How a national supplier moved 80% of their credit card-on-account payers to other forms of payment and is saving $1M a year.
A national supplier faced a common dilemma: many business customers were using credit cards to pay their in-house account balances. Though this practice is widespread, it presents suppliers with two problems. First, it’s against card association rules to use a credit card to pay a terms based account, which could result in stiff financial penalties though it’s rarely enforced. Second and more impactful, it’s expensive. Suppliers are effectively paying twice for each transaction: they’re paying for the cost of an in-house B2B credit program plus the credit card processing fee of about 2-4%, even higher for online transactions.
This national supplier wanted to improve its margins by migrating its credit-card-on-account payers to other forms of payment. They lacked the ability to offer online payments - something their business customers had expressed a desire for. Though they believed most customers would make the switch, especially by offering online bill pay, they wondered if some would become discouraged and turn to competitors. Like many suppliers, they were stuck in a Catch-22: accept credit cards and absorb the high fees or refuse to accept credit cards and risk losing customers.
"Suppliers are effectively paying twice for each transaction: they’re paying for the cost of an in-house B2B credit program plus the credit card processing fee of about 2-4%, even higher for online transactions.
The supplier partnered with BlueTarp Financial for a customized B2B credit program that includes online applications with instant decisioning, flexible lines and terms, risk expertise, collections, customer service and more. BlueTarp offers several ways for buyers to pay, something the supplier couldn’t offer previously, including online bill payments via ACH as well as over the phone and the traditional mailed check.
A multichannel approach to changing payer's behavior
BlueTarp helped the supplier save nearly $1M in credit card fees, a year, by implementing a multichannel strategy, from technology to customer communication that successfully moved 80% of credit card-on-account payers to other forms of payment.
This strategy included:
Seamless online bill pay integration:
Since the supplier lacked the ability to accept online bill payments, BlueTarp built a customized online payment infrastructure that integrated seamlessly into the supplier’s existing eCommerce platform. Customers could sign into their account, place an order, and make a payment on their terms account all in the same online environment. Customers could also self-serve by having the ability to view their purchase history, download statements and request additional credit. The convenience of the purchase-to-payment experience was key in BlueTarp’s success in converting so many customers from credit card use.
Supplier policy change:
During the migration to BlueTarp’s B2B credit program, the supplier withheld the ability for customers to pay their account with credit cards for three months. This enabled BlueTarp to educate customers on the ease of paying their bill online, by phone, or by mailed check if that was their preference. In parallel, BlueTarp trained the supplier’s sales team and account managers so they knew how best to communicate the policy change and payment options to customers.
With the conversion to BlueTarp, as well as the supplier’s policy change, BlueTarp implemented a comprehensive plan to communicate the new online bill pay feature and program updates to customers. Customers were notified of their new payment options from the start with an introductory welcome letter as well as in their billing statements. Post conversion, BlueTarp sent customers onboarding emails that included a direct link to their supplier’s secure portal where they had easy access to online bill pay. Customers also receive regular operational emails letting them know when their statement is ready to be viewed online with a link to conveniently pay online.
"Knowing customer behavior needed to change, BlueTarp agents were trained to expect that 10-15% of customers would need specific direction and support to make alternative payments."
Call center training:
Knowing customer behavior needed to change, BlueTarp agents were trained to expect that 10-15% of customers would need specific direction and support to make alternative payments. Agents encouraged customers to pay via the supplier’s secure portal, they offered to take the payment over the phone, or they provided the address for mailing a check. For customers that insisted on using their credit cards, BlueTarp agents simply instructed them to use their credit card at point of purchase.
A successful plan comes together
In three months, they successfully migrated over 80% of habitual credit card-on-account payers to other payment solutions. For the remaining 15+% who were unwilling to pay their bill otherwise, the supplier restored the capability after the three month period. This enabled the supplier to avoid attrition for those who were passionate about using credit card (most often so they could get rewards points). They also learned that customers that paid on terms spent 3x more on average than customers paying with credit cards.
For any new customers, the upfront sales process was changed to set up the account at the start as a credit card payer OR set them up as a trade credit account. This will significantly reduce if not eliminate the double dip expense on their B2B credit program from growing.