IVR Payments 101

What are IVR Payments?

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.

How do IVR Payments Work?

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:

  1. Customers can directly dial the IVR Payment system’s telephone number (merchants can publish a phone number for this on invoices, account statements or their web site)
  2. Customers can be transferred to the IVR Payment system’s telephone number by the merchant’s staff
  3. Customers can connect to the IVR Payment system by selecting a menu option in the merchant’s phone system. For example: To make a payment, Press 1

Once the customer is connected to the IVR Payment system, the process for making a one-time payment would typically work like this:

  1. The customer is greeted by the IVR Payment application and is then prompted to enter a customer number to identify themselves for the merchant.
  2. Optionally at this point, the IVR Payment application may have been configured to look-up this customer number with the merchant and present an account balance to the caller. The data exchange for this look-up is typically done in one of two ways 1) In real-time, using an API integration, or 2) By using an automated daily batch file exchange by SFTP.
  3. The customer is then prompted to either pay the presented amount or to enter another amount for payment using their phone key-pad.
  4. Optionally at this point, the customer may be prompted to select a payment method, if the merchant has chosen to offer multiple payment methods such as credit card, debit card or ACH eCheck.
  5. The customer is then prompted to enter their payment method information, such as their credit card number, expiry date and CVV.
  6. The IVR Payment application now securely transmits the customer’s payment information to the merchant’s payment gateway for processing. The payment gateway replies to the IVR Payment system with the transaction results. Communications between the Payment IVR and the Payment Gateway are facilitated by an integration using the Gateway’s own API specifications.
  7. The customer is now notified of their completed transaction results and is prompted to select from a menu of options (For example – make another payment, transfer to a live agent, receive a text receipt, etc.) or they can simply hang up.
  8. Optionally at this point, the transaction results can be posted in real-time to the merchant’s business systems (CRM, ERP or billing platform), or the merchant can reconcile their business records either by using an automated daily batch file exchange or by downloading a transaction report online from the Payment IVR’s report portal.

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:

  • offering multi-language service,
  • offering a variety of payment methods such as credit card, debit card and ACH eCheck,
  • storing and updating a payment method for use with future payments,
  • charging convenience or service fees,
  • presenting account balances,
  • routing payments to multiple merchant accounts.

What Types of IVR Payment Configurations are there?

The two most common types of IVR Payment services that merchants frequently choose between, depending on their operational needs, are:

  1. Customer Self-Service: Customer Self-Service Pay-By-Phone, is an Automated IVR Payments system that allows customers to make payments 24/7/365 with no live assistance required. The customer can connect to the system by a variety of methods, including direct dial, an IVR-to-IVR transfer, or transfer by a live agent. The secure payment process is fully automated.All payment information is entered directly by the customer into the Payment IVR. In addition to offering customers greater payment convenience, automated self-service payments reduce the demands on the merchant’s staff, increases collection rates and mitigates PCI DSS risk for the merchant by removing manual human interactions.
  2. Agent Assist: Agent Assist Pay-By-Phone is an Automated IVR Payments system that allows a merchant’s agents or staff to accept payments via a process that is PCI compliant. Before connecting a customer, an Agent sets-up the payment process by entering a Customer Numberorder amount, or other details on their keypad (or optionally this data can be transmitted by a CTI integration with the agent’s call center systems).Once the agent has set-up this secure payment line, the customer is connected to the system for the automated collection of their credit card information. The card information is entered by the customer without the agent hearing or collecting any card information. In addition to vastly reducing the scope and cost of PCI and DCI compliance for call centers, this service reduces agent time for payments and works equally well with both in-office and home-based agents.

You can learn more about how IVR Payments work by visiting this article: How Do IVR Payments Work? The Basics

How do IVR Payment systems Connect to Payment Gateways and Payment Processors?

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.

How Can IVR Payment applications be used for Credit Card Tokenization?

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.

How Can IVR Payment applications be used to process ACH / eCheck Transactions?

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.

How are IVR Payments transaction results transmitted to the business?

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:

  1. On-line Reporting: For businesses that do not require an automated reconciliation process, on-line reporting offers real-time, on demand reports of all transaction data. These reports are available both in the payment gateway’s virtual terminal or from the IVR Payment system’s own reporting portal, and can be downloaded by the business user or viewed online.
  2. Real-Time: For businesses that require an integrated reconciliation process, the transaction data can be transmitted to the merchant’s business systems in real-time using a Webhook (a web-based communications that are initiated by the IVR Payment platform). In some cases, the merchant’s ERP vendor may require that this integration be done using their own proprietary API specifications.
  3. Batch File Transfer: For businesses that require an automated process but cannot support real-time posts to their business systems, automation of a batch file transfer by SFTP offers a simple method for delivering transaction data to their business systems. These files can be encrypted using PGP encryption which adds a further layer of protection for the information in transit.

How Do IVR Payments Help with PCI Compliance?

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.

What are some of the benefits of IVR Payments?

An IVR payments solution delivers benefits to both businesses and their customers.

  1. Customer Convenience: Consumer trend research shows that most consumers simply expect merchants to offer omni-channel payment options and accepting payments by phone remains a significant channel for most. Automated IVR Payments services this market demand for payment convenience while reducing both the costs and PCI compliance risks of handling phone payments by live staff. Customers do not have to wait to speak with a live person to make a bill payment and they can securely pay at their own convenience.
  2. Operational Efficiency: Agent and staff assisted payment calls are both more costly to handle and less efficient that automated IVR Payments. Offloading payment calls from live staff will reduce both the agent call volume and shorten queue wait times. Call centers that have implemented live agent PCI strategies such as clean desks will achieve a significant reduction in payment call time and customer hold time. This means that agents can be allocated to more high-touch customer interactions that truly require human interaction so as to service them effectively.
  3. PCI Compliance: Automated IVR payments removes human interaction and the merchant’s business environment from the scope of PCI DSS compliance as well as reducing their risks from internal data breaches. By eliminating the manual task of accepting credit card information by live staff there is no need to implement costly and inefficient PCI compliance strategies for locking down agent payment processing work areas. Both the agents and call center systems are removed from PCI scope.

How long is the typical IVR Payment call?

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.

How do IVR Payments help with Operational Cost Reduction?

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.

How can IVR Payments help businesses enhance customer engagement?

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.

What are some of the ways that IVR Payment technology can assist with improving customer communication?

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.

How can IVR payments help improve bill payment collection rates?

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.

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Gerry Henstra, CEO, Henstra Business Solutions

“Customer service is a really big deal to us, and I am glad to do business with a company that obviously takes it as seriously as we do.”

Jeff Boatman, Global Client Solutions

“We’re happy with the IVR Payment system and it has been working well for us. Recently we also setup your newest SMS (text) receipts and found it to work great.”

IT Manager

“I want to command you and your team at Datatel on the job just completed for Tele-Response Center. The attention to detail and professionalism with which you approached the project was exemplary and greatly appreciated especially considering the several applications that needed to be implemented on short notice. Thanks again for your assistance getting this project off the ground so smoothly.”

Joe Grossman, Sr. Vice President, 121 Direct Response

“My team and I would like to commend Datatel on creating an IVR application that adds great value to our new Travel product. Your knowledge, input and expertise in IVR scripting, call flow management and overall IVR logistics made the development and implementation stages extremely easy to manage. Thank you for a well executed campaign that was launched on time and on budget.”

Ryan McCullough, Marketing Manager, Aegon Direct

“Great team to work with. I look forward to utilizing some additional capabilities in the future.”

Bob Griffin, VP of Operations, MedA/Rx

“We are very grateful for many years of mutually beneficial business relationship with Datatel and for impeccable customer service we have received during these years.”

Director of Student Accounts

“We, Standard Life, very much appreciated Datatel’s expertise, knowledge and support as we worked through the development and implementation stages. Our Clients appreciate the simplicity of the capability, while gathering very valuable feedback. Thanks for making this a very positive experience.”

Anne Pennell, VP, Customer Services Operations, Standard Life

“This was one of the best implementations I have been a part of. The communication was excellent and everything was responded to and dealt with swiftly. A real pleasure. We are looking forward to the impact this will have on our patient payments! Thank you!”

Kim Pace, Director Patient Accounts and Revenue, Chatham-Kent Health Alliance