A Pinch of Cash, a Dash of Electronic and Season with Mobile to Taste
When it comes to paying their bills, consumers crave choice, control, flexibility and convenience. They want a payments menu with something for everyone in virtually every financial situation. Electronic payments can include everything from online bill payments and eBilling to interactive voice response (IVR) and call center payment acceptance
By Randy Vyskocil
With appetites for options soaring, consumers are interested in mixing up their own personal service recipes to satisfy their lifestyles and needs. When it comes to paying their bills, consumers' tastes are not only varied but change as quickly as their cash flow. In today's economic climate, consumers crave choice, control, flexibility and convenience. They want a payments menu with something for everyone in virtually every financial situation. How can you make sure your utility offers a diverse buffet of payment choices that appeal to the wide range of consumers' needs?
Electronic payments are prevalent — and consumers are taking full advantage. Comprising everything from online bill payments and eBilling to interactive voice response (IVR) and call center payment acceptance, electronic payment channels have been fully adopted and are the most used across consumers.
It's easy to see why with the wide range of payment types they support, including ACH, credit cards, debit cards, prepaid cards, and ATM cards. A recent Western Union study showed 4 out of 10 consumers pay their utility bills online, while 63% of consumers would prefer to pay more bills overall online. By 2013, it is forecasted that online payment volume will grow by 18%.
Walk-in Cash Payments
While electronic payments are strong and growing, don't rule out the old tried and true cash payment. A large set of consumers still choose to make bill payments in person with cash: about 1.6 bills for every 10 paid per month. With cash flow tightening and financial challenges aplenty, many of today's consumers are turning more often to cash payments as a method for managing their money.
With 36% of consumers stating they have either occasionally missed a bill payment or experienced some difficulty paying bills on time, walk-in cash payments help consumers stay on time and avoid service disruptions. For necessary services, such as utilities, consumers look for payment options that allow them to pay last-minute, at multiple locations and for extended hours — walk-in cash payment services, especially those offered through third-party processors, offer all these benefits.
The latest addition to the array of payment options is, of course, mobile. Starting from its existing small base, mobile channels will see the largest percentage increases over other payment channels, with a 376% jump (biller and bank combined) by 2013. Mobile solutions available today include SMS text, mobile compatible Websites, mobile applications and payment enablement notifications (both text and email). Even in their infancy, these services are already facilitating an estimated 98 million payments for 2011.
|When it comes to paying their bills, consumers' tastes are not only varied but change as quickly as their cash flow.|
The ability to send reminders and make recurring payments makes many mobile payment options appealing to consumers looking to stay current on necessary bills such as utilities, mortgages, rent and insurance. Electronic payment notification and enablement, for example, through self-service channels such as email and SMS text, is a cost-effective way for utility companies to provide an alternative to outbound calls and a less costly, green alternative to paper notifications.
Gen Y Stirs the Pot
When designing a successful payment portfolio, it is important to keep an eye on Gen Y-ers since they have great influence over where payments will be heading in the future. Gen Y is identified by the Census Bureau as people born between 1977 and 1994. With the oldest turning 34 in 2011, this generation's 75 million members (baby boomers are at 80 million) are often new renters or homeowners responsible for paying utility bills.
In today's economy, however, growing financial responsibilities also means heightened financial awareness: 30% of Gen Y'ers expect it will be more stressful to budget and pay bills in 2011, 39% are putting more emphasis on increasing savings this year and 22% are looking to reduce debt.
This means Gen Y needs a variety of payment options. Whether it's options for how, where or when to pay their bills, Gen Y wants more control and flexibility to support their constant state of financial change. Take debit cards, for example. While debit and credit cards are undoubtedly popular for payments across all segments, for Gen Y, debit cards take the cake.
Why? With their acceptance becoming more widespread and being directly linked to cashflow, debit cards make purchase and bill pay management easier, more flexible and less costly while posing little risk to credit scores. In the last six months, 38% of Gen Y-ers said they have paid more bills with debit cards than previously. Accepting debit cards through various channels is a must for any utility biller looking to simplify the entire payment process for the consumer.
With our eyes on Gen Y, the next logical question is what's next? While there are all kinds of payment innovations stirring for the retail space, the most applicable channel for bill pay is going to be the mobile phone. But this can take many forms. The mobile wallet is a popular idea where information for various debit and credit cards can be loaded into the processor of the consumer's mobile telephone and pulled up for payment through a biller's mobile application, for example.
Another solution, particularly for in-person payments, is fingerprint identification payments. The consumer walks up to a checkout or payment center, puts his finger on a device and simply chooses from a list of accounts on the display and the payment is complete — no wallet, no cards, no PINs.
For utilities, the two biggest uses of mobile technology for future payments will be for communication and payment enablement. As banks become more savvy in this area as well, the connection between a bill payment and a consumer's bank account could simply be the push of a smartphone button.
Get Your Fill
The greater variety of options you can include in your bill payment solution, the more likely you are to reduce delinquencies, increase payments, convert more costly payments to process to more efficient methods, reduce service disruptions and improve the overall customer experience.
Here are some ingredients for a sure-to-please payments smorgasbord:
- Offer payment flavors for all palates: Presentment and payment channels should include online, IVR, mobile, call center and walk-in with the ability to accept multiple payment types including debit, credit (for certain transactions), ATM, ACH and cash, with options such as same-day, recurring, and scheduled payments.
- Self-service cravings are strong. Delinquent consumers and those facing service interruption are particularly fond. Satisfy them with solutions such as SMS Text and payment enablement notifications (both via text and email).
- You must have your greens! With electronic payment presentment and payment enablement notification, reduce costs by turning off paper statements and reducing inbound calls.
- Tastes change. Be ready for consumer shifts in payment preferences by staying abreast of the latest mobile payment developments.
About the Author: Randy Vyskocil has been in the information technology, billing and payments business for more than 15 years. He oversees the business development for Western Union Payment Services' Utility Vertical Market, focused on providing biller direct and online banking, billing and payment solutions to electric, gas, water, cable, satellite and waste management providers.