The rapid growth of Fintech lending in Indonesia highlights the bright prospects that digital lending in Indonesia promises. However, increased lending also necessitates ensuring timely repayments and mitigating the risk of Non-Performing Assets (NPAs). To help lenders manage the challenges of debt repayments, Credgenics offers Billzy Payments Direct Debit, which not only streamlines the digital loan repayment process but also simplifies reminder communications and payment nudges to customers.
What must borrowers use direct debit to avoid payment miss?
Apart from lack of funds, borrowers miss repayments due to various reasons, including lack of information on repayment amounts or due dates of monthly repayments. The digitization of the borrower repayment journey with Billzy Direct Debit removes any challenges and streamlines the process for digital debt repayments in Indonesia.
Fig 1: Fintech SaaS surge in adoption in Indonesia, Source
Introducing Billzy Payments Direct Debit
Credgenics Billzy Payments Direct Debit allows lenders to deduct funds directly from a borrower’s bank account after the borrower sets up a recurring payment. This feature facilitates single-click check-out, recurring debits, instant settlement based on regulatory guidelines, and lower transaction fees in comparison to credit card transactions. It is particularly beneficial for pre-due buckets, preventing missed payments without the need for constant reminders or multiple nudges. Once borrowers have successfully linked their bank accounts via Credgenics Billzy Payments, they enjoy a seamless auto-debit feature for future transactions. There will not be a need for tiresome account verification or opening new loan accounts in the future for repayments.
How does Billzy Payments Direct Debit work?
Billzy Payments Direct Debit allows end users to register their debit cards or online bank login with a lender or marketplace to pay for their purchases. After a one-time authorization, lenders can pull funds directly from an end user’s bank account. Since the borrower can obtain digital loan approval without the need to have an account at the same bank, the process functions effectively.
Fig 2: Important steps for direct debit payments
Benefits of Direct Debit for Lenders
The benefits of direct debit for fintech lenders in Indonesia offer the advantage of completing customer repayments by ensuring that they do not miss the due date. Borrowers benefit from transparency on their repayment amounts as the system automatically processes transactions, requiring them only to maintain sufficient funds in their registered accounts.
Billzy’s Direct Debit facilitates timely loan payments, providing a win-win situation for both borrowers and fintech lenders. Fintech companies can achieve well-organized and accurately predicted cash flows. This also ensures trust in the digital lending scope and reduces the risk of default. Simultaneously, borrowers can steer clear of unnecessary late payment penalties, contributing to a more cost-effective repayment process.
Reduced drop-off rates
One of the challenges in traditional payment collection methods lies in the increased likelihood of drop-off rates, primarily attributed to issues such as SMS delivery, OTP (One-Time Password) generation, phone number correctness, and internet connectivity problems. When borrowers encounter difficulties in receiving or processing these communication elements, it often leads to delayed or missed payments, impacting the overall repayment process.
Billzy’s Direct Debit serves as a transformative solution for effectively mitigating drop-off rates. Automating the deduction of repayment amounts directly from the borrower’s bank account:
- Diminishes dependence on external factors such as SMS, OTP, or internet connectivity.
- Establishes a seamless and reliable mechanism for collecting payments.
- Eliminates the need to rely on external communication channels, which are prone to drop-off issues
As a result, the chances of payment drop-offs are remarkably diminished, enhancing the overall efficiency and reliability of the debt collection process. Borrowers experience a more convenient and foolproof loan repayment method, reducing missed payments and providing lending institutions with a more robust and dependable approach to managing their collections.
Decrease in costs
The adoption of direct debit mechanisms, demonstrated by Credgenics Billzy Payments Direct Debit, brings about a significant decrease in operational costs associated with loan collections. Traditionally, lending institutions heavily relied on field collectors to manually collect repayments, incurring expenses related to agent salaries, travel, and other logistical aspects. With the implementation of automated direct debit, the dependency on field agents diminishes, leading to substantial cost reductions.
The automated deduction of the loan installment amount directly from the borrower’s account on the scheduled EMI due date results in:
- Minimized need for field agent involvement
- Simplified operational processes
- Increased cost-effectiveness compared to the traditional field collector model
As a result, lending institutions can optimize their resources, allocate funds more efficiently, and achieve a notable decrease in overall collection-related expenditures. The cost-effectiveness of direct debit emerges as a pivotal advantage, aligning with contemporary trends in financial technology to enhance efficiency and reduce operational overheads for lending entities.
Reduced Default Rate
One of the most significant ways to reduce the risk of late payments is to use an automated payment system, such as the Direct Debit capability of Credgenics Billzy Payments. By seamlessly debiting the required funds from customers’ bank accounts, the system:
- Acts as a proactive measure to prevent delays in repayments.
- Substantially reduces the overall risk of default, safeguarding the financial stability of both borrowers and lending institutions.
- Fosters a positive financial environment for all stakeholders involved.
In essence, Billzy Payments Direct Debit provides a transformative solution in the Indonesian fintech lending landscape, offering a comprehensive solution to the challenges associated with loan repayments. By fostering efficiency, transparency, and cost-effectiveness, this innovative feature aligns with the evolving trends in financial technology, providing a blueprint for enhanced collections efficiency and customer satisfaction. To know more about the solution, write to Indonesia.firstname.lastname@example.org
1) How can lenders implement Direct Debit for loan collections?
Lenders can implement Direct Debit by integrating Billzy Payments Direct Debit features into their systems. This allows end users to register their debit cards or online bank logins, enabling merchants to pull funds directly from the user’s bank account after a one-time authorization.
2) Can Direct Debit be used for pre-due buckets to prevent missed payments?
Yes, Billzy Payments Direct Debit is particularly beneficial for pre-due buckets, preventing borrowers from missing payments without the need for persistent reminders. It provides a convenient one-click check-out option and facilitates recurring payments.
3) What are the key benefits of implementing Direct Debit for lenders?
Lenders see improved control over borrower repayments, lower drop-off rates, a reduction in operating expenses, and a significant decrease in default rates. Billzy’s Direct Debit ensures a streamlined and secure repayment process, contributing to well-organized cash flows.
Credgenics Billzy Payments Auto Debit ensures:
- Simpler loan repayment experience
- Faster and reliable transaction
- Higher efficiency, security, and convenience
- Reduction in borrower drop-offs due to SMS / OTP / Internet issues
- Risk mitigation for late payments by auto debit of funds
Author: Ritika Poddar, Product @Credgenics