When digital payments and commerce professionals talk about “friction,” they usually mean reducing barriers that make a consumer pause before buying a new pair of shoes, opening a bank account or similar tasks. Of course, reducing or eliminating those barriers stand as important tasks, as they directly impact sales, profits and customer loyalty.
However, there’s another type of friction, one that digital technology is only beginning to address. This friction is certainly about the proper, legal and secure movement of money between different people, but it’s also about the heavy emotional baggage attached to those funds and their transfers — the weight of lives that were once tied together, but have since broken apart.
When people divorce, everything changes — and that applies to any children the former couple might have. Child support, alimony, doctors’ bills, school fees, and the need for new shoes and coats can spark arguments and resentment. Even in the friendliest of post-divorce situations, those payments can be a source of uncertainty, and at least mild frustration, if not handled in a way that is considered fair and honest.
Digital payments technology — specifically, peer-to-peer (P2P) and mobile app tools — can help solve those problems. That’s the view of Family Plan Co-founder and President Laura MacMahon and Fiserv Vice President of Digital Payments Paul Diegelman. In a new PYMNTS interview with Karen Webster, the two of discussed how the Fiserv-backed Family Plan app can bring a greater sense of harmony to post-divorce households by bringing digital efficiency and accountability to those ongoing payments.
MacMahon comes to this task motivated by personal experience. As she told Webster, her husband — Family Plan’s other co-founder — was divorced, and had four children (making her their stepmother, of course.)
“Just trying to manage and organize all the payments and outcomes around living with children who have two households” proved challenging, to put it mildly. Sure, a couple “may not be married anymore,” she said, “but if you have children, you are already in the business of having happy children.” And — as every parent knows — “kids are very expensive.”
So much of that revolves around a payments and fund-transfer process that has as little friction as possible. After all, who really wants more drama in their lives after a divorce? How to do that, then, via digital, mobile and — what Diegelman called — “modified P2P?”
The first step is simply getting away from cash. “Until now, divorce has primarily been a cash business,” MacMahon said, which means expenses and payments have been “very hard to keep track of.”
The Family Plan app enables both divorced parents to keep up with expected and scheduled payments (child support, for instance), as well as the many unexpected payments that always pop up (emergency medical care, a new jacket to replace one that was lost, a class field trip).
The idea is to not only provide a transparent platform to review and handle such payments and fund transfers, but to use digital technology to, essentially, enable a divorced mom and dad to handle those vital tasks from a distance if they prefer. Digital can certainly bring people together, but it also has value in keeping people apart, even as they need to interact, whether by simple need or official court order.
Getting The Word Out
That need for civilized interactions at a distance impacts how Family Plan gets the word out about its service. MacMahon said the ideal introduction of the Family Plan offering comes from professionals (say, divorce counselors), which serves to avoid the appearance that one parent is pressuring the other, and has the benefit of introducing post-divorce financial planning early on in the breakup process.
As for Fiserv’s involvement in this effort, the appeal, according to Diegelman, was to use its payments, data, P2P and general digital expertise (and the lessons it has learned from working with other FinTech operators), and “bring it to a market where there really is a degree of friction we can solve for, and help make a meaningful difference.”
The nuances of providing such a service are not insignificant, and go well beyond the general challenge of working with people who have decided to split up (and dissolve a contract). “User and account validation are really important,” he told Webster, and so are security and compliance. For her part, MacMahon said her company consulted with lawyers and judges who have expertise in dealing with issues related to data collection.
“It’s not designed to be a ‘gotcha’ tool,” she said of the mobile app, “but it does have the ability to create reports from data collected inside the app, and those reports can be used in court.”
Family Plan can analyze the data it collects, and spot whether, say, certain payments are regularly made late or off schedule. The mobile app can then work to recommend alternatives and other options. The idea, she told Webster, was to always have a “human” element to the app operations, so that there is a built-in understanding that things sometimes happen that are out of the control of the parents using the technology.
The app cannot yet support situations in which both parents want to separately contribute to a single expense — for example, medical billing. “For many places, like an orthodontist’s office, they are really only interested in having one point person be responsible,” she said. However, she didn’t rule out adding such features “down the road.”
Role Of Trust
For now, the biggest issue in getting more use of such a digital payments tool — of getting more buy-in from people who are likely under severe emotional strain — for many payments and commerce platforms, including those engaged in the sharing economy, is trust.
To help achieve that goal, no data is sold to third parties, MacMahon said. Users “are the owners of their data.” The app also enables users to attach receipts, newsletters and other proof of needed expenses so that everything is as transparent as possible. The idea is to make the process as impersonal as it can be, and more like a “business relationship” between the parents.
“We are helping them build a different type of trust between them,” she said.