Posted by Brandes Elitch on Thu, Nov 30, 2017 @ 10:19 AM
Did you know that financial wellness — i.e. money — is the top cause of stress in the United States, and also the leading cause of stress in the workplace? Numerous studies from sources such as the American Psychological Association and the National Business Group on Health among others, show that many Americans feel that they are just one financial shock away from disaster. Does this include you?
A recent Pew survey found that about 66 percent of all American households will experience a financial shock next year. It could be the loss of a job, a cut in pay or working hours, a health crisis, a car breakdown, a plumbing emergency, or some other event that seems to come out of nowhere. Thinking about this can keep you up at night.
There are a lot of articles on the web about “financial wellness.” But you don’t have to read an article to know that this is a big problem in our society. A 2016 study by Bankrate found that fully 63 percent of those surveyed couldn’t handle a $500 car repair or a $1000 bill for emergency room services, again almost two thirds of the population!
What’s really shocking is that a significant number of those in this group make over $75k a year. There is even a category for people who make over $100k a year and have assets, such as a house and a 401k, but no savings — they are called “the wealthy hand-to-mouth.” As if this wasn’t enough, another recent survey showed that 41 percent of Americans over 55 have zero retirement savings — that’s right, nothing, nada, zip.
The Road to Financial Wellness
What can you do when you find yourself in this situation? Well, let’s start with something realistic, like having enough savings to live on for three to six months. Most people can find a way to save $100 a month — give up those two Grande Lattes you have been ordering every day, for a start. Now, you will need a place to put all the money you are saving for a rainy day. And that brings us to the topic of this blog — who would you trust to keep your money? You’re not going to put it under a mattress, are you?
A recent study of 55 financial service companies by global brand strategist firm Landor has some surprises for you. It seems that the financial crisis of 2008 is still fresh in the minds of consumers. The study shows that only 17 percent of those surveyed trusted Chase Bank or Capital One Bank. Bank of America scored a dismal 16 percent. Even lower is Wells Fargo, probably not surprising given its seemingly unending litany of surprises about its mismanagement and nefarious behavior, at 14.5 percent. Not to put too fine a point on it, but this means that 85.5 percent of those surveyed would NOT trust Wells Fargo enough to open an account there! What is worse? Well, it seems that only six percent of those surveyed felt that Bitcoin was trustworthy. Personally, I think that number is a little high.
Now here’s another surprise. The company that scored as the most trusted financial services brand was, you’ll never guess, PayPal. Yes, about 30 percent of those surveyed rank PayPal as trustworthy, compared to 25 percent for Visa, 23 percent for MasterCard, and 17 percent for AMEX. However, the other non-traditional payment providers did not score as well: Apple Pay and Google Wallet are only trusted by 13 percent of these consumers. You hear a lot about Venmo these days (Venmo is owned by PayPal) — how it is revolutionizing P2P payments, etc., but Venmo scored a dismal 10 percent. Of course, Venmo is usually for a small dollar payments.
Landor reports that data from the last 10 years shows a definite erosion of consumer trust in financial brands. You wonder how this could be allowed to happen, since trust is the one “must-have” by consumers when choosing a financial partner.
Landor suggests a few tips for financial institutions to regain consumer trust.
Gaining Consumer Trust
Let’s look at these tips through the lens of the service we provide to consumers here at CrossCheck. Here’s what we do. We stand in at point of sale when a consumer is buying a high-ticket item and needs a little extra time to come up with some of the money to buy it. In some cases, paying for a funeral, paying for an operation for your dog at the vet, buying new roofing supplies for a leaking roof, fixing a slipping transmission, the purchase has to happen today, not later. Now ask yourself: “What is the LAST thing that a consumer wants to be told when they are dealing with a financial emergency like these?”
It’s obvious: the last thing the consumer wants to hear is that they should apply for another credit card. Nobody wants to do that. And yet, the leading provider of this kind of service, often referred to as “Ninety Days Same As Cash,” is a company called Care Credit.
With Care Credit, the consumer applies for credit and is give a short period to pay the debt in full. If they don’t do this by the expiration date, interest reverts to Day One at an exorbitant rate. How exorbitant? Purchase APR is 26.99 percent. Of course, a significant number of consumers fall into this situation, which I call a “debt trap.”
When a merchant uses CrossCheck’s Multiple Check service, the consumer can write up to four checks dated today and tell us when to deposit them over the next 30 days. We guarantee the checks (after a brief authorization sequence) so the merchant is assured that they are going to get paid. How would we score on the Landor evaluation scale?
The first rule is “be transparent.” With CrossCheck, the consumer doesn’t have to apply for credit or pay interest. We don’t trick the consumer into thinking that they will be able to pay the debt off. The consumer chooses the dates and amounts themselves.
Second is “be honest.” While we approve probably 95 percent of all the checks we see, in some cases we will decline to do so. Usually, this is because our research shows that the checking account supplied by the consumer has been closed, or there is a history of bounced checks. We tell the consumer in the first few seconds of the authorization process if they will be approved.
Third is “deliver excellent products and service.” We make it easy for the consumer to make a purchase. They just write from one to four checks and tell us when to deposit them. We initiate the payment to the merchant when the checks are deposited. We do the banking for the merchant. If a payment fails, we keep the merchant whole. We work with the consumer to find a payment plan that is acceptable to them. It is a win-win for both parties.
Fourth is “protect customer data.” Unlike credit card transactions, where a card is swiped and the information is sent electronically to a processor, who sends it to the issuing bank, which responds with an authorization, and then the funds are sent to an acquiring bank which then pays the merchant (whew!), our workflow is simple. We get a hack proof tiff file of both sides of the check from the imager and we create an X9.37 check image file for our processor, so the information is protected all the way.
Merchant Financial Wellness
Fifth is “protect the relationship between the consumer and the merchant.” When we have to collect a failed payment, we go to great lengths to not spoil the relationship the consumer has with the merchant. Because we are a neutral third party, we can do this better than if the merchant was trying to collect a bad debt themselves.
But for the most part, we want to be invisible to the consumer. The merchant will ask the consumer if they would like an extra 30 days to pay for the product or service. Most of the time, the merchant will never even have to discuss who we are and what we do with the consumer.
Many people find it amazing CrossCheck has a fully owned subsidiary which is licensed, registered and bonded to collect debt in all 50 states, and that this company, Optio Solutions, has an “A” rating by the Better Business Bureau. Who ever heard of a collection agency with an “A” rating by the BBB? This is the best evidence our organization is living up to the five rules set by Landor about consumer trust.
If you are a car dealer, sell in the auto aftermarket, provide vet services, sell building supplies, or are a funeral home, you will want to choose a trustworthy financial partner who can help protect your financial wellness — someone like Crosscheck. You can check out our offerings at cross-check.com or download our free guide to Multiple Check. Let’s build a trustworthy relationship together!
Tags: Brandes Elitch