Navigating the New Billing and Payment Ecosystem with Choice, Convenience and Control
- Oct 21, 2021 4:51 pm GMT
By Steve Ostroff, General Manager of BillMatrix and Walk-In Payments, Bill Payment Solutions, Fiserv
During times of uncertainty, utility customers are seeking three characteristics in their billing and payment interactions: Choice, Convenience and Control.
With lingering concerns over the continuing financial (and health) effects of the COVID-19 pandemic, we’ve all been facing uncertainty for quite some time. While we thankfully aren’t facing the same problems consumers in Europe are as that continent confronts surging gas prices, in part due to high demand as economies recover from the pandemic, many Americans are still unable to pay their monthly bills.
In the 2020 Fiserv Expectations & Experiences: Consumer Payments study, we found that if a consumer could only afford to pay three bills, they would choose their electricity, mortgage/rent and cell phone. Other essentials like water, gas and internet access all fall outside the top rankings. This tells us that billers, including utilities, are no longer competing just on customer satisfaction, but also for share of paycheck.
We can see that utility customers want choices that fit their changing lives, convenience to offset additional hardships, and more control at every touchpoint. Here’s more on each and how billers can deliver.
Choice: Consumer Billing and Payments Channels
Bill payments are a lot to manage. The password volume and time commitment required to pay not only utility bills, but also mortgage or rent, water, sewer, car insurance, streaming services—the list goes on—can be overwhelming for even the most organized individual. Billers that offer customers more choices in how they pay their bills, including opportunities to pay more than one bill in the same place, can help reduce stress and confusion around bill payment.
As payments channels have proliferated, we know from our research that direct through the biller’s website is the most popular way for consumers to pay their bills, followed closely by payments through bank websites. Next, in descending order, are mail, in-person and by phone – all more costly methods for utilities to accept payments. Surprisingly, Gen Z consumers are the biggest users of both in-person and phone payments, and, not surprisingly given the longevity of the payment channel, seniors are the biggest users of mail-in payments.
With these choices and differing preferences, it is critical that billers remain nimble. But how can utilities look to shift those higher-cost payment options to lower-cost channels without compromising consumer satisfaction? Let’s look to the evolving digital billing landscape for our answers.
Convenience: Explosion of Digital Wallets and Contactless Payments
How individuals pay for goods and services in a retail setting increasingly informs their expectation for bill payments. By keeping an eye on these trends, we see the writing on the wall—consumer adoption of fintech wallets like PayPal and Venmo, plus contactless payments like Apple Pay and Google Pay, are exploding.
In fact, Experian found 60% of consumers are using a mobile wallet to make digital payments. And PayPal projects that the number of consumers using digital wallets is expected to double to 4.4 billion globally by 2025. Interestingly, given the use of mail-in payments from seniors cited above, PayPal sees increasing use of digital payments by what they call “the Silver Tech generation,” which represents people between 50 and 70 years old.
By leaning into these new preferences for simplifying the payments process, billers can meet consumers where they are and provide superior convenience—all while further streamlining more costly payment options.
Control: Payment Apps Are Becoming Consumer Financial Service Apps
As consumers look for better tools to manage their financial lives, fintechs are filling the void—providing innovative tools to act as a partner, educating consumers about money and helping them to make smarter decisions.
Payment apps are expanding the scope of financial and payment services offered, making them a destination for consumers seeking to consolidate financial payments. But it’s not just about payments; customers are looking for more advice, control over their finances, and easy access to their digital bills.
According to the 2020 Fiserv Expectations and Experiences – Consumer Finances During COVID-19 survey, 58% of consumers said they want more control over where they are accessing their digital bill; they don’t want to be locked into a single access point. They’re also willing to embrace new technology; 42% want the ability to access their bill from the mobile wallet on their phone.
Opportunities for Utilities: Fintech Wallets
For utilities, customers going digital in more aspects of their lives, and incorporating bill payments into those new digital locations, brings new opportunities.
Consumers who use digital wallets value the convenience, encryption and security that these payment solutions offer—beyond their ease of use. These apps may offer the “one stop shop” they are looking for when it comes to making digital payments.
Further, depending on how the remittance is set up with the payments provider, these new fintech wallet transactions may also offer utilities lower cost payments than credit cards, and certainly lower than in-person or phone payments.
The double-digit growth of digital wallets is an exciting development for both digital billing and payments. With the customer choice, convenience and control that they offer, fintech wallets will bring broad value to the forward-looking utilities that tap into them.
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