What makes you trust your payment processing provider?
February 15, 2023
The fast-moving, ever-changing financial services market is continually evolving. In fact, there’s no better example than the way that payment processing has changed over the past few years. We’ve recently seen considerable developments in this area that have revolutionized how lenders offer financing and service to their customers. These changes have been driven by consumer demand for a more efficient experience and a remarkable ability to achieve financial goals. So, what do these changes mean for you?
In this blog post, we’ll look at how payment processing has evolved over time, explore why these changes happened in the first place, and discuss how your organization can benefit from them today!
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Streamlining the Loan Application Process
Lenders are using payment processing companies to streamline the loan application process and make it easier for borrowers to apply for a loan. The most common tools include automated underwriting, document verification, and loan disbursement.
Automated underwriting (AU) involves a computerized decision-making system that uses data from multiple sources to make credit decisions based on pre-set rules and guidelines rather than human judgment alone. It allows lenders to approve or decline applications within minutes instead of days or weeks by reducing manual review time while maintaining strong risk controls.
This technology helps lenders reduce costs while improving the efficiency of existing processes, such as onboarding new customers or issuing new cards/lines at renewal time, by eliminating manual intervention steps like manually reviewing supporting documents before finalizing approvals/declines; instead relying solely on AU results which can be viewed in real-time via portals provided by third-party vendors such as Payment Processing Companies.
Reducing the Risk of Loan Default
A payment processing company uses advanced fraud detection and prevention tools to help lenders reduce the risk of loan default. This protects lenders from losses and ensures borrowers are not burdened with unmanageable debt.
With the right payment processing platform, you can also offer your customers a convenient way to pay their bills online or over the phone without worrying about maintaining an infrastructure for accepting online payments yourself.
Offering Alternative Payment Options
The revolutionized payment processing is also changing the lending landscape in Canada by offering alternative payment options. Payment processing companies are working with financial institutions and other lenders to provide borrowers with more convenient ways to make payments on their loans. These include automatic, mobile, and online payments that can help reduce delinquencies and improve loan performance.
Improving the Customer Experience
Payment processing companies are helping lenders to improve the customer experience by offering convenient payment options and real-time transaction processing. This improves customer satisfaction and loyalty, which is critical for long-term business success.
The company’s mobile-first approach allows consumers to pay their bills wherever they are. Customers can access their bill payment information in real-time and make payments on the go using any mobile device, including smartphones and tablets.
Enabling Fintech Innovation
Payment processing companies enable fintech companies to disrupt the lending industry with innovative lending models and alternative financing options. This is creating a more diverse and competitive lending landscape in Canada, which benefits borrowers and lenders alike.
With payment processing services such as Stripe or PayPal behind them, fintechs can offer products like peer-to-peer lending (P2P), marketplace lending, or invoice financing that were previously too risky or expensive for traditional banks to offer on their own. In addition to lowering the barrier to entry into these markets by reducing overhead costs associated with acquiring customers online, payment processors also provide fraud protection against online transactions made through their platforms — which helps keep costs down for everyone involved in any given transaction.
Enhancing Data Analytics and Insights
Payment processing companies also provide lenders with data analytics and insights to help them make better lending decisions. This includes insights into borrower behavior, loan performance, and risk management. The data collected can be used to assess how well a lender’s products perform in the marketplace and what changes need to be made based on this information.
Lenders need to have access to this type of information because it allows them to provide better services for their customers by helping them understand to whom they’re lending money, as well as how much money each customer should receive based on their financial situation.
Supporting Financial Inclusion
Payment processing providers are helping to create a more equitable and inclusive lending landscape in Canada by providing access to credit for underserved communities and individuals with limited credit history.
This is a major step towards achieving financial inclusion for all Canadians, especially those who have been traditionally excluded from the traditional banking system due to their ethnicity or income level.
Conclusion
We have seen that payment processing is a powerful tool for fintech companies and banks. It enables them to offer more innovative products and services that can help their customers manage their finances better while also increasing revenue for themselves.
Kapital’s team of payment processing experts oversees the Kapcharge platform. The platform revolutionizes online payment processing for all merchant types by allowing electronic transactions to occur securely and streamlining financial reporting.
We will work with you to ensure your merchant application complies with our banking partners’ guidelines. Our staff is always happy to help customers find a solution that fits their budget and needs – contact us today!
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