Survey: Consumers Seek Convenience and Options

Mr. Flanigan is chief marketing officer for Fort Knox National Co., a firm that specializes in electronic and expedited payment solutions.

The paper check may never be erased from the average American household. But it's far less popular than the booming industry of electronic payments, and the equally explosive area of opportunity unleashed by expedited payments, commonly known as convenience payments. The reason why U.S. consumers have turned to the convenience of expedited payments, however, has more to do with their hectic lifestyle than financial issues.

Recent research into the online payment preferences of consumers has determined that 49.9% of survey respondents "forgot" or "simply ran out of time" when asked about conditions that cause them to make late payments. After "forgetfulness," the other reasons why some of those bills are relegated to the back of the drawer - or the back of one's mind - are, in order: cash flow, travel, illness, holidays, disorganization, disputes with the biller and difficulty managing bank accounts.

The independent research, conducted by Edgar, Dunn & Co. for Fort Knox National Co., reveals a series of unique insights into the online payment patterns of consumers. The implications are broad, and the information critical and timely, as billers turn to electronic payment processing solutions to enhance cash flow while improving their billing, payment and remittance processes.

The typical American household receives about 15 bills per month - a number that continues to grow, reflecting new consumer trends and behaviors. Think of the number of new bills that are commonplace today, but did not exist even a few years ago, such as cell phones and Internet service providers.

The sheer mass of bills is a contributor to consumer disorganization, and consumers are demanding alternative payment options that offer convenience while helping them organize their finances. The findings dispel the popular myth that consumers who pay late do so only because they don't have the cash. The fact is, consumers are making late payments because they're either too busy, they ran out of time, or some other priority emerged.

To their credit, savvy consumers are turning to the Web and other channels to play an electronic form of biller catch-up, according to the research. Out of all online bill payers surveyed, one in four have expedited a payment over the last year, using some form of convenience process to get a bill paid before a late fee is assessed or their credit rating is damaged.

Of that group, a whopping 73% say they're using expedited payments at least once every six months. A dedicated, hard-core group of consumers, representing 9%, make at least one expedited payment every month; and 4.5% are using expedited payments more than once per month. Furthermore, almost 19% of consumers are taking advantage of billers' grace periods by expediting the payment after the bill's due date, but before a late fee is assessed.

So how does all this research translate into useful information?

Opportunity, plain and simple. Unfortunately, in many cases, the operative phrase is "missed oppor-tunity," because many billers have not yet factored the level of convenience consumers expect when making expedited payments into their electronic payment strategies.

Lesson learned: Consumers are demanding a wide range of choices for expedited payment options, so when the deadline for payment arrives and it's time for them to pay that bill, billers need to have mechanisms in place to accept those payments, whether it's a credit or debit card, PIN-less or signature debit, or straight ACH transaction.

To attract and retain these convenience-craving customers, four fundamental issues must be addressed by billers to determine what type of electronic payment solution should be adopted. Implementation can be cost-effective, and even a source of revenue, as long as billers are asking themselves the following questions:

1. Do you fully understand your customers' needs and pain points?

Knowing who your customers are, and specifically what payment methods and channels they prefer, will intuitively help organizations serve those customers better. By varying billing practices based on customer segmentation, billers can discover greater value in their own remittance processes - increasing revenue, accelerating collections and reducing costs.

2. Do you want to charge your customers a convenience fee for expedited payments, or provide the service as a value-added proposition?

Most banks and credit-card companies offer a free e-payment service, but many payment processors charge a nominal fee, a scenario the consumer has embraced in return for convenience and control.

3. Is your current infrastructure capable of adding and integrating additional payment channels, balancing the consumer's desire for more payment options with your need for cost savings?

While the phone is still the consumer's preferred channel for making payments, billers should seek to incorporate less costly self-service channels like automated speech recognition IVR and Web payments into their existing payment strategies, to deflect billing and payment inquiries that put a strain on customer contact centers.

4. Does your system possess sophisticated reporting and remittance capabilities designed to capture and disseminate consumer payment information across the organization?

The benefit of a single, integrated provider is back-end processing, reconcilement and reporting across all payment channels that can be presented in one consolidated view. Doing so gives billers greater visibility and insight into customer-facing, internal management and reporting activities, while also providing customer service agents with real-time access to account information for greater service and support.

The niche space of expedited payments is no longer uncharted territory. Embracing a fully integrated, consolidated strategy that takes into account all payment methods and channels is a very real opportunity to turn a "cost of doing business" into a new line of business.

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