Reduce Payment Friction: A Guide For Canadian Collection Agencies

Why Payment Friction is Costing Canadian Collection Agencies

In the world of debt collection, every extra step in the payment process can mean the difference between a successful recovery and a lost opportunity. For Canadian collection agencies, reducing friction isn’t just about convenience—it’s a proven way to boost recovery rates, improve customer satisfaction, and streamline operations.

The hidden cost of payment friction in collections

Friction in collections refers to anything that makes it harder for a customer to pay: multiple forms to fill out, confusing instructions, or slow, manual processes. Each added hurdle increases the chance that a debtor will abandon the payment, directly impacting your bottom line.

• Industry-wide, debt collection success rates average 20-30%, meaning that most debts remain unpaid.
• Time is critical: The probability of collecting a debt drops from 98% at the due date to just 27% after 12 months have passed.
• Friction is a major culprit: Complex payment journeys and outdated processes are top reasons for low completion rates.

The benefits of reducing friction

Leading collection agencies and payment platforms are proving that reducing friction pays off—literally.

• Higher Recovery Rates: Agencies that streamline payment flows see higher collection rates, sometimes exceeding the industry average by a significant margin.
• Faster Payments: Real-time payment solutions can collect up to 75% of funds instantly, compared to traditional methods that take days or weeks.
• Reduced Admin Work: Automated payment tracking and instant confirmations mean less manual follow-up and fewer errors.
• Improved Cash Flow: Faster, easier payments mean cash is available sooner, helping your business stay agile.
• Better Customer Relationships: A frictionless payment process reduces frustration and builds trust, leading to higher satisfaction and loyalty.

How to reduce friction in collections

1. Offer real-time, multi-channel payments

• Use solutions like Clik2pay to send secure payment links by text, email, or QR code, letting customers pay instantly from their bank app.
• Batch reminders and automated nudges keep your collections process moving without manual intervention.

      2. Simplify the payment journey

• Eliminate unnecessary steps and confusing instructions.
• Allow flexible payment amounts and scheduling to accommodate customer needs.

      3. Leverage automation and data

• Use a unified portal to initiate payments, track status, and generate real-time reports.
• Automate communications to reduce human error and free up staff for more complex cases.

     4. Personalize engagement

• Tailor messaging and channels based on customer behavior and preferences for higher response rates.

Real-world impact 

Blair DeMarco-Wettlaufer, Operations Manager at Kingston Data & Credit, shared how reducing friction transformed his team’s collections:

“With Clik2pay, our agents can send a payment link in seconds, and most payments are completed instantly. It’s reduced friction for both staff and customers, and it’s perfect for automated reminders. My team is thrilled.”

Reducing friction in collections isn’t just a buzzword; it’s a strategic advantage. By making payments simple, fast, and flexible, collection merchants can dramatically improve recovery rates, reduce costs, and foster better customer relationships. In a competitive industry where every percentage point matters, eliminating friction is the key to unlocking better results.

FAQs: Payment Friction in Canadian Collections

Q: What is payment friction in debt collection?
A: Payment friction refers to any barriers that make it more difficult for a customer to complete a payment, such as lengthy forms, unclear instructions, or manual processes.

Q: How can real-time payments help collection agencies?
A: Real-time payments speed up collections, reduce failed payments, and improve cash flow by enabling instant fund transfers from customers.

Q: Are real-time pay-by-bank solutions secure?
A: Yes. Solutions such as Clik2pay use secure bank authentication, reducing fraud risk and providing a seamless customer experience.

Q: Why should Canadian collection agencies prioritize reducing friction?
A: With only 20–30% average recovery rates, reducing friction is key to increasing collections, improving cash flow, and creating a better experience for debtors.