November 2, 2015
PaySwag, a white-labeled mobile app that brings a playful approach to the collections process through its cash or card payment, reward, education, and feedback engines provides a solution to empower the underbanked and reduce serious delinquencies by 50%. Max Haynes, CEO of PaySwag, shared with the LTP team his insights regarding the payment experience for the underbanked and how exactly PaySwag revolutionizes it. The company recently attended Money20/20 in Las Vegas, and Max shared his experience from the conference as well. Here is the transcript of the interview with Max:
LTP: Please tell us about the company and the services you offer. What’s the experience and primary value you bring to your clients and to the underbanked segment?
Max Haynes: PaySwag, created by Customer Engagement Technologies, revolutionizes the payment experience for the underbanked. The white-labeled mobile app brings a fresh approach to the collections process for business and government through its cash or card payment, reward, education and feedback engines, and has been proven to reduce delinquencies by as much as 50 percent. The app simplifies the collection of payments, fees and fines and underbanked consumers are rewarded with points for paying on time and maintaining communication. Never before has this demographic been incentivized with Amazon gift cards, Redbox rentals, or Starbucks lattes -- just for keeping up with a payment plan.
More than just a payment tool, PaySwag aims to improve the financial lives of the underbanked. The mobile app features educational videos, engaging games and push payment notifications. PaySwag gives users the ability to create payment plans that are convenient for them and the freedom to pay by cash at more than 17,000 neighborhood locations. The app integrates features designed to resolve the real-world issues that affect the underbanked including:
Convenience: Users have the freedom to pay cash at 17,000+ neighborhood locations. If a customer wants to make a cash payment, they just need to go to their nearest 7-11 (or other neighborhood payment location found on the in-app map) and hand their mobile phone to the clerk who will scan a barcode, and accept the payment in cash. A notification that the payment has been made will be immediately visible on their phone and applied towards their payment plan.
Payment Arrangements: When life happens, PaySwag allows users to quickly use a mobile phone to request a payment arrangement with an immediate response – avoiding the need and cost of endless phone calls.
Games and Rewards: Underbanked consumers are rewarded with swag points—redeemable for prizes such as Amazon gift cards, Redbox rentals or Starbucks lattes—just for keeping to a payment plan. PaySwag is the first platform to incorporate payment incentives for the underbanked.
Once points are earned, they translate directly into rewards that this specific market enjoys. By gamifying the payment experience and adding rewards as incentive to stay on track, the entire process becomes fun and engaging. There is no limit to the types of rewards we can offer, as long as there is a bar code for redemption. For example, one of our customers is offering tickets to minor league baseball games.
Education: With PaySwag’s educational component, users can earn extra points by watching short educational videos covering topics such as credit, loans, budgeting and saving.
LTP: How would you describe the current situation with banking for the underbanked? What are the hallmarks of that segment? What are the main challenges in serving them?
Without debit or credit cards, the underbanked have limited methods of payment, often relying solely on cash transactions. In the current collections environment, the process for making cash payments for utility bills, municipal fines or the repayment of loans often involves waiting in hour-long lines at administrative offices, an onslaught of additional fees, and all around inefficiency. Through its platform, PaySwag can help get drivers back on the road, reduce the incredible tax burden we are absorbing, and make the collections industry more efficient.
LTP: What are the challenges related to serving the risky segments? How does PaySwag address those challenges and how are you able to do that?
MH: Establishing non-threatening engagement in less than 90 days is a game changer! The ideal situation is that the end-user downloads the app just to keep in touch before they have a "life happens" event and they earn rewards even if they are current on their payments. The value here is that it establishes a pattern of communication and engagement. This is ideal for high risk borrowers who are statistically likely to struggle and need real support and education.
The next preferable situation is for the end-user to download or use our app if an event happens and they can't make the payment on time or in full. This allows them to establish communication prior to a real delinquency and, depending on the creditor, avoid late fees or late reporting. This information would be communicated by the creditor, ideally, in a text message (if they have legal permission), email or even a letter if it is less than a 30-day delinquency. This requires the creditor to really have a system to be proactive, and again, this situation is ideal for the non-prime customer.
The next use situation is when the end-user receives the first notice that they are 30 days late; really encouraging them to download the app and resolve the situation ASAP. This notice might be via mail, email, text or a phone call. We have also started using a QR code on these types of statements or late notices with a caption that reads "Having financial challenges? - Scan here!" A quick scan of the QR code sends end-users directly to an app download. We’ve found that a phone call encouraging them to download an app rather than just "pay a bill" is a much easier and cost effective pre-collection call for creditors.
The final use situation would be pre-collection at less than 90 days with the same strategy as above. After 90 days, the system may work as part of a rehab program to get them back on track, but this is not our main focus, as it is hard to create a positive experience for someone who has already received harsh letters from collectors.
LTP: How are financial institutions and the government currently collecting debt from the underbanked?
MH: In addition to the ineffective, time-consuming trips to pay in cash at administrative offices I mentioned previously, businesses and governments are having to employ collections agencies to recoup debts owed by the underbanked demographic.
The stone-age model of collections focuses on punishments rather than rewards and involves endless phone calls, letters and a threatening approach to debtors. 50 percent of mail is typically undeliverable and the majority of phone calls are unanswered. PaySwag is a new, fresh and efficient approach and initial results have shown a dramatic decrease in delinquencies.
LTP: How exactly is PaySwag planning to enhance the efficiency of debt collections?
MH: By combining mobile access and alternative payment technologies, the PaySwag platform gives borrowers the tools they need to make on-time payments, and rewards them for doing so. Using mobile gamification to transform how the underbanked interact with lenders, municipalities and other entities, PaySwag makes payments more accessible, rewarding and likely.
In one of our first case studies with a subprime auto lender, the company implemented the PaySwag platform for 12 months and, in that time, was able experience a 50 percent reduction in severely delinquent loans and their customers were able to use the platform to conduct more than 12,000 unique transactions, yielding $3.5 million in recouped debt. The proof of concept is right there!
LTP: What are some of your important partnerships and how do they help? What are the key next steps or important milestones for PaySwag?
MH: Our partner, PayNearMe, currently provides the technology component on which PaySwag’s cash payment option runs. We are thankful that end-users can utilize PayNearMe to make cash payments through our app, because we know that this sort of flexibility makes payments more accessible and likely for our target market.
Right now, we are working on growing our customer base in the initial verticals of lenders, municipalities, health service providers and utility companies. These are ideal markets for our platform because these organizations are currently experiencing clear difficulties with collections and need to implement a new approach to collecting fees and fines. Through our custom app, which can be tailored specifically for their customers, these organizations are be able to minimize defaults and increase on-time payments,
LTP: Tell us more about your participation at Money 20/20 conference and what is it that PaySwag wants to let attendees know.
MH: PaySwag has been selected to present at Money20/20’s inaugural StartupPitch180 competition and we went to Las Vegas to compete against a total of fifteen hand-selected companies on Oct. 26, with $50,000 in prize money on the line. A new competition as of 2015, the Amazon-sponsored StartupPitch180 brings together fifteen leading startups from around the world to present their innovations to a live audience and panel of judges from leading venture capital firms such as Bain Capital Ventures and Commerce Ventures. These early-stage companies had just 180 seconds to present their businesses to the judges and audience, who were responsible for deciding the winners of cash prizes and more importantly access to the leaders in Venture Capital.
What we want people to know that PaySwag is a revolutionary approach to collecting debts, fees and fines made possible by its innovations in mobile, rewards and payment technology.