IVR Payments, also commonly known as Pay-By-Phone, employs automated Interactive Voice Response technology to enable customers to make payments over the telephone. IVR Payments applications can also be configured to store credit cards for future transactions. When customers interact with a merchant’s IVR Payments application, they are guided through an automated payment process by a series of pre-recorded voice prompts. Customers interact with the IVR Payment application by entering keystrokes on their telephone’s keypad. Callers are typically prompted to first enter information such as an invoice # or an account # to identify what is being paid, followed by entering an amount to pay or being presented with an amount due. Finally, they are prompted to enter their credit card or another method of payment information. The IVR Payments application then securely transmits this payment request to the merchant’s payment gateway in real-time for authorization and then notifies the caller of their transaction’s successful completion.
IVR Payment systems empower customers to make payments by phone 24/7/365 by interacting with an automated interactive phone system. Merchants can offer their customers multiple ways to connect to their IVR Payment system including:
Once the customer is connected to the IVR Payment system, the process for making a one-time payment would typically work like this:
There are many variations on the above payment process that merchants can choose for how their customers will use their IVR Payment service. Some of these options include:
The two most common types of IVR Payment services that merchants frequently choose between, depending on their operational needs, are:
You can learn more about how IVR Payments work by visiting this article: How Do IVR Payments Work? The Basics
IVR Payment systems are securely connected by specialized software integrations to a payment gateway to conduct credit and debit card transactions with the merchant’s payment processor.
Payment gateways are a software interface that captures and validates credit and debit card data from the customer, then transmits this data for processing by the merchant’s payment processor. Payment gateways allow a merchant’s card-not-present payment technology (such as an ecommerce site or IVR Payments) to securely connect to the merchant payment processor. Gateways validate cards with the customer’s issuing bank (i.e., the bank that issued the customer’s credit card) and approve or decline payments but they do not complete the processing of the actual payment. Payment gateways also perform other functions including fraud management, reporting, and storing credit card tokens for card on file transactions.
When configuring card-not-present payment services (such as for phone payments or ecommerce) merchants can choose between a variety of third-party gateways (that connect to multiple payment processors) or they can use the gateway service that is offered by their Payment Processor.
Payment Processors are the financial service chosen by the Merchant to execute their payment transactions with their customer’s issuing bank. Payment processors will first set up a merchant account with the merchant’s acquiring bank. The payment processor is responsible for managing the transfer of funds from the issuing bank to the merchant account for settlement of each transaction while the acquiring bank licenses the merchant to accept credit cards and maintains the merchant account. In some cases, the payment processor and the acquiring bank may be the same entity however they are not the same things.
Businesses can offer customers a wide range of IVR Payment transactions, including the ability to store their credit card for future transactions with the merchant, which is called card Tokenization. Tokenization is a transaction in which the credit card information is securely stored on the Payment Gateway/Processor. A token is then generated by the gateway and returned to the merchant. The credit card information is encrypted in a vault for safekeeping by the payment gateway/processor. This token allows a merchant to submit future or recurring transactions to the gateway that will be charged against the stored credit card without the need to transmit the actual credit card information.
Tokenizing can be conducted as either a stand-alone transaction in which no charges are processed at the time that the card is tokenized, or the card can be both charged and tokenized at the same time.
Tokenization can also be used with IVR Payment applications to enable one-time payments by saved payment method. For their customer, this option will be presented by the IVR as a choice of payment methods, for example:
“To enter a credit card to pay, press 1,
To pay using your credit card on file, press 2”
Merchants can use tokens to submit one-time charges when needed, or they can set up recurring subscription payments with the token in their billing software. To enable an IVR Payments system to tokenize credit cards, businesses simply need to add this gateway transaction to their IVR configuration.
Another IVR Payment method option that businesses can offer their customers is ACH / eCheck. An ACH / eCheck is a type of electronic funds transfer where an electronic check is withdrawn from the payer’s checking account and processed over the Automated Clearing House (ACH) network.
To enable an IVR Payments system to process ACH transactions, businesses simply need to choose a payment gateway that supports those types of transactions. For their customer, this option will be presented by the IVR as a choice of payment methods, for example:
“To make a payment with your credit card, press 1,
To make a payment from your checking or savings account, press 2”
When the customer chooses ACH, they are then prompted to enter their checking account information. The payment is then automatically withdrawn from the customer’s account and the funds are typically deposited in the business’s account within three to five days after the transaction is initiated.
The receipt data from an IVR Payment transaction – which can be a credit card sale authorization, a pre-authorization, a credit card token, a credit card verification, an ACH authorization, a card-on-file sale authorization or a combination of several transaction types – can be transmitted to the merchant for reconciliation using a variety of methods:
Every business or organization that accepts credit card payments for products and services must be PCI Compliant. The business is ultimately responsible for securing their customer’s credit card information even if they are outsourcing their payment processing to a third-party vendor.
By removing the handling of sensitive credit card information from live staff and overlaying their business technology infrastructure with an IVR payment solution from a certified PCI compliant provider, businesses can both significantly reduce their compliance efforts and ensure their payment process is PCI compliant.
Before choosing any solution to address PCI compliance it is highly recommend that you check first with your merchant service provider or a Qualified Security Assessor (QSA) for help with assessing specific PCI compliance requirements for your organization’s payment environment.
An IVR payments solution delivers benefits to both businesses and their customers.
The average IVR Payment | pay-by-phone call takes 2.75 minutes to 3 minutes. This may vary depending on the length of your introduction message, additional instructions you may provide your callers, and how much information callers are required to enter.
Automated IVR Payments has a strong potential to reduce operational costs in three key ways:
Staffing. Whether a business is operating a large call center or if they only have a few staff answering payment calls and taking payments live by phone, the effort required for this can quickly add up to hundreds, or even thousands of staff hours per year, the reduction of which can translate into significant cost savings. In addition, if the business has implemented a secure work area for handling these calls, the elimination of the wait time associated with setting up these calls is a further substantial reduction in staffing costs.
IVR Payments enable businesses to handle any volume of concurrent payments and to implement automated payment reminder processes without the demand of these either hindering existing staff productivity or having to increase staffing to maintain service levels during peak payment periods.
Compliance. An IVR Payment solution removes payment card data from both the hands of staff and business systems. This eliminates the significant costs required both up front and annually to institute and maintain an in-house payment process that is PCI DSS compliant. While merchants continue to be ultimately responsible for their compliance, their effort required is significantly reduced when payment processing is outsourced to a third-party payment service.
Cash Management. Putting tools in place to ensure that receivables are collected on time is an important element in successful cash management and controlling the costs associated with operating loans. Our research has found that a significant percentage of customers who want to pay now are calling because their payments are already either past due or are about to be. Automated IVR payments can have a significant impact on a merchant’s accounts receivable collections.
When implemented effectively, IVR payments offer customers convenience, ease of use, and the comfort of knowing that their credit card information is being securely transmitted. For businesses who are looking for ways to drive customer engagement, market research suggests that IVR Payments technology can help with achieving this goal.
Another IVR Payment feature that enhances customer engagement is SMS Text messaging payment receipts. There are numerous industry studies that indicate that SMS Text messaging is one of the fastest growing preferred methods of communication by customers. Datatel recently conducted its own study that showed that businesses across multiple industries who offered their customers an IVR Payment option experience a 65% SMS Text Payment receipt opt-in. And this number will likely only continue to grow. The result is more opportunities to initiate a meaningful dialogue with customers in the communication channel that they prefer. This means higher customer satisfaction and more opportunities to engage customers.
IVR payments in combination with others features like SMS Text Messaging offers a variety of opportunities for businesses to communicate more effectively and efficiently with their customers. Whether it’s payment reminders, special offers, or quick customer satisfaction surveys, businesses can use this technology to get paid quicker, boost sales (according to Velocify sales prospects who are sent text messages convert at a rate 40% higher than those who are not sent any text messages) and get valuable feedback.
IVR payment technology can benefit businesses by speeding up invoice to cash time. If there are multiple payment channels available, the customer will most likely choose to pay via the one that is quickest, easiest, and most convenient at the time they receive the bill. With online payments, a customer needs to be in front of their computer, launch their browser and type in the web address provided. Once there they typically have to log in with a password and follow a series of steps in order to make a payment. On the other hand, if there is an IVR option available, s/he might decide to simply place a phone call, and if it is an automated 24/7 system, the bill can be paid right then and there no matter what time of day it is.
When a business is attempting to understand their customer’s bill payment choices, the most important take away from that should be that offering their customers multiple payment channels that are available 24/7, benefits both them and their customers. Study after study has shown that 30-40% of customers prefer to be able to pay bills outside of normal business hours. IVR Payments offer convenience, ease of use and flexibility. Unlike online payments, there are no browsers to launch or passwords to remember. You just need to pick up the phone.