The collection process: a look from the experience

By: Héctor Calderón, Accounts Manager at Evertec Chile.

Because the market did not have enough trained professionals to develop these new implementations, many companies had to train their own executives to carry out the development in their computer systems, thus emerging, the first programmers and systems analysts. On the other hand, universities and professional institutes, during this decade, began to dictate their first technical and engineering careers, thanks to the great emerging demand.

On the other hand, companies dedicated to computing, such as ECOM and SONDA, began to incorporate new services taking advantage of the high demand for automation, finding a business niche in this area. Sonda, for its part, is still in force in the Chilean market since that time.

Banks and companies, not unrelated to this development, at the end of the 70s began to hire these new professionals, young civil and commercial engineers, who were called “Cuescos Cabrera”. These new executives were integrated with the career employees of the different banks and companies, allowing banking in Chile to start automating all its processes at the beginning of the 1980s, including Collection and Payment Services.

It should be noted that, at that time, the only collection model that achieved a higher level of automation was the Automatic Bill Payment Service (PAC), promoted rather by the main public utility companies for electricity, water and telephony, which, in its beginnings, was not seen as a business, but as a way to get customers out of the bank’s cash registers and make this process more cost-efficient, not even charging these public utility companies for these services.

During the 1980s, all banks turned strongly to providing new services to clients, in addition to the traditional financial business, causing an increase in transactions, especially in Payment and Collection Services.

The following chronology details some relevant aspects of the collection processes from the 70s to the present day.

The beginnings of a process in full swing

Everything started in the 70s, when the collection service began with a Payment Notice to its customers, who went to the bank, paid at the cashier and the cashier had to manually collect all the vouchers to square them at the end of the process.

Under this collection system the Pajarillas or Mailboxes were born, essential elements used for the collection of documents, which served to store the Payment Coupons, which were sent from the boxes to the Central Office, to make the final square and manage the payment .

The agglomeration of people in the banks to pay their services allowed the emergence of the Automatic Bill Payment (PAC) service in the early 80s. This model avoided the presence of customers in the banks, allowing the account holder to pay their bills with an automatic charge to your checking account. This favored basic services companies, who had higher transaction volumes.

As the model was growing, the companies did not take long to ask the banks to send a floppy disk or a magnetic tape, with the details of the payments received. This is how the Collection Service with Additional Data Capture emerged. Initially, the payment was entered in batch mode (deferred).

Then the banks developed online applications in their own boxes to capture the necessary collection information there. The service involved the delivery to the client of his deposit in checking account, the payment coupons and a diskette with the details of the transactions. It was also at that time that the General Treasury of the Republic (TGR in Spanish) asked the banks to generate a surrender file with the details of the forms received in the box, called the “Huincha Electrónica” or “Electronic Piggy Bank.” This forced the banks to hire digitization companies in order to comply with what was unilaterally established by the TGR.

The jump to online collection

From the late 80s and early 90s, the companies with the greatest technology leadership began to ask banks to connect their debt portfolios online, with the bank’s cashier applications. Although it was achieved with some companies, the model did not bear fruit due to its cost and delay.

At the beginning of the 90s, the first development of banking applications on the Internet began. Among the first applications were the Electronic Account Payments, the VAT Payment of the Internal Revenue Service (SII) and the Contribution Payments of the General Treasury of the Republic (TGR). At this time, as a result of this need in the market, several companies to support the banking business, such as EFT Group (today Evertec), emerged.

For its part, the development of new products due to technological evolution gave way to the creation of new services such as the Payment Button, allowing businesses to offer their customers the payment of their debts for their applications and / or pages from Internet. Almost all banks started with this service. Some subcontracted it, such as Bank of Boston, today Banco Itaú Corpbanca, whose supplier has been the same since then.

However, the Payment Button was only the beginning of the era of creating new technological services that contributed and simplified the collection processes for both merchants and paying users. Then came the VAT Payment and Electronic Transfers (TEF in Spanish). Both online transactions were promoted by the Internal Revenue Service and the Superintendency of Banks. These electronic fund transfers cause monetary liquidity that speeds up the economy. Business becomes faster as there is no waiting for the release of funds. It also begins to change the way of thinking of the population. People start to think “online.” If a user pays online for a service that has been cut, he cannot wait until tomorrow to have it replaced. It requires that the replenishment be also online.

Then the banks developed the Electronic Bill Payment Service, which had the objective of having their clients pay their service bills online, on the bank’s website.

This service initially starts by connecting the Public Utility companies but later, many other companies wanted to be there together with the Utilities to receive payments from their banked clients, and the banks opened to receive these new payments by charging a commission to the company for every transaction. This service was also born in entities such as Servipag, Sencillito and Unired, which developed their web pages and enabled the payment buttons of all banks, so that their clients could view their debts and make their payments.

Despite all this progress, what was missing?

The advancement of the Electronic Payment Service (PEC) slowed the growth of the PAC Service. Many users decided to make their payments online, on the dates when they had their funds available and not on the dates that the service company has available (PAC expiration date). This caused a migration of users to the PEC Service. Despite this, the PAC Service is maintained especially in low-amount recurring payments and Insurance companies.

On the other hand, after the year 2000, new Banking Correspondent channels emerged that grew in number of businesses and in number of transactions. It is under this model that Caja Vecina, Sencillito and later Servipag Express were born.

In recent years, banks began to migrate some web functionalities to mobile devices and in fact, the number of transactions in applications (APP) increased a lot. Except for this, banking lagged a bit behind in the development of new services to meet the needs of customers, which allowed several financial technology companies (Fintechs) to emerge to fill those gaps that the market made available. For example, we can name some services that the bank did not develop or did partially:

Electronic Funds Transfers (TEF) with identification of the Payment

Several companies have developed procedures to make up for this deficiency that the banks did not cover. They have incorporated Robots (chatbots) to analyze this type of transactions in order to achieve their identification

Scheduled PEC

Although some institutions have developed the programmed PEC Service, most banks have not yet developed this product. It consists of an agenda of services that are paid, at the exact moment, that the client indicates. For example, the day after your salary payment.

Basic Service Payments via Push

Although several banks have developed Push Services to notify their clients and obtain their immediate authorization, this service still lacks growth in terms of new applications and in the number of transactions.

Bank ticket for collection and payments between people

It is a system in which payment is made with a voucher issued by a bank and that the user pays at any bank in the country. The payment can be made online through electronic banking, from mobile phones or through a face-to-face payment. This model works today in Brazil and allows millions of daily transactions such as payments of Common Expenses, Schools, Leases and Services in general.

Multi-bank Payment Button

The Multi-bank Payment Button operates with a current account that the business opens in a single bank (Concentrator Bank). It is the Concentrator Bank that receives the funds for all payments that are made and sends them to each business, at the end of the day. Today the Payment Buttons in Chile are mono-banks and require the merchant to open a checking account for each Button that they wish to contract.

A look from experience is what the aim was to capture in this article, in which important milestones were detailed that marked the transition process that the collection model has undergone from the 70s to the present. Being aware of these changes, their evolution, their progress and the opportunity that still exists helps us to be present in each of their improvements, expanding the view and knowledge of a process as important as the collection that benefits millions of people not only in Chile but worldwide.