Recurring Payment Processing Options

Retail lockboxes are one of the prime payment processing options available. These are coupon/check type of transactions involving individuals paying a company or organization and are the most common type of recurring payment transactions. They are utilized by many industries such as utilities, banks, and tax entities.

Some of the recurring payments are of the following types: mortgages, loans, utility bills, and taxes. In addition, healthcare related organizations can utilize this type of processing as a way to outsource back office processes. Credit card and check payments for consumer purchases of goods and/or services can also benefit from a retail lockbox set up.

PO/Lockboxes & Payment Processing

A retail lockbox is just a secured address location where the payments and coupons are mailed – in other words, a post office box. Where the payment processor comes in – whether for recurring monthly type of payments or just monthly billing, is by a third party that specializes in processing remittances. These processors will take over all of the back office duties related to payment processing including:

  • Mail room duties – a payment processor will have a dedicated mailroom for opening and sorting mail, which is also picked up by them from the PO Box
  • Converting documentation to digital format – the third party processor will have the technology and expertise to scan/image the forms that come in as paper hard copy
  • Indexing of data – a dedicated data entry services team will key the data and apply quality control to it, comparing the coupon amount to the check or credit card amount. All of this data will be validated. Checks are then deposited to the bank account being utilized, while credit card information is sent to the processor. Deposit reports are then sent to the client.

The reason why retail lockbox solutions are a prime payment processing option can be seen in the duties just described. These involve expensive labor-intensive tasks and technology to operate in-house and even more so if taking into consideration the fact they have nothing to do with the core business. When looking at reducing costs, recurring payment processing solutions charge a fee per transaction. This can return a great cost savings as opposed to upfront technology and recurring labor costs. There are also scalability benefits.

Healthcare Utilization

Health insurance companies also utilize this option. Much of the payment processing duties are the same – involving mailroom, document conversion, data entry and validation, and data transfer. The difference is that in this case, the sending entities are providers  – whether individual medical or dental providers or hospitals. What is being sent are claim forms – such as the CMS 1500, to the post office box. The third party processor manages it all from there and then transfers the processed electronic information to the insurance company in a format that allows their own software to generate payments. On the flip side, providers also utilize retail lockboxes to handle client to provider payments.


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