Are Faster Payments Leaving You Behind?
The payment landscape has been changed forever. Innovative companies are now offering consumers the convenience to pay one another through peer-to-peer (P2P) payment solutions, which have skyrocketed in usage. According to eMarketer, by 2021 the total value of mobile P2P transactions in the U.S. could rise from $156.49 billion to $244.03 billion. And USA TODAY reported that Venmo, Zelle, and Square Cash dominate the P2P payment market. Zelle is actually owned by a consortium of the largest banks and supported by more than 100 financial institutions.
The growth and convenience of P2P digital channels is a leading indicator of consumers’ desire to simplify the process of making payments. This also translates to consumers’ preference to pay all of their bills via a single secure and easy to use digital bill payment service. Meeting consumer expectations from the biller-side has not reached its full potential, largely because customers demand choice and control. Paying bills at the billers’ sites meets the needs of many consumers, but a large percentage prefer to manage some or all of their bills via other digital services that allow them to aggregate their payments and utilize other time-saving tools to manage their bills. Despite the technology being available, most billers are being left behind due to lack of internal resources and tight budget constraints -- which is ultimately causing them to lose out on an array of cross marketing and electronic bill payment opportunities. Billers that have invested in enhancing their digital strategy are receiving faster payments, increased paperless adoption rates and improved customer engagement.
Partnership Will Pave the Way
Many banks are already leading the way in bill pay technology and have been for quite some time. In 1984 banking changed with Stanford Federal Credit Union becoming the first U.S. financial institution to offer Internet banking to all of its customers and as well all know, banks have come a long way since the 80s. By 2013, 51% of U.S. adults, or 61% of internet users, were banking online and 32% of U.S. adults, or 35% of cell phone owners, were banking using their mobile phones. Banking online is now a ubiquitous part of our everyday lives and this ubiquity also includes bank bill pay. The Aite Group cites that U.S. consumers pay approximately 14.7 billion bills annually, shelling out roughly $3.9 trillion. Of those, 2.2 billion are paid online via a financial institution’s website or mobile app, which is one in seven bills.
With banks as the pioneers of online bill-pay, billers have also been working hard to give consumers another channel for their payment needs. More and more billers are realizing that delivering their bills via online banking increases adoption of electronic bills and reduces the percentage of costly paper statements and check payments. This growth in digital adoption translates to faster reconciliation of customer payments and improved customer service.
The opportunity — for both billers and banks — lies in partnership. Billers should look to extend biller direct benefits to the bank channel so they can improve engagement and lower costs. On the flip side, banks should give consumers the ability to aggregate all of their bills in one place without having to maintain multiple passwords.
Banks Bill Pay 2.0 – Faster, Simpler Bill Pay
The industry is quickly moving towards an evolved online bill payment experience that leverages the banks’ online bill payment systems to connect to a vast network of billers in real-time. This next generation bank bill pay service will make it easier for consumers to find and pay their bills at their bank while also giving them many of the benefits they receive from paying at their biller’s sites directly. These consumer benefits will include a choice of payment types, immediate payment confirmation from the biller and access to detailed billing information.
Billers will benefit from a great reduction in payment reconciliation expenses and an overall increase in digital payment volumes and better customer engagement.
Banks will strengthen customer relationships, which will drive cross-sales and improve customer retention.
Everyone benefits in this new bill payment ecosystem. Now is the time to get on board and meet your customers where they want to pay.
Preston Thornton III
Vice President of Product Management