Instant and Digital: The Next Frontier of Bill Payment
We’d all like an inexpensive, simple and consolidated way to pay our bills, and we’re seeing a growing list of upstarts entering the market to meet this need. Customer interaction during the billing process is a critical touchpoint to maintain relationships and potentially enhance the customer experience, but third-party solutions that offer enhanced ease of use could get in the way. Companies need to respond with an engaging bill pay offering, which includes real-time payments.
In the U.S., the bill pay market is $3.9 trillion and growing slowly. But digital bill pay, which makes up half of all bills, is growing rapidly according to a recent Business Insider Intelligence report. That share is expected to expand to over 75 percent by 2022. Although many American consumers currently find it easiest to pay their bills directly to the company they owe, there is a lot to be said for consolidating bills – including housing costs, utilities, taxes, insurance, loans and more – into one digital, instant-pay app.
Bill pay today is far from a smooth process, and the healthcare, college tuition and loan servicing industries illustrate this:
- A survey showed that 15 percent of healthcare spending is due to billing and payment inefficiencies, and 47 percent of patients said they would leave a hospital for a better payment experience.
- In a world where college students send 120 text messages a day, immediacy is key. However, according to Aite Group, 40 percent of tuition payments are made by ACH (electronic checks), which takes days to process.
- Convenient ways to pay can reduce late payments on loans by up to 76 percent, while reducing call center volumes by up to 83 percent.
When consumers pay their bills through third-party digital bill pay applications, businesses lose their influence over the cost of payment and consumer experience. However, by offering better, instant and digital bill payment experiences for their consumers, companies can take control of that consumer touch point before it’s too late — before attrition.
The switch to real-time is a matter of when… not if
With real-time payments, money is instantly taken out of one bank account and deposited into another bank account, 24x7x365. This same transaction carries the payment and remittance data. These payments run on new rails and move money faster than same-day ACH and debit cards, and prevent ACH returns because they’re irrevocable – with guaranteed funds. When a consumer submits a payment, they’ll see it immediately taken from their account, preventing overdrafts. For businesses, this means improved collections, a reduction in operational costs associated with collecting and reconciling payments, and greater satisfaction from customers.
The switch to real-time payments is now a matter of when, not if, thus making it imperative that companies select partners that can support such payments now and in the future. To defend costs and consumer relationships, organizations must offer a better digital and instant bill pay experience now… or face increased competitive pressures from a growing list of entrants.
Ready to make the switch to real-time? Stay at the forefront of new bill payment options with ACI's Real-Time Payments Resource Center
Related Blog Posts
Request for Pay – What Does It Mean For Financial Institutions?
What do banks – one with $60B+ in assets, one a mid-size regional bank, and one, a small innovative credit union – have in common with payment networks and the ‘Big 4’ consulting firms? They were all part of the first ACI #PaymentsForBreakfast event in North America! The theme was real-time payments, but the focus was more specifically on Request for Pay.
Why Open Banking Might Need to Rely on a Magic Illusion of 24x7 Availability
The adage “the more things change, the more they stay the same” appears to ring true when applied to the early phases of the evolution of open banking (or open payments). Especially when you contrast it with the early days of ATM withdrawals; particularly those made in the dead of night so you could pay cash for your after-party greasy feast.
Sibos Preview: The Five Trends Transforming Real-Time Payments
Real-time is now a reality, with more than 30 schemes live around the world. And real-time is in the spotlight as banks and financial service providers make their way to Sydney for Sibos 2018. What better time to look ahead at the key trends that are going to shape the ongoing development of real-time payments.
Winners and Losers in the Regulation Vs Competition Debate? How About New Business Models?
As Summer has abruptly turned to Fall, I have found myself daydreaming of a European vacation (and yes, I realize it’s Fall there too… or rather, Autumn). Maybe it’s the Instagram feed full of friends on a summer sojourn to Italy, France, or Germany, or the constant barrage of Premier League kickoff commercials on the NBC Networks (Let’s Go Gunners!), but yesterday it was something else entirely that had me drifting off into a memory-induced Nutella-crepe state of euphoria.
API Management: The Reason Digital Open Banking Can Fly
When it comes to thinking about the different roles that an API Manager can play for an organization, I personally think that an airport provides the perfect analogy. The customer is the passenger, the third-party organizations using a bank’s APIs are the airlines and the airport itself is the bank. I also think this analogy helps to visualize the variety of API management capabilities – including the role of an API gateway.
The Mexican Fintech Revolution – ¿Qué onda in Open Banking?
Mexico has joined an elite group of nations, being amongst the first to pass open banking regulations. Specifically designed to open up its financial services and technology sector, the so-called ‘Fintech Law’ appears to have taken notes from PSD2, UK Open Banking, Singapore’s ‘organic’ approach, and others – and balances these against Mexico’s unique context and aims.
ACI’s Lu Zurawski, one of the industry's foremost open payments experts, and Sonia Gomez, a Latin America payments authority, discuss this balancing act; including the drivers, the regulation and the potential benefits.
Working Up An Appetite for APIs in Australia
This week ACI hosted the latest installment of our #paymentsforbreakfast forums in Australia, with the early birds catching the open banking worm in both Sydney and Melbourne.
Given the similarities between the Australian and UK open banking movements, we enticed ACI’s UK-based Lu Zurawski (Solutions Practice Lead - Retail Banking) to Australia to share his learnings from being heavily involved in the UK Open Banking working group.
APIs and Cash Management (Harnessing the Hammer, Part 2)
In my last blog post, we talked about the hammer and the nail; the hammer in this case being open APIs, and the nail being the market need to adapt to changes in customer behavior and expectations from our commercial market. We laid out why the US is in a different position when it comes to open APIs—it has to do entirely with the regulatory environment, which is allowing us to start with the largest revenue opportunity first. Finally, we challenged you, the reader, on how you can begin on your journey. And that is where we are going to pick things up. What steps can you take today, and what use cases can you explore as we start getting our hands dirty?
Three Key Takeaways from the Latest Payments Insight Survey
Blinkist is a reading app that summarizes books into 15-20 minute reads; these reads are called “blinks.” It’s helpful for a few reasons – I can scan books before I purchase them, I can get new ideas without having to read the full book, and I can learn to summarize information. It’s safe to say that I (and probably many who are strapped for time) are a little obsessed with Blinkist! So here I present my own summary – in three key takeaways – of the new ‘2018 Global Payments Insight Survey: Retail Banking,’ which finds that 51% of banks are increasing spend on payment technology.
The Hidden Cost of Digital Payments for Retail Payment Players
It is not exactly breaking news that non-cash payments are on the rise globally, with column inches dedicated to the launch of digital financial-inclusion projects. But going cashless is not only a challenge for humanitarian endeavors, or developing countries. We all agree that removing cash from the system will save payments players big bucks in the future, but we must also consider the immediate impact of digital transformation on the legacy infrastructure of the powerhouses of the payments ecosystem.