Fiserv’s annual Consumer Trends survey is one of my favorite reads every year. It continues to be an excellent review of year-to-year trends regarding consumer payment habits. No doubt the story of the last decade has been the declining use of traditional payment methods such as paper checks (in lieu of online banking and bill pay adoption).
In fact, according to this year’s study, only 23% of household bills are paid with a paper check, compared to a staggering 61% in 2002.
While those numbers are significant, the biggest outcome of this year’s survey (of course, I’m admittedly biased) was that biller direct bill pay – paying bills directly on a biller’s website – grew a whopping 11% in 2011, keeping pace with online bank payments. This flies directly in the face of what leading experts and market research firms predicted for the year. While most everyone agreed that each avenue would continue to grow at a solid pace, many thought that the growth of online banking would outpace that of biller direct.
So it begs the question – Why is biller direct growing so fast? Well, I have some thoughts…
- Increased dissatisfaction with big banks and financial institutions. 2011 marked the meteoric rise of credit unions and for many consumers, was a year of revolt against major banks and financial institutions. Though only a relatively small percentage of the population was part of this movement, perhaps it left fewer consumers flocking to put all their eggs in the big bank basket and more apt to go biller direct.
- Increased consumer comfort and confidence with online payments. Duh…I know – this one’s a no-brainer. There’s no mystery that American consumers are feeling increasingly comfortable with online payments. But the significance that I’m getting at is that consumers who once may have only trusted certain websites (like bank sites) are now becoming more trusting and comfortable with submitting payment information on mainstream biller direct sites.
- Rising % of young bill payers. As more young consumers (Gen Y, Millennial) enter the marketplace and world of rent payments, cell phone bills, utilities, etc. they immediately look to pay their bills online. And since they don’t have a significant volume of bills at that age (average of 4-6 bills versus 10-12 for the middle aged consumer/household), it makes consolidated online banking less valuable and appealing.
- Increasing biller direct e-payment options. When you think about it, the total number of online banking providers and options in the marketplace is relatively set. However, the total number of billers who are now incorporating online payment options into their websites is growing. With an increasing number payment platform options and providers available (like PayLease) and with the ease of integration into their websites, any biller can offer online payments. It’s no longer a luxury only for the big utilities, insurance providers, etc. And as these platforms become more sophisticated and tailored to the needs of individual customer, they actually improve the online bill pay experience for payers and ease the management of it for billers.
Of course, this is only my humble take… But regardless, this is great news for biller direct payment providers like PayLease, who enable property management companies to accept online rent payments or HOA dues via their own website. It’s really neat to see the impact that providers like PayLease are making on the marketplace. And there’s plenty of reason to believe this trend will continue for years to come!