More consumers are using online banking bill-payment services to keep better control over their finances and to hold on to their money longer, suggest new research data from Fiserv Inc.
“Most likely because of the economic squeeze, consumers are looking for ways to organize and track their finances,” Eric Leiserson, senior research analyst in Fiserv’s Bill Solutions group, tells PaymentsSource.
The Brookfield, Wis.-based financial-technology company surveyed roughly 2,000 U.S. households online in March for its 2010 Billing Household Survey.
The number of consumers who use consolidated bill payment, such as from online-banking sites, has increased 11%, to 36.4 million this year from 32.8 million in 2009, Fiserv says. This surpasses the use of auto-debit bill payments, which Fiserv says dropped 6%, to 31.5 million from 33.6 million. With auto-debit payments, consumers arrange to have billers automatically debit their accounts at specific times each month.
Consumers want online bill payment over automated bill-payment services, including those offered by credit card companies, because they prefer to hold on to their funds longer and pay when they are ready instead of having biller deduct funds automatically on a certain date, Leiserson surmises. “Consumers are keeping a much closer eye on their finances, either out of necessity or caution,” he says.
Electronic billing, which involves sending a bill to a consumer electronically instead of mailing a paper bill, also is gaining momentum, as 33% of consumers who pay a bill using an online-banking site also receive at least one bill electronically via their online banking account. This represents 12.1 million households and is up from 24% of consolidated bill-payment users, or 7.8 million households, in 2009, according to Fiserv.
In addition, 34% of respondents who received bills electronically said the service improved their relationship with the biller, and 33% indicated electronic billing made them less likely to switch to a competitor, findings credit card companies should deem important, Leiserson says.
Indeed, card companies that have had their share of bad press recently should find ways to retain customers and keep them happy, and consumers want control, he contends. “Electronic billing offers a whole new dimension of control because consumers get text alerts and e-mail reminders of payments due,” says Leiserson.
Illustrating a possible switch in payment methods that billers might want to flag, 34% of respondents used a debit or credit card for a one-time payment, says Leiserson. “Cash-flow difficulty is the main driver behind that,” suggesting they may not have had the funds to use the account from which they usually pay, he says.
Moreover, 68% of respondents who visited their credit card company’s Web site did so for billing and payments, a hint that those companies may want to focus on that part of their marketing or online communications versus other services and offers, Leiserson says.