CHANTILLY, Va. – Collecting from delinquent credit card accounts has gone online, in a beta test by a top-three card issuer of a virtual collection agent from Online Resources Corp. Called Incurrent Consumer Card Collections, the service invites delinquent account holders to a branded site where they can sign up for rules-based payment plans, make payments and schedule future ones, and verify correct contact information, the latter in and of itself something often not easy to get. The new service follows Online Resources' purchase last year of Incurrent Solutions, a provider of Web-based card-member services to clients that include Fiserv, Certegy, MBNA, Target and National City Bank. Online Resources provides Internet banking, payments and relationship marketing services to more than 700 credit unions, banks and other financial institutions. The unnamed card issuer launched its pilot of the collections program in October, promoting it to approximately 90,000 accounts. In three months, holders of 1,315 accounts visited, with at least 50% of those in the first two stages of delinquency making payments or promising to, Online Resources says. Another 25% of those in late stages of delinquency did the same. Users who come to the Web site enter into a confidential dialogue in which they go through what basically is the same process as with a live agent, including offers to pay the balance now, or part of it, or to commit to future payments, all the way to closing out the account and settling. The preliminary results show that the "self-curing program yields about a 20 basis point improvement right off in the early stages, in an area where they tend to scratch and claw for five," says Bill Kinnelly, vice president of sales and marketing for Online Resources' Card & Credit Services. "In later-stage accounts, which tend to be harder to reach and collect and you tend to settle for parts of the dollar, about a fourth of those who authenticate at the site get in a payment program, and the amount they settle for looks to be at least as large as settling offline," Kinnelly says. In addition to helping recover delinquent funds, the program also provides "a branded support experience for the cardholder, with educational material that has a financial advisory tone, for instance," Kinnelly says. The online collections service also offers the card issuer a chance to save money by using a less expensive channel than phone calls and other traditional means, "areas where throwing more people at the problem shows diminishing results," Kinnelly says. Convenience and not having to deal with a live person also appeal to the other side of the equation, apparently. "Our product performance to date shows that 22% of the visitors to the service come out of calling hours for the collection department, so they're either on different schedules or they're trying not to talk to someone," Kinnelly says. "Really, it makes sense. It's that non-confrontational thing, plus convenience," he says. "It's like, `I won't take a call like that at work or at dinner, but I will sit down at night and take care of my affairs.'" The company now is looking at ways to market the Incurrent Consumer Card Collections to credit unions. "If you have a card portfolio of say a billion in receivables, it looks like we can save you about a million dollars a year, so of course, we're focusing on those credit unions with the largest portfolios right now," Kinnelly says. "The thing about smaller institutions is you have to keep in mind that they tend to be more intimate with the borrower, so the loss rate is lower anyway. The value to those institutions would then be not just doing this for credit cards, but for auto loans, student loans, direct loans . so we're testing that concept for all those products now," Kinnelly says. -

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