Open Banking
Open Banking
February 6, 2024
5 min

3 Steps for Simplifying ACH Autopay Enrollment

Timothy Shin

Open Banking Expert

Enrolling in ACH autopay shouldn’t be difficult or frustrating to do. Yet, antiquated processes are still in place today, making enrolling in autopay a friction-filled experience, and errors during enrollment can cost billers time and money. The new, modern ACH autopay methods powered by Open Banking remove friction and streamline enrollment, allowing billers to enable their customers to make seamless, consistent, and timely payments that are evergreen and cost-effective. 

Pain Points Impacting ACH Autopay 

Autopay benefits virtually all billers because it is a steady revenue stream that ensures that payments are made consistently and on time without any issues. Autopay enrollment done through ACH is even more beneficial to merchants as it is more cost-effective than accepting autopay card payments. Most consumers enjoy using autopay as an evergreen “set it and forget it” way to pay their loans, mortgages, utility bills, etc. However, there are blockers that impact ACH autopay’s ability to succeed compared to other payment alternatives. 

Lack of ACH Autopay Offerings

Did you know that roughly 80% of billers still offer in-person and over-the-phone payments for bills, whereas only 2.8% of consumers pay by calling in and 2.2% pay in person? In contrast, 13.4% of consumers use ACH autopay via their bank and another 13.3% via biller websites, meaning over a quarter of consumers utilize autopay in some form. 

Despite this, only 59.8% of billers offer ACH autopay, and even then, without leveraging Open Banking, the existing autopay system in place may not be optimized for the modern consumer. Billers shouldn’t act as a pain point to themselves and hinder autopay by not offering an easy-to-use and streamlined version of it in the first place. Instead of focusing on and offering largely unused payment methods such as over-the-phone or in-person bill pay, billers can re-invest their efforts into creating a functioning and streamlined autopay system to encourage its use and incentivize consumers to make payments automatically.

Friction from Outdated ACH Payment Experiences

Long and antiquated onboarding steps and manually inputting account and routing numbers are friction-laden processes. Any friction in the enrollment process increases the likelihood of autopay abandonment. These processes can cause issues during ACH autopay enrollment and lead to problems, such as costly ACH returns, that make the experience frustrating.

To illustrate how outdated ACH processes block autopay’s effectiveness, let's examine issues with ACH returns. Return codes R03 and R04 (returns stemming from being unable to locate an account or invalid account numbers, respectively) are commonly encountered when doing business. These costly returns happen largely due to consumers making errors when filling out their information during onboarding or mistyping account numbers, which typically stem from billers still utilizing friction-filled and archaic practices for their ACH autopay enrollment. 

R03 and R04 have maximum thresholds of below 3%, meaning that the higher the return rates are, the more penalties and consequences billers face from Nacha. Aside from penalties, the risk of payment failure and getting issued an ACH return is a major blocker for billers, as it costs $12 on average for every payment that fails or gets rejected. Additionally, broken or failed payments also impact staff workload and also impact business costs with the time and manpower spent on addressing these issues. 

Simplify ACH Autopay Enrollment with Open Banking

The pain of ACH payments today can be mitigated by modern ACH and Open Banking solutions. By simplifying the autopay enrollment processes with Open Banking, manual entry of account information isn’t needed, and onboarding happens automatically in real-time with bank-grade data so that consumers don’t make the costly mistakes that make ACH autopay a pain. 

Now that we understand the severity of the pain points in a friction-filled ACH autopay enrollment experience, billers can take these 3 key steps to simplify the process and address them directly.

Step 1 - Remove Manual Input and Automate Onboarding 

A consistent theme throughout this blog is that much of the friction with ACH autopay stems from the hassle of manually inputting account information and the stress of onboarding. Manually typing in account and routing information is prone to errors that can lead to returns or payment failures. In short, the entire process becomes tedious, and consumers will begin to avoid autopay. 

With Open Banking, consumers don’t have to input any information manually. All they would have to do is log in to their bank account using their credentials to quickly and seamlessly onboard for autopay. Once signed in, the API does the rest and automatically verifies consumers' names, addresses, identities, etc., by pulling consumer permissioned bank-verified data without having to type anything additional in.

Step 2 - Simplify User Interface and Make Connecting to the Bank Easy 

Consumers aren’t looking to make payments in person or on the phone, nor are they trying to send checks in the mail. Making a simple and intuitive autopay enrollment system is critical. Once you streamline the onboarding process for ACH autopay, it’s essential to make sure that the payments platform you use is easy for the consumer to navigate through. Trustly’s Open Banking platform makes connecting to bank accounts easy for the consumer.

As this Wall Street Journal article exemplifies by showing our UX, there’s no need for dozens of steps. All consumers have to do is log in with banking credentials, and our API takes care of the rest. That’s essentially it. No other input is needed, and they can set up autopay without having to go through several screens and type in their information multiple times. 

Step 3 - Provide Incentives for ACH Autopay Enrollment 

Did you know that most consumers who don’t currently use autopay would gladly enroll in it if provided the right incentives? Since ACH autopay already has some stigma with consumers, given that how it is when not powered by Open Banking is a hassle, providing incentives piques consumer interest and makes it worth it to set up consistent payments. 

In fact, it’s stated that 41% of consumers on the fence about Pay By Bank options, such as ACH autopay, would be open to trying them if incentives or rewards programs were available. Incentives provide a clear and immediate value proposition for customers considering ACH autopay. Whether it's discounts, cashback, or exclusive rewards, the tangible benefits simplify the decision-making process for potential enrollees.

Benefits of Increasing Conversion to ACH Autopay

After learning about ACH autopay pain points and the efforts they can take to simplify enrollment, many billers may ask, “Why should I do this? What are the benefits of simplifying autopay?” By leveraging the power of Open Banking to streamline ACH autopay, billers can: 

  • Benefit from consistent and evergreen payments from consumers. Bank accounts don’t expire like cards, and the automated process makes setting up recurring billing easy. This means consistent payments and lessening the risk of delinquency. 
  • Reduce the risk of administrative ACH returns and keep their return rate low to prevent future issues with Nacha. 
  • Enjoy overall cost reduction. ACH autopay isn’t subject to card processing fees and is a cost-effective way to accept regular payments. 

Trustly’s Open Banking Platform Can Help 

ACH autopay is an excellent payment option that conscientious billers should consider for their clientele. Regrettably, in its current operational state, consumers find the friction associated with it too much of a hassle, and costly ACH returns and payment failures make it tough for billers to maximize its potential. 

Trustly Connect emerges as a transformative solution harnessing the capabilities of Open Banking, enabling billers to deliver a seamlessly streamlined ACH autopay experience to their customers. Trustly Pay is easy to implement and even easier for customers to onboard with. The platform boasts straightforward setup procedures for billers and an effortlessly navigable interface for consumers, ensuring a professional and user-friendly experience.

Stay in the know

Get exclusive insights and updates on all things Open Banking and Payments.

Thank you! Your submission has been received!
Oops! Something went wrong while submitting the form.

Relevant pages and resources

Open Banking
June 6, 2024
5 min
How Open Banking Makes Consumer Account Verification Easy
Financial Services
Open Banking
June 4, 2024
8 minutes
3 Ways Open Banking Can Unlock Growth in Financial Services
Open Banking
Financial Services
May 29, 2024
10 Min
What Is ACH and How Does It Work?