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For billers strategizing around payments innovation, it’s essential to understand consumer payments expectations and the wider financial pressures they might be facing.
The annual ACI Speedpay Pulse survey of 3,000 consumers – now in its fifth year – has become the industry’s go-to source for insights on America’s billing, payment and communication preferences.
The prevailing trend of recent years has, of course, been the displacement of check, cash and mail in favor of digital channels. In pursuit of convenience and cost savings, billers have embraced digital and assembled an array of payment choices that allow them to serve almost any consumer, no matter whether they prefer to pay by writing a check or scanning their face.
This blog covers three key findings from this year’s Pulse report and places this payments proliferation against the wider economic backdrop. A picture emerges of rising costs, rising risk of delinquencies and rising risk of fraud – and each one is contributing to billers turning their attention to optimizing payment operations and processes to continue giving consumers the bill pay experiences they prefer while minimizing costs.
The risk of delinquencies is increasing, adding to already high-cost pressures
After years of decline, largely due to government cash injections during the COVID pandemic, consumer credit card debt has now hit record highs, reaching $1 trillion.
Meanwhile, costs look likely to stay high for consumers. Housing inventory reached new lows earlier this year, domestic auto inventories are still tight and interest rates are keeping the cost of loans higher than what consumers have become accustomed to.
Taken together, these factors represent a rising risk of delinquencies for billers. Our Pulse data hints at an opportunity for billers to get out ahead of this challenge, as more than half of those surveyed said they ignore phone calls and dunning notices from collections. Instead, most prefer to set up their own arrangements on a website or mobile device.
BCU, a top 100 credit union, responded to this preference by implementing ACI Speedpay’s virtual, self-service options. When it provided members with an easy way to set up payment arrangements, it promptly collected more than $1 million in past due payments.
Push for paperless has plateaued. Time for billers to pivot to mobile
“Payments rails” is a common industry term, but billers will also recognize the parallels between multiplying payment types and an ever-widening highway.
As more payment lanes are added and the highway gets wider, it takes more money and more expertise for billers to maintain the road and optimize the traffic. And the road is not going to narrow any time soon – payment types are almost never retired.
The range and spread of preferences are illustrated in our Pulse data. Gen Z and Millennials overwhelmingly prefer to pay bills with a debit card, while nearly one in five Boomers are still writing checks. Boomers are also driving more credit card transactions than other generations. Elsewhere, a recent report by Credit Karma indicated that 30% of Gen Z have even switched to “cash stuffing” over the last year.
Behind every payment sent down one of these lanes is a bill. Many billers have looked to drive paperless billing adoption (delivering bills by email, website or app instead) to mitigate increasing payment costs, but our survey also shows that gains from these initiatives are leveling out.
Octane, a growing fintech providing cutting-edge technology and financing experiences, points the way forward. Through ACI Walletron, part of the ACI Speedpay solution, the award-winning company enabled self-service account management options – including bill presentment – within the mobile wallet already on its customers’ phones, with limited IT resources.
Are consumers opening the door to advanced bill pay fraud?
Fraud in bill pay is evolving away from the days of consumers making fraudulent payments with stolen credit cards or checks. Account takeovers, using credentials stolen via fake IVRs or cloned billers’ websites, are becoming more common in the insurance industry, for example. Card testing has also plagued the utility space for years.
Yet our Pulse research shows that consumers might be opening the door to fraud with weak password practices. Almost a third write their billers’ passwords down on paper, for example.
For billers looking to encourage customers to better secure their accounts, and so limit their own exposure to the financial and reputational consequences of fraud and identity theft, consumers’ preferred authentication methods include two-factor authentication (69%), passcode (44.4%) fingerprint (35.7%) and facial recognition (31.3%). The latter findings cross over with increased preferences for mobile payment experiences, with most devices now relying on these kinds of biometric security measures.
Want to learn more about the consumer payments habits shaping bill pay? Explore five years of consumer research findings on bill payment behaviors and preferences or get the 2023 ACI Speedpay Pulse report.