Online Collection Programs Could Serve 11 Million Annually

Each year, there are at least 11 million credit card accountholders that are likely prospects for online collection servicing, suggesting the market for such technology is ripe, according to a new report from Mercator Advisory Group.

In addition, only about one-third of the top 20 card issuers offer an online collection program, Principal Analyst Ken Paterson estimates in his report, “Online Collections Solutions: Morphing To Intelligent Interactive Cardholder Servicing.”

Paterson contends that at least 50 million general-purpose credit card accounts might experience delinquency over the course of a year. If 75 percent of those cardholders have Internet access, and one-in-four “are open to using the Internet for these sensitive issues, then industry volume could easily meet or exceed 11 million delinquent card accounts served annually,” concludes Paterson.

The major providers of online collections technology should see growth as more issuers offer online collection programs and more cardholders adopt broadband technology. Firms in this sector include Apollo Enterprise Solutions, Debt Resolve, Online Resources Corp., and Global Collection Systems.

In addition, SoundBite Communications offers an enhancement to its automated voice messaging solution that is designed to accept payments without agent interaction. SoundBite says its Agentless Direct Collect can accept payment from the customer, such as a check routing number and account number for ACH purposes, and provide confirmation to the cardholder.

Paterson lays out the benefits of the technology – anonymity for cardholders that don’t want to talk with a collector; it’s running 24/7; a careful ‘script’ reduces the compliance risk of a live collector; and the cost of adding cases “is low and dropping.”

There are a number of cons to online collections, notes Paterson. The natural channel for contacting and driving a delinquent cardholder to a collection site is email, but issuers today have a valid email address for less than 20 percent of their cardholders, according to Paterson’s research.

In addition, issuers will have to coordinate their communication efforts – phone, email, mail – to delinquent accounts, to ensure that calls stop after an online payment is made.

Currently, online collections are an add-on, with a usage rate of less than 5 percent, according to Paterson. But that could change as more large issuers offer the programs. That in turn will spur smaller issuers to ask their outsourcing vendors to add online collections technology to their menu of programs.