BOSTON-The advent of online and mobile bill payment solutions has changed consumer bill payment behavior, resulting in additional revenue for debit and credit card issuers, cost savings to billers, and lost revenue, according to a new Aite Group report, "How Americans Pay Their Bills: Sizing and Forecasting Bill Pay Channels and Methods, 2013-2016."
As expected, online and mobile payments are quickly eclipsing payments by mail or in person, but those e-payments aren't necessarily being made at financial institutions' sites.
With a projected drop in the share of digital payments made on bank sites from 36% in 2010 to 30% in 2013, Aite Group concludes that banks are losing the bill pay game. Although the growth in card-based payments-particularly debit card payments-produces additional revenue to banks in the form of interchange fees, some factors that influence bill pay behavior are working against banks as younger consumers prefer biller sites rather than bank sites.
"Convincing younger consumers to shift their online bill pay activity to bank sites will require banks to add new features and functionality, e.g. peer analyses, not found on biller sites," said Ron Shevlin, senior analyst in retail banking at Aite Group. "In addition, as prepaid debit card issuers improve online bill payment sites, additional bill pay volume is likely to be siphoned off from bank sites. Billers are stepping up their mobile app development for industry sectors including insurance, which also will encourage a consumer shift to the mobile channel."
