Credit Unions missing out on massive online billing opportunities

The recurring payments industry is huge and growing.

Almost every startup on the planet that’s building a Software as a Service(SaaS) application needs subscription & recurring billing capabilities. Most of these companies create business models where you pay a monthly subscription fee varying from $5 per month to over $2000 per month. The billing companies charge a monthly fee between $50 to $300 per month plus 1.25% of the revenue. It’s a great business model and it’s working well for many companies.

When it comes time for these entrepreneurs to decide on how to setup this part of their business, most never consider a credit union or even one of the big banks.

They consider innovative financial companies like Recurly, Zuora, Chargebee, Charify and many others that provide very innovative solutions to setting up, integrating and managing a billing solution for their business.

These services are innovative and come with a lot of useful features all accessible from a browser or mobile phone 24/7.

Most of these solutions include:

  • Try before you buy. All of these SaaS can be tested in minutes by signing up for a trial.
  • The ability to create and manage many subscription plans for your business services on the web and smartphone.
  • They’re all web based apps that you can setup in minutes and have complete control over your billing experience.
  • They can easily manage software trails and setup fees.
  • Communication with customers is build right is so you can configure and automate renewals and other billing tasks using email and SMS.
  • They all integrate through API’s with other systems like CRMs, banking systems and other legacy applications.

The Canadian Credit Union billing system has many of useful capabilities. You can pay bills online, send payments via interact email money transfers and all the other basic banking transactions. Credit Unions do have billing capabilities but honestly they lack the innovation, agility and flexibility that comes standard with the above SaaS offerings.

Here is Central1’s solution offered by Vancity to it’s customers. They provide very similar features to these SaaS companies but your can already see with the execution, you need to engage with a Business Specialist to get this service started. No trials or online signup.

Vancity EFT

It’s a basic solution that doesn’t compare to the SaaS offerings out there.

Why have no Credit Unions stepped up to fill this demand properly?

The challenge lies in the technology credit unions have at their disposal. The billing solutions they can provide are generally tied directly to what Central1, the payments processor and trade association for credit unions in BC & Ont provides.

The legacy billing solution Central1 provides was design and built over 20 years ago for a different marketplace that has evolved considerably over the past 15 years. Central1 has simply not kept up with how the market has changed and is changing. Yes they have adapted to some market changes but it has been much more reactive than innovative.

If you read Central1’s Automated Fund Transfer and Bill Payment solution, you can see that it’s a generic service that provides automated transfer of funds through online banking and in branch using a teller. This system is sold to credit unions to integrate with their banking systems and their online banking platforms.

It’s a great solution if your customers want to pay hydro and cable bills but as a small business wanting to set up subscriptions and recurring billing capabilities and manage it with your smartphone, the credit union product capabilities fall short big time.The result is a product that doesn’t meet the new demands of today’s new businesses.

Features aside, the Central1 billing solution can also take days to almost weeks to set up for a company and it simply doesn’t provide the flexibility needed for today’s agile, innovative startups.

Integration features are also completely lacking as there’s no integration with 3rd party systems like Salesforce, Mailchimp and many others that come standard on the other SaaS billing solutions. It all requires custom coding which translates to more money and more time.

Why bother when a busy entrepreneur can be up and running on a service like Recurly by the time you finish reading this post?

From my perspective, this is a niche ripe for a credit union to focus on but sadly I don’t think it will happen anytime soon.

This type of change requires both technology, approach and culture innovation within both an individual credit union and Central1 and the political and diplomatic challenges to achieving this are much greater than what any startup like RecurlyZuora or Chargebee need worry about. These startups are agile cultures at their core and are designed to adapt to market changes quickly; something the credit union system is no where near implementing.

There are so many ways credit unions can innovate and this is just one small niche.

If Credit Unions want to survive & thrive in the next decade, the leaders that recognize these opportunities will need to take on the hard task of changing an old bureaucratic system that was once setup to help credit unions but has sadly become an innovation bottleneck.

They will need to look at what these financial startups are doing and how they do it and apply those business models to their organization.

For starters, Credit Unions need to learn what it means to be lean.


Credit Unions missing out on massive online billing opportunities
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