Credit analysts at Fair Isaac Corp. of Minneapolis are teaming up with the Chantilly, Va., Internet payment service provider Online Resources Corp. to help creditors take aim at those who fall behind on their monthly payments.
Fair Isaac and Online Resources
Fair Isaac's customers have access to an online payment portal that accepts a variety of payment types. Online Resources says the portal makes debtors more willing to pay, because they can avoiding the embarrassment of dealing with a live collections agent.
Robert R. Craig, an executive vice president at Online Resources and the general manager of its eCommerce services unit, said its online collections system has been available for two years. "We do think there's been growing interest, with consumer delinquencies increasing recently."
The two companies already have a number of customers in common, Mr. Craig said. "At the end of the day, we want to facilitate the transaction between the account holder and the owner of the debt."
Online Resources expanded its foothold in the collections market this month by acquiring Internet Transaction Solutions Inc., a Columbus, Ohio, company that processes 5 million payments a year on behalf of 150 clients, for $45 million in stock and cash. Those clients include 12 of the top 20 consumer receivables management companies and four major utilities, Online Resources said.
Nancy Atkinson, a senior analyst at the Boston research and advisory firm Aite Group LLC, said credit concerns are mushrooming, and the panic over subprime mortgages threatens to spread into broader of consumer and corporate lending markets.
"It sounds like Online Resources has found a way of leveraging what's going on in the market and building their volumes," Ms. Atkinson said. The partnership gives creditors a high-tech way to manage delinquent debt and could help them improve returns without selling bad loans to factoring agencies for collection, she said.
Though other companies use the biller-direct model, such as ClearTran Inc., which Mellon Financial Corp. of Pittsburgh bought in September, Fair Isaac and Online Resources would provide a strong offering, Ms. Atkinson said. "They're certainly on the cutting edge."
The partnership ties together Fair Isaac's ScoreNet collections-management system with Online Resources' Virtual Collection Agent and CollectPay services.
The Virtual Collection Agent technology, which works on behalf of creditors or collections agencies, offers multiple methods for account holders to make a payment or a promise to pay, using the creditor's policies and guidelines and late-stage options such as flexible payments, balance liquidations, and "best offer" settlements.
Fair Isaac's analytics measure whether someone is likely to pay, and how much, and how likely it is to self-cure or charge off.
Jerry Arehart, ScoreNet's client partner for business services at Fair Isaac, said his company has similar arrangements with Debt Resolve Inc. of White Plains, N.Y., and Apollo Enterprise Solutions LLC of Irvine, Calif.
"We're agnostic toward the provider per se," Mr. Arehart said. "ScoreNet is a data delivery mechanism that also has analytics capability."
