How Will COVID 19 Impact the Way Consumers Pay Bills?

The current environment with the impact of COVID 19 impacting our movements and the decisions we make, the way we pay our bills will be impacted moving forward.  Trips to the post office or paying bills by check can be viewed as an inconvenience and concerns.  In addition, companies are scrambling in order develop new solutions for collections or enhance their current products. As more and more consumers opt to pay their bills digitally, companies will need to ensure they have the right solutions and products in place.

There is a large segment of the population that is not familiar with using a checkbook at all. For this segment, living within the digital world has become the norm. Whether streaming movies, instant-messaging with friends and family, or listening to their favorite music groups, they build their lives in the digital space and have made technology their trusted companions. This group lurks within the digital payment framework and is already comfortable using computers, mobile phones, and tablet devices to view bank balances and pay bills online. On the other hand, many people still use checks as a primary form of payment.

Despite technological advances, a sizable segment of the population still prefers the traditional methods of sending payments in the mail.  Even though they use their bank accounts or go to company websites to make bill payments, this population still chooses to receive paper bill statements by mail. The paper statement in the mail represents a reminder that it is time to pay the bill even if the consumer has opted to make a payment digitally they still want the paper. This may change moving forward.

When a customer takes advantage of electronic payment channels but prefers to continue to receiving paper statements, it is called “double dipping”.A number of vendors have employed strong marketing strategies to incent their customers to migrate from sending checks in the mail to paying bills via online banking, accessing the company website to make a payment electronically, or even setting up a recurring ACH payment. However, there is research that shows although people are becoming accustomed to using electronic means to make payments, many of them still want to continue receiving statements in the mail. Why not cut out the paper statement entirely?

For most businesses, customer satisfaction remains the number one priority.  Although implementing a bill presentment and payment service is not free, studies continue to show that this service is ranked highly in customer satisfaction surveys, so businesses should continue to look for ways to make it easy and convenient for customers to make a payment. However, evidence also shows that simply offering an electronic option is not enough to influence full electronic adoption. In coming years, businesses will have to make conscious effort to encourage customers to make the full switch to electronic bill presentment and payment by offering better incentives. 

In terms of cost and operation, businesses would benefit the most if customers followed through with 100% electronic bill payment and presentment adoption. If customers are already making payments online, going 100% electronic would alleviate the need for paper statements, thereby saving money, resources, and the environment. Some companies set up their payment procedures so that when customers opt-in to making electronic payments, they also opt-in to receiving their statements electronically. Others present their customers the option to disable paper statements, but do not make the switch to electronic statements mandatory Whether or not the latter is an efficient process remains up for debate. If customers want electronic bill payment options, it might make sense make opting into electronic statements mandatory as well in order to reap the most business benefit. 

Consumers expect the freedom and convenience of online bill payment, but it remains to be seen if they will fully adapt to receiving electronic statements in the long run. Businesses are finding it difficult to balance between consumer demands for new technology and paper habits that are hard to change. Looking to the future, these businesses will have to devise creative strategies to encourage full electronic bill presentment and payment adoption in the face of challenges that prevent largescale acceptance of electronic payment processes. In the meantime, some businesses may find it best to mandate electronic statements for customers who opt into electronic bill payment. 

The onslaught of COVID 19 has provided strong momentum in the payments industry for consumers to adapt digitally solutions. Whether this is a short term fix or not only time will tell. The payment industry will be altered forever. 

The Walker Group provides business development and advisory services to FinTech companies. Our varied market segments enables us to identify synergies and opportunities to stimulate growth as we partner with our clients to build their business. Through our one-on-one CEO Advisory Services we have helped companies develop and execute a marketing strategy to attract both new partnerships and capital. For more information contact Wayne Brown at wbrown@walkergroupnyc.com