The traditional approach to collections is built on a fundamental assumption: that missed payments signal financial distress or unwillingness to pay. This assumption shapes how collections systems are designed, how resources are allocated, and how borrowers are engaged after a payment failure. But what if this core assumption is flawed?
In today’s multi-account environment, payment failure often results from a mismatch between when a payment is attempted and which account holds sufficient funds at that moment. When lenders rely on rigid systems with limited payment methods and slow recovery cycles, these temporary misalignments can escalate into unnecessary delinquencies, damaging both collection rates and borrower relationships. As borrowers increasingly manage their finances across multiple accounts and digital wallets, the traditional one-size-fits-all approach to collections is no longer fit for purpose.
Our recent report on UK Consumer Lending Trends found that:
- The majority of prime, near-prime and sub-prime borrowers reported having sufficient funds in another account when a payment was missed.
- The majority of both prime and sub-prime borrowers maintain two or more spending accounts
- Of respondents who had missed a loan repayment, over 60% subsequently used a different account to make the payment.
These findings indicate that missed payments are frequently a reflection of how borrowers distribute and manage their funds, rather than a lack of ability or willingness to pay. To see this data in more detail, download the UK Consumer Lending Payment Trends Report here.
The Risks of Rigid Collection Systems
Lenders who persist with inflexible, single-channel repayment systems face several risks:
- Lower collection rates as recoverable payments become delinquencies
- Increased operational costs from unnecessary collections activity
- Damaged borrower relationships, reducing the likelihood of future lending
- Potential breaches of Consumer Duty by creating unnecessary barriers to repayment
The Solution: Dynamic, Multi-Channel Repayment Strategies
Forward-thinking lenders are addressing these challenges by implementing dynamic, multi-channel repayment strategies that reflect how borrowers actually manage their money. At the forefront of these solutions are intelligent automated payment links, which represent a significant advancement in collections technology.
Payment Links: A Game-Changer
Payment links are secure, personalised URLs delivered to borrowers via SMS or email. Unlike generic links to payment portals, each link is pre-populated with the borrower’s specific details, including the outstanding amount, account reference, and due date. When opened, these links present borrowers with multiple payment options on a single screen, such as:
- Alternative debit or credit cards
- Digital wallets (Apple Pay, Google Pay)
- Pay by Bank (Open Banking) for instant account-to-account payments
This frictionless experience requires no usernames, passwords, or portal logins. Borrowers simply select their preferred payment method and complete the transaction. Both borrower and lender receive instant confirmation, updating account status immediately.
Zopa Bank’s Success Story
Zopa Bank integrated Acquired.com’s Payment Links capability into their Point of Sale product recovery strategy with remarkable results:
“We know there can be many different reasons why a customer misses a payment, so we want to make it as easy as possible for them to get back on track. With the Payment Links solution from Acquired.com, which we include in our customer emails, it’s now even simpler for them to make a one-off payment. Acquired.com also gives us the insights we need to determine the best outcome for each customer — helping us become better customer champions.” — Mike Pugh, Product Manager, Zopa Bank
To date, this initiative has delivered a 10% recovery rate on failed payments, helping Zopa recover nearly £1 million in collections through this channel alone.
The Importance of Flexibility
Modern payment strategies must go beyond convenience and efficiency; they must also reflect obligations under the FCA’s Consumer Duty. One of the clearest ways lenders can meet these expectations is by removing unnecessary barriers that prevent borrowers from resolving failed payments quickly and independently.
Paul O’Sullivan, Global Head of Banking and Lending at Aryza commented “Timing mismatches, internal transfers, or simple oversight can cause payments to fail, even when the borrower has the necessary funds elsewhere. This presents an important opportunity for lenders to reimagine how payments are managed. By enabling borrowers to retry a failed payment from an alternative account, whether it’s through a user-friendly interface that allows them to select a different account or by setting up automated retries, lenders can reduce churn, lower the risk of defaults, strengthen customer trust, alongside reducing the costs associated with collection efforts and account resets. Allowing retries from alternative accounts offers multiple benefits. For borrowers, it offers greater control over repayment processes, improved financial management, and a way to stay on track without unnecessary friction, enabling them to complete their repayments smoothly whilst maintaining a positive credit relationship. In today’s dynamic financial environment, flexibility is crucial.”
Conclusion
Missed payments are often a matter of liquidity, not affordability. By recognising this and providing borrowers with flexible, immediate repayment options, lenders can improve both operational efficiency and customer outcomes. The future of collections lies in smart, borrower-centric solutions that reflect the realities of modern financial behaviour.
To read more about implementing more flexible repayment options for your business, download the full UK Consumer Lending Payment Trends Report here, or contact our team to discuss your specific business needs.
