and then you cut my water off, odds are I’m going to be pretty upset. And that’s where that friction arises. And you know, talking with businesses, a lot of what they get calls about are things like that, where their payers are like, Hey, I made my payment through my online bank bill pay for the 13th, when it was due, and it’s now the 15th, and you’ve cut my water off. But I know I made my payment. I see it come out of my bank account. So just different things like that. One that I see evolving more and more are like banks and credit unions themselves. Banks have been really focused on how they can help their customers, and now we’re starting to see them return to say, Okay, we have all of these treasury products. Why are we not using them ourselves? Same with credit unions, you know, we hear all the time. You know, when they do things like indirect lending, where they don’t necessarily have the relationship with the payers, but they need to get paid. And so really looking at that baking into that journey and saying, Okay, how can I create an experience for somebody who is my client but somebody that I don’t necessarily know. So again, it’s providing all of those options, looking at ways you can meet those payers where they are, and oftentimes that’s online, that’s through the use of something like real time payments, Apple Pay, which we talked about in some of those examples. But when you start talking about loans and lending, it’s okay, how can I create a branded experience? How can I create a seamless experience, and how can I ensure the safety and security of these payments as they come in throughout the process?

Craig Jeffery  19:53

So baking that in looking at the whole experience makes sense. I did want to shift a little bit in here. You shift to the practical side. You know, Deluxe provides these services. You’re the senior product manager in this space. But given all of this, this, this view of the customer journey, the idea of how payments fit into the customer experience, what are, what are some of the things that Deluxe is doing to help this journey? Maybe give an example to make it real?

Layne Kight  20:21

Yeah, absolutely. I think there’s a couple good examples I’m gonna give. One on the receivable side, one on the payable side of the house, because at Deluxe we, we want to think about like holistic relationships. We we talk about it one Deluxe all the time, and we want to be the partner for you no matter what you need to do on your payment journey, whether that’s getting money in or or sending money out, but on the receivable side, where I spend a lot of my time, you know, I’ve referenced it electronic bill presentment and payment we call it Deluxe Ebill, or Deluxe EBill Plus, which is our electronic bill presentment and payment option. And really what that is focused on doing is creating that branded experience for payments from, you know, banks that are small community banks all the way through some large regional banks that we work with to create that experience to give to their clients. And one of the things we’ve seen have a really big shift, just like I talked about is the internal focus on banks using products like Ebill. You know, going to circle back to that indirect lending or those auto loan payments. You know, oftentimes it was, here’s your retail coupon, send in your check, and then we’ll process it. But what we’re doing, like with Ebill and even our E lock box, which is that electronification of those online bill pay payments is really looking at, how can we help you meet your payers where they are. And I’ve said it a few times, but that’s kind of my motto that I try and live by, because I think it’s really important for businesses to think about and banks to think about, is where their treasury customers are in their evolution journey. And so what we do is we not only help support all of the legacy products and legacy payments. You know, we have a really incredible lockbox system. We have really incredible remote deposit capture, but we also have these new digital products with our Ebill, with our E lock box. And again, it really is, as we talked about last time, layers of the cake. So you start with making sure you can do all of the basic payment processing of, you know, check payment, electronic payment, Bill Pay, payment. And then how do you funnel that up into getting really big insights? And our 360+ product, it’s taking all of that information and really being able to ingest it and give insights into those payments, and that is where we are headed at Deluxe, it’s not just being a processor, but being a consultative partner and helping you gain more insights which better helps you understand your customer journey and like how you’re getting paid, the frequency, the channels. All of that becomes really important as you look at your whole business and and how to manage it.

Craig Jeffery  23:07

Could we take just a jump in on the R360? It sounded like you were saying you handle the processing of the payment, but you’re you’re seeing a lot more value in the information to the company to help make make decisions that’s more significant, or as significant as handling the transaction?

Layne Kight  23:28

Yeah. Oh, absolutely. I think, you know, throughout my career, what we’ve seen the evolution being, is like processing payments and providing payment options is something that a lot of people can do. I don’t think a lot of people can do it as well as Deluxe in some instances and a lot of instances, but most people can do it. But really, what is becoming more valuable. And I mean, we’ve seen this in like every industry, right? Your data, data in general, is almost the most valuable piece of anything nowadays, you’re going to get the money. You’re going to get your payment processed. Yes, we can do it faster. Yes, we can help you. But what do you do with that data afterwards to help inform your business? And it can be something as simple as, okay, 80% of my clients are still paying me via check, but I have this online banking portal. How do I help drive adoption to that online portal? Because that’s going to have multiple benefits. One, you’re going to get paid faster. It’s going to be a better experience. And then you also have, like, overall cost reduction, but taking that data, understanding your payer base, understanding your customer base, is in in my mind, at least, absolutely more important than the processing in general. And I think we’re seeing that throughout banks, throughout businesses in general, as that’s kind of the golden ticket to to really furthering your business and really creating good relationships with your payers.

Craig Jeffery  25:04

And I think you were going on the the other side of the full process.

Layne Kight  25:08

Yeah, I mean, the payable side. You know, as a receivables guy, most of my career, I like to think about getting money in, but getting money out is just as important. So what we’re seeing on the payable side of the house, and what we are doing and what we are seeing the best in class lean into is the power of choice, even on the payable side. So by putting how you want to receive your payment in the hands of that ultimate receiver of the money, that creates that better relationship. That’s what creates that rapport with that business. You know, we’ve all been the receiver of a random check in the mail and being like, Okay, what do I do with this random check for $3.56 but when you put that choice in that ultimate receiver’s hand to say, hey, send me an electronic transaction instead, or No, I do want to get that paper check that becomes really important and really powerful to creating those lasting impressions. And that’s what we are doing, and that’s what we are seeing the leaders in the industry do.

Craig Jeffery  26:17

Layne, thanks so much for your time today on this episode of the Treasury Update Podcast. Really appreciate it.

Layne Kight  26:23

It was awesome. Thanks for having me.

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