Managing Delinquencies in Subprime Auto

Delinquencies were increasing before the virus outbreak. What happens now? Even before the massive drop in economic activity due to COVID-19, there were signs of trouble brewing on the subprime loan side of the auto lending market. Now more than ever, it’s important for subprime lenders to understand and effectively manage these delinquencies.

Subprime Loans by the Numbers

While a subprime borrower has a lower credit score and presents a greater credit risk than an average borrower, the definition of “subprime” in terms of credit score varies. For our purposes, we’ll consider subprime to be a credit score of less than 620.

Auto debt is the 3rd largest debt category in the US after mortgages and student loans. It now makes up 10% of total household debt. The Federal Reserve Bank of New York issues a quarterly household debt study and based on its most recent study, and as seen in the chart below, about 15% ($25 – 30 billion) of 2019:Q4 auto loans are considered subprime.

Auto Loan Originations by Credit Score

Per financial analyst Wolf Richter, severe delinquencies on subprime auto loans have exploded, surging to a new record as of February 2020. Out of the $1.3 trillion in auto loan and lease balances, we know around $25 billion are subprime. We also know that almost a quarter, approximately $66 billion, were 90+ days delinquent in the fourth quarter of 2019. And this was before the virus outbreak.

At 90+ days delinquent, we all know the unfortunate reality: these borrowers are unlikely to come back and make the balance current again. Here’s another interesting chart from the Federal Reserve Bank of New York, showing 2.5% of all auto loans are 90+days delinquent, up 0.5% since 2014 and steadily increasing (NY Fed Debt Survey, slide 14).

Serious Delinquency by Loan Type

Cox Automotive, owners of Kelley Blue Book & AutoTrader, reports that severely delinquent accounts are up 5.4% year over year, painting a tough picture for subprime auto lenders.

What Can Subprime Auto Lenders Do Now?

As a subprime auto lender, you are, in part, stuck with the paper you have in your portfolio. Loans have been written and need to be serviced. So what to do now? Here are some simple but effective steps to take:

  1. Be proactive and maintain contact with the investor groups that buy your loans.
  2. Expand your payment options to make paying on existing loans as easy as possible for borrowers. Consider online payments, IVR (Interactive Voice Response), and text pay so borrowers can pay via cards and bank accounts whenever they have the cash available.
  3. Adapt communication styles to your borrowers’ preferences – implement text messaging services to send payment reminders and account updates.
  4. Ensure all relevant paperwork is complete, so you have what you need if the loan goes south.
  5. Fine-tune and be ready to show your collection and repossession procedures to prepare for any incoming repossessions.

There’s not much else you can do with your existing loans as they move through the servicing cycle, but you can use this information when evaluating new loans. However, it’s important to keep in mind our upcoming post-COVID-19 world.

The NY Post reports IHS Markit projects 2020 auto sales will drop by 15% compared to 2019. The NY Times reports analysts estimate a drop of about 37% in 2020 Q1 due to March’s shelter in place orders.

There are so many unknowns right now. Will the $1,200 per person stimulus package be the only public stimulus? Will more consumer-friendly legislation follow? Will consumers use that $1,200 to pay down debt? Issues surrounding job and home security abound.

We simply don’t know what will happen on a personal or economic level.

The one piece of ‘good news’ for subprime lenders is that more borrowers will need your services in the future. Banks and credit agencies will continue reporting on consumers’ pay habits, even if borrowers are allowed a debt holiday or a forbearance. As credits degrade in the upcoming months, more will need your services to finance their next cars. If you put some safeguards in place, you may be able to make the most of the situation. These safeguards include:

  • Verifying current employment
  • Increasing down payments and lowering finance amounts
  • Confirming bank balances to ensure personal liquidity
  • Exercising caution when underwriting for consumers in the states of New York, New Jersey, California, Arizona, and Nevada, the most debt-heavy states (NY Fed Debt Survey, slide 32)
  • Carefully evaluating 18- to 29-year-old consumers, the demographic with the most trouble paying current bills (NY Fed Debt Survey, slide 26)

You know it’s going to be a tough time post-COVID-19, at least in the short term. However, there are concrete steps you can take to prepare your lending business for what’s coming next. How will you adjust?


Personal Loan Demand and COVID-19. What Now?

Personal Loan Demand and COVID-19
Our appetite for borrowing only continues to grow, Coronavirus or not.

Debt levels are rising despite what has been eleven years of favorable economic performance. That was before the Coronavirus outbreak. Borrowing demand, however, is likely to remain strong, if not just a little delayed, despite the forced global slowdown.

Credit cards are a big piece of that debt. After home, car, and student loans, credit cards are the next biggest debt category (see the blue in the chart below). With rising credit card balances comes more interest in debt consolidation loans provided by fintech lenders like Lending Club, Prosper, or SoFi.

Debt Share by Product Type and Age_New York Fed

 The New York Fed Report on Household Debt 2019

Based on an Experian study from 2019, The Motley Fool reports personal loan debt is the fastest-growing type of debt. Personal loan debt growth of 12% is double the growth of the next biggest category, credit card debt. The average borrower has a $16,000 loan balance.

Total Personal Loan Balances in the U.S._ExperianExperian

The need for personal loans and debt consolidation will continue to exist, virus or not. In fact, the demand could grow due to the new economic environment.

Lending Club’s Growth Numbers

Lending Club is one of the lending leaders. Since they are publicly traded, we can get a good snapshot of the industry by looking at their numbers. From their last quarterly earnings report (slide 13), we can see the growth of demand for personal loans quarterly and a year over year (YoY) comparison to 2018.

Lending Club Quarterly Loan Originations

The loan origination numbers here are in the millions of dollars. Lending Club is averaging between $2.7 billion and $3.35 billion in originations per quarter. The total for 2019 is a little over $12 billion. Not only is that a lot of loans, but the YoY growth is double-digit in four of the past five quarters. People’s appetite for borrowing isn’t slowing down.

And then there’s the virus.

Effects of the Coronavirus

Many U.S. cities are on some form of quarantine or lockdown, meaning people are going out less. As we write this, bars and restaurants are closing or converting to carry-out only service in cities, both big and small. But loans and other debts must continue to be paid unless a temporary suspension of payments goes through Congress.

And while the appetite for borrowing hasn’t changed yet, people’s behaviors have. Those used to going out and making a payment at a bank branch or in some other point-of-sale manner are now staying home. They need to find different ways to accomplish the same tasks.

On the bright side, the internet and digital payment options continue to function properly. If they were going to overload and malfunction, as we’ve seen with the Robinhood stock trading app, we would have seen and heard of it by now.

Digital payment options like online, text or SMS, and interactive voice response ensure customers can make payments virtually, and businesses can get paid. Companies with more available and flexible payment options will be rewarded during this unprecedented time. Your flexibility in this area will increase your cash flow.

Despite having to put new policies in place (like working from home, shorter hours, reduced staff, etc.), you have a business to run. You need to get paid. As a lender, many people are relying on you during this time.

  • Your employees need to get paid, so their lives aren’t disrupted too much more than they already are.
  • Your future borrowers are relying on you for much-needed funds.
  • While perhaps delayed, many of your borrowers are still getting paychecks and want to pay what they have promised. Many are hoping to maintain or improve their credit standing.
  • Your shareholders are looking for smart, careful management of their investments during a difficult time.

Make it easy for borrowers, especially now, by giving them as many options as possible.

As behaviors change due to the virus, there’s a good chance people will be spending less. But that will probably have little effect on the demand for personal loans, especially for debt consolidation. Odds are demand will stay strong. When things normalize, people will want to borrow. Flexible payment systems are one way, along with solid underwriting and portfolio management, that you can continue to originate quality loans and keep your business running smoothly.

Why Credit Unions Should License Payment Technology

Credit union technology
Does your credit union use technology to make things easier for members?

Mambu, Salesforce, Microsoft Office 360, Google G Suite, and Leasewave

What do these software companies have in common? Two things:

  1. Banks and credit unions commonly use them
  2. The software is licensed, not purchased

These software companies are doing everything from providing email services to managing customer data and lease transactions to serving as core banking systems. And they do it all in the cloud through software licensing, commonly referred to as SaaS or software as a service.

Banks and credit unions have been moving towards the cloud from on-premise software more slowly than other industries. This Credit Union 2.0 tech trends article, however, places cloud as one of the seven areas expected to grow in the future. The other six areas are:

  • Digital Transformation
  • Fintech Partnerships
  • Marketing Automation
  • Analytics
  • Artificial Intelligence (AI) & Machine Learning
  • IT Security
Payments: Fast, Convenient, and Profitable for a Credit Union

Do you know what technology hasn’t changed that much for credit unions? Payment technology. The basic premise is still there. Members want an easy way to pay for services and pay back loans.

Does your credit union make this easy for members?

Payment services represent a massive opportunity for credit unions to engage with members and exceed their service expectations.

Payment System Technology

Until the chip and pin cards and EMV (Europay, Mastercard and Visa) hit the U.S. a few years ago, there had been virtually no change in payment technology. Visa and Mastercard are still the leading card brands controlling much of the standard operating procedures and interchange rates when it comes to card transactions. All this is still true.

But now, most of the advances in payment systems are in security, automation, and the use of AI.

Since cloud can mean enhanced security and PCI compliance, there’s no reason not to utilize third-party payment technology platforms. Credit unions can take a modern fintech-based payment system and license its use without having to develop and maintain these advanced tech systems for themselves.

Why build the infrastructure of a new payment system from scratch when the latest and most secure payment technology advancements are at your fingertips and could be licensed and implemented in a matter of weeks?

Licensing for Credit Unions

Some payment companies, including REPAY, let you license their suite of payment technology products, including online payment portals, text pay platforms, IVR (Interactive Voice Response) / phone pay, and mobile apps. These solutions can be customized for each credit union, so the look, feel, and voice of the credit union can be captured. Often, the members will never know the payment platforms they are accessing belong to anyone other than their credit unions.

Offering convenient and modern payment services can give credit unions a competitive advantage over smaller or more conservative financial institutions. Utilizing specific channels, such as text pay and mobile apps, can increase the number of touchpoints credit unions have with their members, thereby promoting engagement and strengthening the member – credit union relationship. There is no reason why credit unions can’t offer the same payment options the big banks do.

With core banking software, credit unions can often pick which modules they want to use. You can license the ones most applicable to your credit union without having to buy things you don’t need. Licensing of payment systems allows this, too.  Your credit union will stay at the forefront of technology, maintain the highest-level security, and give the greatest flexibility and convenience to your members while only paying for the parts that you use.

Is your payment system in need of an upgrade? If it is, or you want to see how some of the best payment software in the industry works, contact us today for a demo.

Tax Season is a Huge Payment Opportunity for Auto Dealers & BHPH

Tax Season Opportunity
Take advantage of one of the few times of year you KNOW your customers have money for both down payments and loan payments.

The average tax refund last year was $2,869, according to Marketwatch.

As auto dealers, you know cars are only getting more expensive as manufacturers add more desirable technology and features. Tax season is a prime opportunity to target some of your prospects and turn them into buyers as they use their refunds to buy cars.

For most people, money is still very tight, and saving can be tough. According to two studies, Turbotax Free filers and the IRS VITA (Volunteer Income Tax Assistance) Program, almost half of the respondents said they needed their tax refund money for necessities, such as groceries, bills, or rent.

CNBC expects the refund number to be just a little bit higher this year at $3,100. CNBC also reports only 10% of refund recipients expect to use the money for investments. eBay conducted its retail study and found 37% of millennials receiving refunds are planning to spend the money on purchasing cars.

That means there are going to be a lot of potential car buyers out there. Make sure you don’t miss this opportunity.

Reap Two Huge Benefits

Per the IRS and Turbotax studies, almost half of respondents do not need their refunds for necessities, which means there will be a lot of people with money to spend on a car. Your dealership can benefit in two ways, as buyers:

  1. Make down payments for a car purchase (9% are expected to make a major purchase and cars definitely qualify, according to the CNBC article)
  2. Pay down debt, including existing auto loans customers have with you (the #1 expected use of tax refunds this year)

Check out the chart from CNBC with information provided by a GoBankingRates poll:

Tax refund plans according to CNBC and GoBankingRates

While using the refund for down payment money is easy to understand, if you hold a loan portfolio of any size, you could get a big bump in yield by receiving an early payoff. This might be even better for your dealership than customers using the money to buy a new car. The option of rolling over this loan into a bigger loan for a creditworthy buyer is a win/win, too.

Are you Ready?

There are lots of things to consider as we enter the peak of tax season. Do you have a marketing plan to target early payoffs or rolling a loan payoff and trade-in into a bigger, more expensive car? Do you have easy and convenient payment options allowing your new and existing customers to make down payments and loan payments?

To capitalize on tax season, you need to be sure you never miss a payment opportunity. The most basic place to start is ensuring you can accept payments via debit/credit cards, prepaid cards, and ACH/bank accounts. The next step is thinking beyond your normal business hours and beyond the physical boundaries of your brick and mortar dealership. Can your customers make loan payments online, on a mobile app, or via text or Interactive Voice Response (IVR/phone pay)? It’s important to make the payment process as convenient as possible so you don’t miss cashing in on that tax refund.

Other points to consider during this time have to do with prepayments. Do the loans you hold in-house have a prepayment penalty? What about your best lending partners? Do you use precomputed interest? If there is a charge for prepayment, no matter how small, then your portfolio can:

  • Earn fees from the penalty
  • Earn other fees related to the loan payoff
  • Use the funds to lend to a new borrower at a possibly higher interest rate
  • Roll this balance into a new bigger loan for the same borrower

The numbers are clear. In Q4 of 2019, household debt crossed $14 trillion, an all-time high, according to Reuters. Many families do not have extra money sitting aside for a car. The one significant opportunity you have to collect loan payments or get customers into a new car is during tax refund season. Don’t miss it!

Payment Options for Millennial Borrowers

Millennial Payment Options

At this point, millennial borrowers probably make up a large portion of your customer base, so it’s important to understand their spending habits and priorities. The American Institute for Certified Public Accountants (AICPA) conducted a study of millennials and found 70% believed that financial stability was the ability to pay all their bills each month. So, according to millennials, stability means striving for zero payments due at the end of the month.

If you lend to millennials for student or consumer loans, think about this definition of financial stability and the simple aspiration of just paying the bills each month. According to Investopedia’s analysis of the AICPA study, one in four millennials had late payments or interaction with a debt collector. As a group, these borrowers are often loaded down with debt and still receiving financial support from their parents.

And thanks to social media and the immediate gratification lifestyle, millennials may often be more concerned about chasing the latest technology gadgets and the same experiences and things their friends have. With all these competing priorities, consumer lenders can be the last to get paid.

What’s a lender to do?

How Millennials Bank

It should come as no surprise that this group of borrowers uses mobile banking more than any other. The Balance uncovered some interesting banking trends and found the three things millennials do most often on their mobile banking apps are:

  1. Schedule person to person money transfers
  2. Transfer funds between accounts
  3. Check their transaction history

Here’s what they are not doing: checking their accounts to see if they have the funds available to pay you after they’ve paid for rent, internet, utilities, and fun.

While they may like their banks, they love technology more. They will jump at the chance to switch to another bank, fintech lender, or credit union if their bank is too inconvenient or if their mobile banking app is too slow or archaic.  Bottom line: millennials love mobile functionality and convenience. Are you leveraging this and making it easy for them to pay you?

Offer Payment Options

Millennial borrowers are starting to earn good money, so many are able to repay you at some point during the month. Yet, if you aren’t convenient or easily accessible, they will likely forget about you until after they’ve paid everyone else.

Many lenders think ACH is the answer, and automatic drafts out of their borrowers’ bank accounts are the best solutions for guaranteeing payments. It’s possible, however, that given their spending habits, your millennial borrowers won’t have enough cash in their accounts to clear the payments.

Why not offer payment options that fit into their daily lives and are easily accessible whenever your borrowers are ready to pay?  Mobile apps and text pay are great options that put you exactly where your customers are – on their mobile phones. You can send payment reminders, balance updates, and marketing campaigns via push notifications or text messages.  Your borrowers, in turn, can initiate and authorize payments and chat directly with your customer service representatives. Interactive Voice Response (IVR) enables borrowers to make payments 24/7 over the phone without ever speaking with a live agent.

Millennials value little above convenience and tech-savvy options. You can use this to your advantage to ensure you get paid and keep default rates low. Make it easy for them, and you will get paid.

If your payments system doesn’t offer options like IVR or text pay, contact REPAY to request a demo. You’ll see for yourself that these additional payment options will help you collect more easily from this fast-growing group of millennial borrowers.

Credit Unions & Fintech Firms: A Great Partnership Opportunity

Credit Unions and Fintech Firms Partner Up
Is Your Credit Union Keeping Up with Modern Technology?

Seventy-nine percent of credit union members would leave their credit union for a financial technology (fintech) firm for convenience and easy access to services.

If you are a credit union, this figure should scare you. But don’t jump to any hasty conclusions just yet — you don’t have to invest a billion dollars in new technology. You can compete with larger financial institutions even if you don’t have the same access to funds.

You do have options. At REPAY, we empower credit unions to enhance the member experience. Our real-time payment technology solutions enable credit unions to provide faster, more streamlined digital service offerings.

Buy, Build, or Partner

Why build something brand new when you can partner or buy?

Banks and credit unions have been dealing with the rise of fintech by choosing one of three options: buy, build, or partner. A few large institutions have purchased smaller fintech disruptors and made them their own. For instance, SunTrust bought FirstAgain and rebranded it as SunTrust’s online lending arm, Lightstream.  Other banks have chosen to build their technology, as evidenced when Goldman Sachs introduced Marcus, its online banking service.

While buying or building new technology can work for large financial institutions, smaller establishments have chosen another route – partnership. Many credit unions are in a place where partnering with a fintech firm makes the most sense, regardless of how much capital they’re willing to spend on new technology.

This Forbes piece describes how most credit unions spend a similar percentage of assets (0.42%) on new technology, as compared to a group of nine mega- and regional banks. Credit unions only spend 12% less than the megabanks do, the difference due to their smaller size. However, credit unions can use that smaller size to their advantage by remaining agile and adaptable to ever-changing consumer demands.

As this article states, fintech firms “aren’t an adversarial force in the market for credit unions. Rather they are potential partners for filling the gaps in service offerings.” And we couldn’t agree more. Each side brings something valuable to the table.

  • Credit unions foster a much higher level of trust among their members when compared to banks and their customers. Credit unions also boast a much higher satisfaction rate than do most other financial institutions.
  • Fintech firms bring new technology and innovation, allowing members to make payments faster, apply for loans online, and transact business around the clock.

When the two partner up, your credit union runs in a more modern, efficient, and agile manner thanks to the introduction of new technology.

Fintech Helps Answer Your Most Common Questions

A partnership with a fintech business means you can use the most advanced technology to streamline service offerings. You can give your members better answers to their most common questions:

  • Can I apply for a mortgage with my credit union?
    • Why, of course, you can! And now, you can apply online, seamlessly submit documentation, and manage your loan payments on our mobile app.
  • Can I use my credit union for business?
    • Definitely! Not only can you open a business account, but you can also process customer payments. You can also text us for service and access your account 24/7.
Credit Unions and Fintech Firms Are Better Together

Well-run credit unions do not threaten fintech firms. They don’t want to be credit unions, and they rarely seek banking licenses. However, because fintech firms often specialize in a few specific services, it makes sense they would want to fill those solution gaps. Credit unions, on the other hand, are always looking for ways to provide better technology to their members. Therefore, a partnership between a fintech firm and a credit union is an ideal scenario, thereby providing all members with both cutting-edge technology and premier customer service.

In future articles, we are going to examine issues like technological trends for credit unions and how staying small and agile is an advantage in a market of banking giants. If you are curious about how the most advanced payment technologies can help your credit union grow, contact us to request a demo.

Speed of Payments: Which Payment Method is Fastest?

When people consider adding payment processing to their business operations, their first thought is credit and debit cards quickly followed by ACH and check processing. The truth is, there are a lot of options out there, and they all come with their own unique benefits.

While digital payment methods, such as digital wallets and near field communication (NFC) payments, are growing in popularity, the three primary non-cash payment methods are credit/debit cards, ACH, and physical checks. It’s sensible for businesses to offer multiple payment methods – it’s a convenience for customers and ultimately means more payments and fewer delinquencies for the business.

But of the three most common methods, which one is the fastest?

ACH is Getting Faster

If you are a B2B business, your payments program has to include ACH processing. In a 2018 Statista survey, 53% of survey respondents identified ACH as the most preferred B2B payment method in North America.

The good news is ACH processing is faster than checks, especially with the arrival of same day funding. Same day ACH lets businesses collect funds faster and reduces the risk of returned ACH transactions due to insufficient funds. If payments are made before the cutoff time, the funds are available in about 3-4 hours, no later than 5pm EST that same day. If the transaction is processed after the cut off time, funds are available the next banking day by 9am RDFI (receiving depository financial institution) local time. Of course, there are exceptions. High-value transactions above $25,000 are not yet eligible for same day funding, but NACHA recently passed a rule that will increase the per-transaction dollar limit for same day ACH transactions from $25,000 to $100,000 effective March 20, 2020. Another important thing to note is ACH transactions can’t be processed on banking holidays when the Federal Reserve Bank is closed.


Although checks are still around and popular, they were by far the least preferred payment method in the survey. There’s really no surprise here, thanks to several reasons, including:

  • Travel Time: if physical checks are mailed, 3-5 days are wasted before the payment even begins to be processed.
  • Resource Drain: a person must handle the checks, which takes away from other duties and responsibilities. In order to maintain good financial controls and prevent embezzlement, a second person usually deposits or posts the checks.
  • Process Time: whether you receive or send them, it takes time and money to cut, mail and process the checks. Small businesses can lose between $4-20 processing a check.

So how long does it take a check to clear? It’s a good question and no one seems to know for sure. The biggest variable is the bank because every bank’s policy is different. When it comes to checks, two banks are involved – the merchant’s bank and the consumer’s bank. Best case scenario, funds become available 24-48 hours after the check is deposited, but it can sometimes take much longer. Even with remote check deposit, banks still place a hold on the funds.

According to, checks are still around because they meet three main criteria for businesses:

  1. Checks move money from one entity to another.
  2. They allow data and documents to travel along with the payment (for proper tracking, diligence, accounting, and taxes).
  3. Businesses can develop workflows around them.

While checks are a prominent form of payment, their dominance is shrinking due to their resource requirements and time constraints.

Card Payments

Merchants who accept card payments are generally funded for those transactions within 24 to 48 hours – much faster than the funding time for most paper check scenarios. The settlement time for card payments is now even faster thanks to push payment technology. With this new technology, funds are available within 30 minutes; in most cases, however, they are available within seconds after transaction approval. The real-time processing and funding of push payments eliminates the waiting period associated with ACH and paper checks.

The Fastest Combo

So which payment method is fastest? It’s a combination of ACH with its same day funding enhancements and push-to-card payments. Both enable funds to clear the same day, giving you quick, if not immediate, access to money.

Launch Your Own Mobile Payment App

Make it easy for customers to pay and stay with your very own mobile payment app.

People use their smartphones for so many things other than making actual calls. In a late 2017 Statista survey, almost one-third of smartphone owners reported that they use their phones to make calls either occasionally, seldom, or never.

Yet, almost two-thirds of smartphone users use their mobile browsers regularly and more than 70% use the messaging functionality regularly or very often. Aside from texting, there are many mobile apps in the Messages category, including Slack, WhatsApp, Asana, Basecamp, Telegram, Discord and more.

The bottom line: people are on mobile apps. A LOT. This includes your customers. In fact, eMarketer conducted a fascinating study in late 2017. The study concluded that people are on their mobile phones for longer periods each day (no surprise there). The surprise, however, was that the time spent in mobile browsers is declining and time spent using mobile apps is increasing. At the same time, the number of apps people are using is dropping. People all over the country, including your customers, are on their phones more, browsing less, and using fewer apps more frequently.

Now is a Great Time to Launch Your Own App

This recipe for more concentrated app usage is an opportunity for your business to make it easier for customers to pay and to encourage your customers to stay with you for the long run. You can do that with your own mobile payment app powered by REPAY technology.

Other than streamlined payments, what are some additional reasons that a mobile app would be useful? Here are a few big benefits to consider.

Value Added Services
Let’s say you are a consumer lender, and on a typical 3-year loan, most of the defaults occur between months 12 and 16. One unique and cool thing you can do with a mobile app is start a loyalty program that encourages on-time payments by offering prizes, cash, reduced payments or lower interest rates on future loans. After all, if borrowers pay the loan off and nothing else changes, wouldn’t you want them to borrow again? And when would you want to implement such a plan? Month 1 or maybe month 8 or 9 leading up to that common default period? It’s ultimately up to you, but a mobile app gives you control and a direct line of communication to your customers.
Customers Are Loyal to Apps
In our previous article, Mobile Apps Make Payments Easy, we stated that the most popular payment app is the Starbucks app with over 20 million users. Starbucks has some great features, including a loyalty program, an e-wallet to make payments simple and easy, online ordering, and well-timed and engaging push notifications.

Customers are savvy, and they expect excellent customer service. Having your own app shows your customers you are trying to connect with them and serve them better. Fifty percent of marketers in a recent study listed either Improving Customer Service or Fostering Customer Loyalty as the #1 reason for having a mobile presence. It’s easy to see mobile apps are powerful retention tools.

Is customer retention an issue in your business? An app could be the answer.

Partner on It Instead of Build It

Many of the businesses we work with understand the value of having a mobile app. The hard part is getting started.

We have the perfect solution – the REPAY White Label Mobile App. Since it’s a white label solution, our merchants can use their own logos and brand colors, giving them more credibility with their customers. The app is customizable in many ways – merchants can choose payment options and field configurations and give their customers the option to view balances and payment histories. Customers experience the ultimate convenience of paying through their phones whenever and wherever they choose, and merchants get paid faster and experience greater retention rates and higher customer satisfaction. If your processor doesn’t offer an app or you just want to take a look and see how it works, you can request a demo today and take it for a test drive. You won’t be disappointed!

How Lenders Can Leverage Push Payments

Merchant processing makes collecting on-time payments from borrowers easier and faster for consumer lenders. Consumer installment loans, typically provided by both the traditional storefront lenders and the newer online lending fintech companies, are attractive to borrowers for many reasons. An installment loan is fast, simple, can be inexpensive with a fixed term, and is a great option for debt consolidation, home improvement, or an unexpected expense. In the last year, 34% of Americans have taken out a personal loan, according to a PureProfile survey.

How can lenders effectively leverage payment processing options to fund loans and make it easy for borrowers to repay?

Traditional Payment Practices

The largest marketplace lender, Lending Club, accepts credit and debit card payments online and through pay by phone features. Avant accepts card payments from borrowers through a call into a live operator. SoFi, whose primary loan product is student loan refinancing, does not offer a card payment option at all as most loan servicers in the student loan market require a direct debit from a bank account. With credit and debit card payments so ubiquitous, you would think any public-facing business, including consumer lenders, would offer multiple card payment options.

And you’d be wrong. 

Lenders have a huge opportunity to implement payment processing to not only make repayment easier, but to provide a fast and seamless funding experience. Let’s check out the newest opportunity for lenders – push payments.

The Push Payment Opportunity

Both pull and push payments can make payments faster, easier, and cheaper for both lenders and borrowers. A pull payment is the traditional, well-known payment method – it is initiated by the lender, who pulls the money from the borrower’s account after the borrower provides the account information and payment authorization. Push payments, on the other hand, enable the borrower or the lender to send (or “push”) the money to a recipient one time or on a recurring schedule. Push payments have faster settlement times and lower costs.

There are huge opportunities for push payments within the lending industry. Not only can lenders accept card payments as a form of repayment, they can use push payments to transform the lending experience. Through push payments, lenders can send funds directly to their borrowers’ debit or prepaid cards, and those funds are typically available for use within minutes of authorization approval. With this real-time processing and funding, push payments eliminate the waiting period associated with ACH and paper checks. Borrowers won’t have to make a trip to the bank to deposit a check, and storefront lenders won’t have to carry or handle cash. Another great benefit is that the push payment network is available 24/7/365, which means lenders can push payments to fund loans at any time, any day of the year, including holidays and weekends.

Lenders can use push payments to gain competitive advantages in the marketplace by delivering fast and convenient funding experiences to their borrowers.  Push payments add tremendous value for borrowers and lenders, reducing costs and wait times for everyone.

How People Pay with Their Phones

To be a successful fisherman, you must fish where the fish are. Like fishing, marketing for your business really boils down to finding your fish and telling them about what you offer.

In many fields, especially in the B2C world, meeting your customers where they are is the most effective way to engage and communicate with them. And if you haven’t figured it out yet, your customers are on their phones. They use them multiple times throughout the day and already pay for things with peer to peer payment apps, company-issued payment apps, mobile banking apps, and digital wallets.

Are you accepting mobile payments? Here are some reasons why you should.

The Mobile Payment Market

This Statista chart shows the approximate value of all mobile payment transactions in the U.S. In 2018, mobile transactions were valued at $78 billion (up 59% from 2017) and are projected to reach $113 billion in 2019.

The mobile payment market is huge and growing very quickly. Do you have a mobile presence? Are you making it easy for your customers to find you and pay you?

Peer to Peer Payment Apps

Zelle, a peer to peer (p2p) payment service owned by seven banks, has 27 million users. Zelle is a digital wallet and payments platform where you use your bank account to complete peer to peer payment transactions. Venmo, owned by Paypal, also works as a digital wallet for initiating and receiving peer to peer payments. Square Cash, the 3rd largest mobile p2p payments platform, has 9.5 million users, according to eMarketer.

These top three platforms had 60 million users in 2018. Even if one-third of these users use more than one of the three platforms (and it’s probably much less than one-third), there is still a market of 40 million users (or 1 in 8 Americans).

With a projected 44% growth rate to $113 billion in transactions and at least 40 million users, the mobile payments market is just too big to ignore.

Company-Issued Payment Apps

Thanks in large part to company-issued payment apps, consumers are now expecting a mobile presence from all the brands with which they interact. We’ve said before that the most popular payment app is the Starbucks app. There are many reasons why, including:

  • the thousands of locations worldwide
  • the app’s user-friendly experience, and
  • the unique benefits offered, like special features or in-app discounts

The chart below shows that digital wallets Apple Pay, Google Pay and Samsung Pay, are all popular with a combined total of 40 million users. Yet individually, they each have fewer users than the Starbucks app.

Mobile Banking Apps

Mobile banking apps are much more popular than many people realize. Finextra reports that in a 2018 study, nearly half of the respondents had increased their mobile banking app usage and 31% said they use their mobile banking apps the most. A mobile banking app is the 3rd most popular app on a smartphone, right after social media and weather apps.

Bankrate reports that 63% of all smartphone users have downloaded a financial app. The U.S. has approximately 250 million smartphones, which means 157.5 million people have financial mobile apps on their phones.


Paypal is so big and so old in fintech, it predates the term of ‘digital wallet’ or ‘e-wallet’ and gets its own category. As of Q4 2018, Paypal had 254 million active accounts and 17 million merchants worldwide. It processed 7.6 billion transactions in 2017. Paypal is so popular and trusted throughout the world, that the average account does 35 transactions through Paypal each year. In fact, if Paypal were a bank, it would be the 21st largest bank in the U.S.

Paypal is still growing at an excellent rate. Payments processed grew 25% from 2016 to 2017. If there is room for Paypal to continue to grow, then there is room for you in mobile payments.


When you offer a mobile payment option, you are where your customers are. By making it easier for customers to pay, you will receive more payments earlier and on time. People are already paying bills, splitting their bar tabs, and managing their bank accounts through their phones. Any little piece of the mobile payment market you can claim is added growth for you and convenience for your customers.

If you want to learn more about how to add a mobile payment option for your business, contact REPAY today. One of our mobile payment experts will show you exactly how it works and what it can do for your business.