Overview
According to the Bureau of Labor Statistics, overall consumer prices increased 3.0% from June 2023 to June 2024. This rise has a direct impact on the cost of bills consumers must pay. The Bureau of Labor Statistics' Consumer Expenditure Survey average total expenditures for U.S. consumers was $72,967 in 2022, showing a 9.0% increase since 2021. Consumers have a wide range of bill payment choices, and if financial institutions want to increase their share, they should consider opportunities in the bill payment space.
Though the amount being billed has grown, the bill payment function has remained stagnant. There are two predominant functions of bill payments: biller direct and bank bill pay. Biller direct flows from billers to consumers, offering payment choice and eliminating the financial institution as the middleman. Bank bill pay is a service offered by financial institutions that allows customers to pay bills electronically through their primary checking account.
Direct billers are more popular than financial institutions’ bill payment solutions. This poses an opportunity for financial institutions to improve their bill payment solutions to meet industry standards and their customers' needs. Direct billers support multiple payment options, including faster payments, which simplifies the bill pay experience and provides transparency around the payment progress of a bill.
According to the Consumer Financial Protection Bureau, American families pay $14 billion in late fees annually. Effective bill pay solutions that allow for multiple payment methods, including faster payments, payment tracking coupled with real-time payment confirmations, and a streamlined bill pay experience combat consumer concerns head-on.
This impact note examines how consumers pay their bills and discusses specific features that direct billers are doing well in meeting consumer expectations, as well as how financial institutions can improve.
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