August 30, 2013 •Brian Watson
When was the last time you watched a network TV news program?
If you’re like a lot of viewers, it’s simply no longer part of your nightly TV routine. Pew Research’s 2012 Excellence in Journalism Project reports that total audience size for network news programming has shrunk to less than half of what it was in 1980.
And yet, chances are you interact with some kind of news media every day.
According to eMarketer, the average U.S. adult spent 278 minutes a day watching TV in 2012 and another 173 online. And at least some of that is probably dedicated to news, whether it’s though a network, a cable outlet, news blogs, or an aggregator like Twitter.
How exactly does consumer preference for accessing news relate to your billing and payment strategy?
Simple: today’s consumers have more options than ever before. And whether it’s interacting with media or paying a bill that’s due, they’re not necessarily sticking to a single channel either.
The New Payment Paradigm
It’s sometimes hard not to see adoption of a new technology in linear terms. It just makes sense that a product is introduced and consumers either embrace it incrementally until it reaches critical mass, or it just sort of stagnates outside of the public spotlight.
But the truth is that consumer acceptance often happens in fits and starts. And adoption of one technology doesn’t necessarily prevent the use of a potential substitute.
Take the example of network news again: just because someone starts using Twitter to track breaking news, doesn’t mean they’re necessarily going to stop watching the nightly news full-stop. It simply means that they now have options. You or I might catch NBC Nightly News when it fits our schedule, but find some other way to stay informed when don’t have time to watch.
The same thing is true with respect to how consumers are choosing to pay their bills. As your customers’ comfort level with new kinds of payment channels grow, the distinctions that used to make a big difference – online, in person, over the phone – don’t apply as much. They’re all just ways to make a payment.
So on one hand, consumers are using emerging payment channels in record numbers. A Western Union report published earlier this year found that 46% of all bills are paid online, with an additional 19% paid by an automatic deduction or recurring payment and 2% by mobile phone.
On the other hand, traditional channels are still used in large numbers.
Instead of dropping conventional choices and moving to online channels exclusively, research suggests consumers are now using a mix of payment methods to build more flexibility, convenience, and choice into the billing process. Consumers are picking and choosing how to pay their bill based upon a number of factors, like the date a payment’s due, how much they owe, and availability of funds.
For example, a 2013 Fiserv survey reports that 76% of consumers use more than one way to pay their bill each month. What’s more, one-in-five change the channel they use to pay a bill monthly.
And having the ability to pay using more than one channel makes a big difference to consumers, too. That same Fiserv survey reported that three out of four consumers say having access to multiple payment methods is important to very important.
What payment tools should you be offering your customers?
The fragmented way consumers pay bills today goes hand-in-hand with a bit of traditional revenue cycle wisdom: there's no such thing as too many payment channels.
Sure, online payment is booming. And experts expect mobile to enter its growth phase in earnest soon.
But when roughly 60 million Americans still lack home Internet access (including 47% of seniors), no matter how tempting it might be, your billing strategy can’t emphasize online at the expense of other channels. Given the willingness of today’s consumers to mix-and-match payment channels, having a full blend to offer customers is critical.
Payment by Mail
A tried-and-true foundation of pretty much any customer billing and payment program, statement processing and mail-in remittance might be losing ground to online billing and payment, but it’s still a fundamental part of how businesses collect revenue from customers. According to the latest data from Western Union, nearly 20% of all bills are still paid by mail.
Why Customers Choose It:
• An easy way to pay for customers that lack Internet access and/or online bill pay familiarity.
• Ideal for customers that still have fraud/security concerns about online payment.
• Simple remittance: customers don’t have to enroll in online bill payment or remember a username and password; they just detach the stub, include payment, and send.
Online Payment
It’s safe to say that online payment has reached a tipping point. Seventy-three percent of consumers pay at least one bill a month using an online channel. And that number is only expected to increase as Americans grow more comfortable making purchase and payments via the Web.
Whether it’s through a simple payment without enrollment website or a full-fledged payment portal, online payment is simply too widespread – not to mention profitable – to ignore any longer.
Why Customers Choose It:
• Fast and efficient: there’s no need to purchase stamps and, because payments are processed quickly, customers can pay online to head-off potential late payments issues.
• Online payment history helps customers easily track past transactions.
• Consumers can make a payment anytime, from anywhere with an Internet connection. And advanced payment tools – like scheduled/auto payments and savable payment profiles – make it easy for consumers to manage when and how bills are paid.
Mobile Payment
Although mobile payment is still firmly in an early-adopter-only stage – most sources peg the percentage of total payments made using mobile sources at somewhere between 2-3% – it’s also poised for exponential growth over the next few years. According to Gartner, mobile payments are expected to increase by 44% this year and reach $721 billion in transactions by 2017.
It’s not hard to see why: smartphone ownership continues to skyrocket, and, as more people use their phones for everything from email to monitoring heart rate, it only makes sense that mobile payment would also receive a healthy bump.
Why Customers Choose It:
• Enables customers to make payments from their mobile device nearly anywhere, one-upping the convenience factor of online payment.
• Radically simple payment: many applications offer payment in just a few clicks, and some integrate with SMS for easy, text-based payment confirmation.
• As one of the fastest growing billing channels, mobile is also one of the most innovative. Smart, helpful new tools – like photo bill capture, text-based bill notifications and due-date reminders, and fully loaded, stand-alone payment apps – are introduced often.
Pay by Phone
Even though-by-phone has lost ground in recent years to web and mobile channels, there’s still a market out there – particularly for consumers that want a fast, convenient way to pay their bill, but aren’t yet comfortable with online payment channels. Interactive Voice Response (IVR) has provided another shot-in-the-arm to pay-by-phone usage, enabling customers to easily make a payment after regular business hours.
Why Customers Choose It:
• Provides fast payment for customers that are facing a looming due-date.
• Eliminates the need for stamps or checks to mail in a payment.
• IVR pay-by-phone tools offer the convenience of after-hours payment.
In-Person Payment
Surprisingly, 9% of bills are still paid by consumers at a walk-in location. Low-hanging fruit or not, with those kind of numbers, it pays to invest in tools and technologies – credit card scanners, bar-code readers for check capture, and a back-end legacy system that makes it easy to input and track payment data – to help simplify and automate walk-in payment.
Why Customers Choose It:
• Allows customers to have a payment processed and posted quickly.
• Provides customers with security concerns a safe, fraud-free way to make payments.
What payment channels do you use? And how do you handle channel integration?
