|PAYMENT TRENDS: Studies assess same-day bill payment potential and more|
Three reports from Aite characterize various aspects of emerging payments trends: Same-day bill-payment revenue; consumer acceptance of electronic payments; and the transition from paper-based presentment.
Sizing up same-day bill payments among alternative financial services customers
In an effort to recoup the costs of providing electronic bill payment and presentment, many financial institutions and billers offer consumers “same-day” (or “expedited”) bill pay. For a fee—typically $10 per payment—a biller or bank will accept or deliver a payment from a consumer and ensure the payment is credited no later than the next business day.
In Aite’s survey of 500 U.S. consumers who use alternative financial services, 80% made at least one same-day bill payment in 2010, and one in three did so at least once a month. Aite estimates that this generated nearly $2.3 billion in 2010 same-day bill pay fees.
“Banks, billers, and prepaid-card issuers all have an opportunity to market same-day bill pay,” says Ron Shevlin, senior analyst with Aite Group and co-author of the report of survey results. “An understanding of the same-day bill payer’s demographic and product behavior will make a difference in how much available revenue each of these entities can capture.”
U.S. consumer bill payment and presentment
Despite more than a decade of efforts to drive consumers away from paper bills, adoption of paper “turn-off” remains very weak, according to Aite. Surveyed billers report that a meager 12% of their customers turned paper off in 2011.
While there is general biller consensus that paper billing must cease, many lack a solid plan to make it happen and most continue to neglect the basic steps to accelerate penetration of e-bills. For example, a whopping 75% of respondents have no plans to make e-bills the default option when consumers enroll to pay bills on the billers’ website in the next 24 months.
When interviewed, 35% say they are very focused on paper suppression and have annual paper suppression goals; 51% say they are focused on paper suppression, but don’t have specific goals; and 15% say it is not a top priority.
“While billers have made great progress in driving electronic payment adoption over the years, they continue to lag when it comes to presentment,” says Gwenn Bezárd, research director with Aite Group and co-author of the report of survey results. “Consumer adoption of e-bills is stuck in the low double-digit rate mud. Part of the problem is that the majority of billers continue to overlook basic tactics that could drive more consumers toward paperless billing.”
Mobile payments acceptance
The transition of payments from a static piece of plastic to a Web-connected channel is opening doors to enhance communications between merchants and consumers, provide new shopping experiences, change advertising and marketing, and transform the way transactions are completed. It also has established the point of sale as a key bottleneck through which transitional activities must pass—a change that will dramatically affect payments acceptance technology and the firms that provide it. The move to new technology will require the industry to implement new infrastructure for merchants and address new security considerations.
In May 2012, Aite Group surveyed 44 payments acceptance executives in cooperation with the Electronic Transactions Association. The purpose: to discuss the evolving competitive dynamics associated with the creation and deployment of mobile payments.
Seventy-five percent of those interviewed agree that mobile payments represent a great opportunity for their businesses, while only 9% disagreed.
“With dollar signs in their sights, a strong belief in merchant interest, and limited concerns about risk, acquirers and mobile payments acceptance technology providers are moving to deploy solutions across their merchant locations,” says Rick Oglesby, senior analyst with Aite Group and author of the report of survey results. “While the momentum is building, deployment of mobile acceptance technology is not yet full-force. Many providers are working through preparatory activity, though are in some cases hesitant put their full weight behind their efforts.”
More information on these reports is available at:
[This article was posted on July 10, 2012, on the website of ABA Banking Journal, www.ababj.com.]
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