This podcast was originally published on PaymentsJournal on May 4, 2022.
The bill pay industry is often overlooked, which is surprising given that bills are omnipresent for all adult consumers. Thankfully, organizations like BillGO are paying close attention to how consumers pay their bills and what consumers are looking for in technology to help them better manage their financial obligations.
PaymentsJournal sat down with Daniel Hawtof, SVP of Bill Pay Product at BillGO, and Tim Sloane, VP of Payments Innovation at Mercator Advisory Group, to discuss BillGO's recent eBook, Winning the Battle for Bill Pay, including highlights from several comprehensive studies pinpointing what consumers want in bill pay technology.
Listen to full podcast: Bills, Bills, Bills: Consumers Want Flexibility and Speed for Bill Pay
Payment choice eases bill pay anxiety
In 2021, Mercator Advisory Group surveyed 3,000 consumers about their bill payment preferences. Data from this survey can be found in the BillGO eBook, Winning the Battle for Bill Pay. The survey results indicate that consumers utilize a broad set of payment solutions for bill pay: 26% use debit cards and checking accounts, 19% use credit cards, 17% use checks, and 12% use cash.
The reason for such a wide payment method spread is simple: consumers want choice and flexibility. "It depends on where they have money," Hawtof explained. Sometimes consumers may have to move money around to pay their bills, or they may be motivated to use a specific method of payment, as with credit card rewards.
And the reason consumers demand choice and flexibility stems from anxiety. "There are a lot of late fees and high interest rates, and a late payment can drive down their credit score," noted Hawtof. "Even a single missed payment can in some cases drop a person's credit score by over 180 points." As a result, consumers cannot afford to worry about where to find the money to pay their bills.
Even Sloane, a seasoned payments industry veteran, well-versed in the schemes employed by fraudsters, found himself ready to click on a phony XFINITY link recently when he was (mis)informed his bill payment had bounced. "I looked at the URL, and sure enough, it was a spear phishing exercise, which almost worked - even against me, and I'm pretty indoctrinated against it," admitted Sloane. "But that anxiety of not paying that bill almost got me."
The role of speed in bill pay and cash flow
Consumers who have access to speedy payments and billing confirmations often find their anxiety is lessened, and for good reason: faster payments and flexibility go hand in hand. "Speed means flexbility, "Hawtof clarified. "To the consumers, they want to be able to pay at the last possible moment; they want to pay on the due date. It gives them the ability to wait until all their money is in, their paychecks have cleared, and they don't have to commit money before it is due."
By that same token, instant verification that checks have been cashed also eliminates the stress of uncertainty. "You pay it, you go look at your account, you can see the money was withdrawn - anxiety resolved," emphasized Sloane.
Rapid bill pay is the modern consumer expectation, regardless of where the money comes from. To that end, BillGO looks for the fastest possible bill pay methods and facilitates the transfer of funds on both ends, with separate processes for the biller and the payer.
"We have direct connections with our client banks and fintechs who can rapidly pull that money out of the consumer's account - obviously, only when the consumer wants that to happen," said Hawtof. "We then have a variety of payment methods, and multiple options are real-time, so [billers] get paid immediately or within an hour."
Changes in the bill pay landscape
About half of consumers use banks to pay bills, but more than half pay some or all their bills directly with a biller. There are several reasons for this blend of payment methods. "[Banks] are working to offer real-time payments, but they don't all have same-day confirmations," said Hawtof. "They don't all offer bill visibility and the kind of speed and knowledge that the consumer expects." For FIs looking to recapture this swath of bill payers, BillGO can help by consolidating that blend of payment methods and letting consumers see and pay all their bills in one place.
This centralized billing platform also addresses another pandemic-induced trend: increased subscription billing. While many consumers found themselves housebound, they started ordering more to their houses - everything from media to groceries to restaurant delivery. "Usually those are card-on-file billers," Hawtof pointed out. "But let's say your card expires or something happens to that card, and you want to switch to a different card. Logging into each of those billers and making a change on the card can be a real pain." BillGO's centralized platform makes that process a cinch.
Notification of payment receipt can also be comforting to consumers. "When Amex and other card bills get paid, I receive a notification that the payment has been receievd and that I'm good for the next month," mentioned Slone. "Yet most merchants don't do that." BillGO comes to the rescue once again by sending confirmations directly from billers, so consumers know the status of their payment.
Many FIs and fintechs still do not offer superb user experiences (UX) on their login pages, nor do they fully embrace all the choice that customers are looking for. "The key to this is the expectation of the consumer for an outstanding bill pay experience is just going up," concluded Hawtof. "Consumers expect fast, easy, and mobile."
Learn more about consumer bill pay preferences in our eBook Winning the Battle for Bill Pay.
