Fitness4Less plans to cut its costs for handling payments by 80% by switching from a third-party payment processor to a system it controls in-house through an application programming interface (API) from Fundtech.

The London-based health club chain has 18 locations in the U.K. with about 75,000 customers. "The bigger we were getting the harder it was to manage the payments," says Emma Edwards, the director of Fitness4Less.

Fitness4Less, which would not name the third-party processor it uses, says its costs stem from a strategy of reducing human interaction as much as possible.

"We do as much in an automated way as possible," Edwards says. "That means we also take our payments online—but it was becoming harder to do that … when you are on a budget market, we charge [about $30] per month for a membership, every penny we can save on administrative process is hugely important."

The third party managed processing via Bacs, the U.K's national automated routing scheme for direct debit payments. Under this system, Fitness4Less pays a fee for each transaction. The Fundtech API model, which the health club pays for as licensed software, is designed to bring expense certainty for payments processing.

Fundtech's API is designed to translate Bacs policies into language that a customer service rep at a business can understand. There are a number of different policy and guidance documents that regulate how direct debit payments should be accepted and processed. "There could be in excess of 100 different steps depending on what types of payments a business is accepting, and there are different codes and workflows for each of them," says Barry Plumley, the manager for the Fitness4Less account at Fundtech.

The API allows the health club's customer service administrators to manage customer queries on payments, direct debit and other tasks, Edwards says.

"The third party had handled these queries before, but we did not have control over how the consumers were answered," Edwards says. "We have fairly IT-literate people but not all are complete experts, so it's helpful that the payments API is user friendly."

The payments API is one of a number of technology plays that Fitness4Less has recently made as part of its strategy to automate its interactions with consumers. The company also uses biometric scans, for example, instead of membership cards for access to its facilities.

A number of companies offer developer tools to help other companies build payments applications. These include Stripe, Dwolla and PayPal.

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