Timely News And Information About FEDChex And The Payments Industry.

Offshoring: Business Savvy or Savage Business?

My husband and I recently bought a new home. By new I mean a 40 year-old
labor of love, a true 70's beach icon with white-washed hardwood floors and ceilings, a wet bar in the basement and step-down Roman shower/tub (if you can hear the theme to Hawaii 5-0, you know what I mean). Luckily, we're both very handy and aren't afraid to get our hands dirty so in order to keep expenses down we can (or attempt) to do much of the "updating" ourselves.

However, one of the projects that has us both less than excited is building a pond for our koi and turtles who are currently holed up in a temporary above ground, much too small, plastic pond insert. So, as we stand on the sight of our hopefully-some-day-pond sight feeling overwhelmed by the amount of back-breaking labor that lies ahead, we're confronted with a couple difficult decisions. Do we get rid of our beloved pond denizens and forget about the project or do we hire other people to do the digging and hard scaping (aka, the dirty work)? And, if we decide to move forward with the project, do we hire local contractors (many of whom we know personally) or do we hire cheap(er) day-laborers, which may or may not be "citizens" of our community?

On one hand, we'd really prefer to support our local community in this not-so-great economic environment. But on the other, we need to be frugal and get the best deal possible, thereby allowing us to use the extra money to fund other necessary projects. It's one thing to support your community and another entirely when an "outsourced" bid comes in at a third of the cost (sometimes half) than that of your local contractor.

When it comes to outsourcing labor, it's no simple decision. There just isn't an easy solution and there are many caveats that accompany the benefits that businesses (and simple folk like me) must really consider. Even more so for "offshoring", which is sometimes contrasted with outsourcing or offshore outsourcing.

To define:
Outsource | to obtain (goods or a service) from an outside or foreign supplier, esp. in place of an internal source : outsourcing components from other countries | [as n. ] ( outsourcing) outsourcing can dramatically lower total costs.

Offshoring | the relocation by a company of a business process from one country to another where labour costs are cheaper—typically an operational process, such as manufacturing, or supporting processes, such as accounting.


Outsourcing manufacturing jobs to countries who are able to manufacture goods more cheaply than in the US has made business sense for for many years. Look at some of the retail moguls like Walmart and Mattell for instance.

Recently, however, service jobs such as payroll processing, collections and customer call centers are lumped into the mix, collectively called "offshoring". We've all been there. You know, when you have to make the dreaded customer service or technical support call to your local XYZ company only to be greeted by someone you can barely understand. Frustrating to say the least. This cannibalization is a trend that exhibits growing concerns as the U.S. struggles to recover from a recession where the rate of job creation lags far behind the expected pace.

So, offshoring makes sense, right? I mean, ABC collection agency (for instance) might save a lot of doe if they move their call center to India. One of the goals for most businesses is to reduce costs, after all. And when a product or service can be produced more cheaply overseas, does it not make more economic sense to import it than to produce it domestically? Lower priced goods and services are good for all consumers, right?

Perhaps.

But what about the impact on the American consumer and small business? While prices may drop due to offshoring, and only marginally at best, as shown in the Bureau of Labor Statistics 2011 news release, American wages overall have decreased, making it difficult (if not impossible) for consumers to purchase products and/or services. And, although much of the revenue earned abroad may return to the U.S. in wages for other employees, profits for shareholders, investment in R&D, and taxes for the government, foreign workers do not contribute to US Social Security or other taxes and the increased tax revenue from corporate profits does not equal the amount lost on US workers income taxes.

So, I ask again, is off-shoring business savvy or savage business?

Only you and your conscious can decide that, but here are few questions to consider:

• Do you perceive offshoring to be yet another way for the uber-rich corporate executives to get richer at the expense of individual workers?
• Do you think that outsourcing work to companies that can do it more efficiently and less expensively makes sense, provided that it is actually less expensive at the bottom line?
• Do you suppose that some of the hidden costs include the danger that consumers will stop buying from companies engaged in offshoring? And, will these companies go out of business as a result?
• Does Offshoring mean that unemployed Americans and insufficiently paid overseas workers will not be able to purchase products and services?
• And finally, do we use the general contractor in our community or hire the day laborer standing outside of Rite Aid? Oh, nevermind. 

 

 

 

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What's in your e.wallet? Yet another alternative payment option.

Remember when we actually remembered stuff, like phone numbers, account numbers, driver’s license numbers, and (ooh, dare I say it) passwords? But then, for better or for worse, we evolved. First to those little magnetic, credit card-sized accordion-like phone books, then the Rolodex, then to PA's or Personal Assistant's (i.e. Palm Pilots) and finally, the smart phone.  Huh? A phone that remembers this stuff for you? Yup. Or rather, an application for your phone that allows users to make electronic or Internet commerce transactions quickly and securely, utilizing wireless technologies such as near field communication (NFC). 

Enter the digital wallet (or e.wallet). 

However, according to Jud Linville, Chief Executive of Citigroup's credit card business, digital wallets hold little promise. In a recent interview, he told Reuter "It is crazy to think that there's going to be one killer form factor. It's still too early.". Read what Linville, told Reuters.

So is it too good to be true? Maybe. Or maybe it's just too soon to tell. We've come a long way so far in the alternative payments space. 

Though the system has already gained popularity in Japan, where digital wallets are known as Osaifu-Keitai or “wallet mobiles”, the U.S. still has quite a few hurdles to overcome - primarily, merchant and consumer adaptation. At present only a handful of phones currently support NFC technology. Most industry experts agree that in order for NFC mobile payments to be a success, there will need to be a much greater deal of cooperation and coordination among multiple disparate parties. 

From the merchants and retailer side, a mobile strategy must be established to start preparing for NFC payments. In the end, they may find that this payment option may be no simpler than accepting credit cards and offers little to no additional value. 

From the consumer side, while the platform offers password protection, the general public that utilizes smart phones may be hesitant to trust the technology to keep their valuable information safe. But ultimately, the convenience of tapping a phone versus swiping a card may not be significant enough to change user behavior.  

Click on the image to see what Jon Fortt from CNBC reports. 

 

 

 

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Groupon or Poopon | 16 things to consider before you participate

Is Groupon today's snake oil for advertising, it's peddlers ruthlessly preying on the ignorance or inexperience of small businesses? Or is it a genuine, viable marketing tool?

Since its inception in November 2008, Groupon has quickly become the Goliath to the small business Davids in the retail environment, promising all but the moon and stars. But what's under the veil of those promises may surprise you.  

Let's lay it out for a look-see:

You, as a business owner agree to become featured on the Groupon network where you are instructed to reduce your product or service price by 50% or more. Groupon promotes the deal and gets new customers through your doors. It's then up to you and your staff to keep them coming back. Consequently, Groupon gets between 30% and 60% of your drastically reduced price. 

Ouch! That’s right. You could get less than half of your discounted price, plus you essentially pay for the credit card interchange fees. But it’s worth it to get an influx of new customers. Right?

Not so fast.
Groupon is not for everyone. Businesses of all sizes have felt the biting sting of a poorly designed Groupon deal. It’s up to you to do your homework, get educated and carefully weigh the pros and cons to see if this marketing/advertising model is right for your business.

Here are some things you should think about before participating in Groupon: 

• Are you willing to replace your customer base with one-and-done coupon holders for the entire time they’re valid?
• Are you willing to lose loyal customers for customers who are loyal to Groupon, and are only out for the next great deal?
• Are you willing to sacrifice some brand loyalty for mass promotion?

If your goal is simply exposure, and you have a substantial marketing budget, then Groupon may be a viable option. If, however, you’re expecting a massive boost in profits, the figures may shock you upon further inspection.  

Ask yourself these questions before considering doing a Groupon:

• What am I selling? An item, a package of items, a continuing service?
• What type of customer will I attract for each?
• What are my profit margins?
• Will my existing customers suffer if it's successful?
• Can I handle the increased demand?
• Whats the lifetime value of my average customer? 

You should never consider giving something away at less than cost, ever. If you think you might lose money on your deal, don't do it. If, however, after you've thought long and hard, done all your homework and feel strongly that Groupon is for you, keep the following tips in mind.  

Tips: 

• Limit the length of your promotion. Pay close attention to what the sales rep says, and try to get the best deal possible.
• Use Groupon to get people in your door but keep them coming back by enticing them with some specials of your own. Focus on the upsell and turning these one-off customers into loyal ones.
• Make sure you understand the fine print and have as much control as possible over your deal details. 
• Limit the time period and/or volume of your deal.
• Plan well enough to offer your best service during the Groupon time period.
• Make an effort to collect customer info for your marketing list, as you will need to make additional revenue to offset the cost of the deal and try to turn these customers into loyal, repeat business. 
• Have a well-prepared marketing plan of your own and make sure that the deal outcome is in alignment with your plan and budget. 

The bottome line:

Since Groupon arrived on the online coupon scene, a plethora of clone sites have emerged with better, more personalized platforms for merchants and consumers to explore. There are well established sites like LivingSocial and Screamin' daily deals and up-and-coming sites like SoCoLoCoDeals for just Orange County locals with a focus on shared proceeds with local charities via Charity Smackdown. There are also a growing number of hyper targeted sites like Couptessa, daily deals just for women. It doesn't take long to realize that Groupon is not just the flavor of the month, but only one among a rainbow of Ben & Jerry's. Which flavor works for you?   

There are many business types that can and do see good results with Grouponing and use them frequently. But, in the end, it's up to you to determine if it's good for you and your business.  

Do you have any Groupon experiences? Let us know the good, the bad and the ugly. 

 

 

 

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Out with checks - In with electronic payment systems

The 2010 Federal Reserve Payments Study takes us through the history of the check over the last decade and its slow demise in the shadow of more efficient electronic payment vehicles.

Richard Oliver, Executive Vice President of the Federal Reserve Bank of Atlanta said, “The [study] results underscore the nation’s progress over the past decade toward a more efficient and reliable electronic payments system, keeping pace with the shift toward electronic payments alternatives and electronic check processing.”

 

Get the whole enchilada here. 

 

 

 

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Entertainment: NEW Uncensored E*TRADE Baby Ad for the 2011 Super Bowl

E*Trade's baby is a never-ending source of humor. Check out the out takes that didn't make the cut, then watch for the unveiling of the ad that did this Super Bowl Sunday. 

 

 

 

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The Federal Reserve's proposed rule on debit card interchange fees

There's been a lot of ruminating over the Federal Reserve's proposed rule on debit card fees and routing, particularly how it appears to overlook consumer interest. 

There seems to be a consensus that consumers are going to end up paying more for banking services as a result of the rule. The proffered idea that consumers aren’t going to get pinched in the end is primarily based on the claim that merchants are going to pass the cost savings on to their customers. Thus presumably, consumers will pay higher bank fees but will see a balanced scale from a reduction in retail prices.  

This seems more like Houdini economics than smart business, with merchants escaping the net while consumers get poached. Although debit-card interchange cost reductions could, in a perfect world, get passed down to consumers, small changes in the cost of doing business are (understandably) going to go right to the bottom line for most merchants.

However, merchants with foresight will pass those reductions in fees down to consumers if they want to build a higher and better loyalty base. 

Check out the 2 videos below to get the full scoop.

The Federal Reserve Board of Governors met to discuss proposed rules governing debit card interchange fees and routing. [58 min]

Ed Mierzwinski talks about the effects of the new financial regulations bill on consumers. This program was part of a week-long "Washington Journal" series on the impact of recently passed financial regulation laws. [41 min]

 

 

 

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Economic Predictions: What's on the horizon for 2011?

As we look back on the economic woes of 2010 - the staggering rate of unemployment, the unrelenting mortgage/foreclosure crises, the devastating BP oil spill, and a crumbling European monetary union - 

dare we look forward to a brighter 2011? What's on the horizon for the days ensuing a schizophrenic year? 

First, take a look at Bloomberg BusinessWeek's 2010 in Review. 

 

Then check out a few videos to find out what some specialists are forecasting for 2011. 

VIDEOS:
Diane Swonk - Chief Economist at Mesirow Financial, on her predictions for job growth in 2011.

John Browne - Senior Market Strategist at Euro Pacific Capital, on why China is likely to revalue its currency and the U.S. faces 'stagflation.'

Andrew Ross Sorkin - Financial Columnist, New York Times: Your job, home and 401K.

Give us your feedback. What would you like to see happen in 2011 as it relates to the economy and your business?

 

 

 

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Emerging Mobile Payments: What's all the buzz?

Like it or not, it's coming...and quick. In fact, your competitors may already be doing it. With the myriad of apps and tools developed today to enhance consumers' mobile phone experience, the ability to make and accept payments using a cell phone is at the top of the list for players in the financial arena.

However, there are many factors and issues that developers and providers are struggling with. There is a delicate balance between consumer control, security and convenience. It is imperative that merchants have an acute awareness of the future of mobile payments and how customer adoption can effect their business.

Read about Six Issues For Mobile Payments and the Challenges of Mobile Payment Technologies & Adoption with growth statistics included. 

 

 

 

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PRESS RELEASE: Follett Chooses FEDChex Recovery Services

FOLLETT HIGHER EDUCATION GROUP SELECTS FEDCHEX RECOVERY FOR NATIONAL ACCOUNTS RECEIVABLES COLLECTION SERVICES 

Irvine, CA – Oak Brook, IL – December 3, 2010

In the first quarter of 2010, FEDChex Recovery participated in a seven-location pilot for Follett’s Rent-A-Text, their latest cost-saving text rental program to collect charges and fees for unreturned books. The pilot proved successful and subsequently led to a large-scale rollout of Rent-A-Text to more than 700 locations.

“Follett introduced Rent-A-Text to make an impact on affordability, as we understand the rising costs of education for students and their parents,” said Lynn Arazny, Cash Accounting Manager at FHEG, “As found in any rental model, a small subset of renters neglects to return their rented materials – part of the risk in introducing such a program. We’re confident that teaming up with FEDChex Recovery will help us recover most, if not all, of those charges.”

FEDChex Recovery, a leading provider of payment processing and risk mitigation solutions, utilizes skip-tracing technology with internal and external negative databases, as well as Lexus Nexus and Equifax in order to locate and collect on delinquent accounts. In conjunction with this process, a series of collection letters are distributed and unlimited phone contact is made utilizing a state-of-the-art Predictive Dialer. When necessary, FEDChex Recovery uses direct relationships with Litigation and District Attorney Check Restitution programs across the country to collect these debts.

“Since 2003, FEDChex Recovery has been proud to offer Follett Higher Education Group our Electronic Check Re-Presentment Program (RCK), Balanced Consolidated Returns (BCR) and Traditional Check Collections services and we are very pleased to provide them with our Accounts Receivables Collection services now,” says Bryan Dube, SVP, Business Development. “We’re proud to say that our clients receive the highest recovery rates in the industry and are certain that Follett Higher Education Group will realize the benefit this service.”

About Follett Higher Education Group
Follett Higher Education Group is the leading provider of bookstore services and the foremost supplier of used books in North America. Follett services five million students and over 400,000 faculty members through more than 850 stores. Follett also services more than 1,600 independent campus stores with its wholesale services, and has the most visited ecommerce collegiate website, efollett.com, that provides services and products through a network of more than 900 campus stores.

About FEDChex Recovery
FEDChex Recovery is licensed in all 50 states and has established itself as one of the leading contenders in today’s collections industry by placing our focus on the needs of our clients and developing the tools and tactics to best assist them with the recovery of outstanding debt. Our customer service approach has enabled FEDChex Recovery to boast a higher recovery rate than any other national collection agency. Along with building relationships with our clients, we take great pride in offering a variety of tools and resources to help create a proven collection process.

FEDChex Recovery is an associate member of the American Collectors Association (ACA), California Association of Collectors (CAC), and is a member in good standing with the Better Business Bureau in states across the U.S. For more information about FEDChex Recovery solutions, contact Bryan Dube at 866.599.1262 or visit FEDChex Recovery on the web at http://www.fedchex.com.

 

 

 

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FEDChex | Doing Our Part For The Environment

As a complement to our Pay It Green initiative we have also undertaken a multi-year virtulization initiative. By utilizing hardware from Dell and software from VMWare FEDChex has been able to reduce our rack space by 20 percent and our physical servers by 18.5%. We expect to further reduce our deployed hardware by an additional 11% over the coming year. The benefit to the environment is substantial as we are using far less power and HVAC than in previous years. 

Additionally solutions like Thin Provisioning are allowing us to better utilize disk space meaning that growth in power-hungry devices is only done when needed to properly run the business.  The power savings equates to reducing CO2 emissions by 122,400 kilograms per year; the equivalent of taking 78 cars off the road for an entire year.  

 

 

 

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