February 28, 2011

Banks should focus on expedited payment fees as a way both to collect revenue and promote cost savings to consumers, according to a new Javelin Strategy & Research report, the 2011 Expedited Payments Forecast.

While consumers reported spending $1 billion on expedited payments in 2010, they saved $4.8 billion in potential late fees using this service. These savings are expected to climb to $6.3 billion by 2015. Javelin found that just seven out of the top 40 banks currently offer this service, giving financial institutions the opportunity to continue to grow market share.

“Overdraft fees were an important revenue source for banks in the past, but regulations limiting these fees have caused banks to lose billions,” said Beth Robertson, director of payments research at Javelin. “Expedited payments services, which are often under marketed by financial institutions, are one area through which they can recover lost revenue. Javelin’s research shows that consumers want to be able to access this service through their banks.”

Javelin data supports market opportunities for expedited payments, indicating that two-thirds of online bankers and three-quarters of mobile bankers are likely to use expedited payments. Further, almost two-thirds of consumers faced late-bill payment fees of $20 to $50 or more in 2010; fees that consumers can avoid by using expedited payments services.

“Expedited payments can—and should—be positioned as a value-added service,” said James Van Dyke, president and founder of Javelin Strategy & Research. “Effectively marketing expedited payments enables financial institutions to establish a profitable revenue stream, while meeting consumers’ needs to pay bills on time and avoid late fees.”

 

Read more at:  

https://www.javelinstrategy.com/news/1171/92/Expedited-Payments-A-Win-Win-for-Financial-Institutions-and-Consumers/d,pressRoomDetail