More Consumers Want Digital Payments
The Federal Reserve says U.S. consumers are increasingly taking advantage of the speed, flexibility, and convenience of digital payment options. However, PYMNTS warns that there’s a growing disconnect between what billers offer and the digital payment options consumers want.
- What Consumers Want: When paying monthly bills, 15% of consumers prefer to pay manually on the biller’s website or via a bank payment system and 13% prefer to use automatic payments through the biller’s website or a bank payment system. These are the two most popular methods.
- What Billers Offer: Unfortunately, not all billers offer the digital options consumers want: 80.5% offer in-person payments at a physical location and 77.3% offer mail payments, making these the two most common options.
The Generational Divide Is Growing
As new payment channels have emerged, a generational divide has developed.
- Digital Wallets: According to PYMNTS, 78.9% of Gen Zers use digital wallets, whereas only 25.7% of Baby Boomers and seniors do. Furthermore 66.7% of Millennials and 43.7% Generation Xers use digital wallets.
- Mobile Apps: Another PYMNTS study found that Baby Boomers and seniors tend to prefer manual payments via the biller’s website, whereas Millennials prefer to use mobile apps – an option that only 52% of billers offer.
- Automated Payments: MX Technologies found that 42% of Gen Zers and 41% of Millennials prefer to set up automatic payment to pay their bills, making this a popular option. However, only 29% of Gen Xers and Baby Boomers like to set up automatic payments.
Security Is a Top Concern
Although consumers don’t have the same favorite payment channels, there’s one thing everyone agrees on: payment channels need to be secure.
According to Security.org, 60% of U.S. credit card holders have been the victim of fraud and 45% have experienced fraud multiple times. Over the past year, 52 million Americans have dealt with fraudulent changes on their credit or debit cards, with the average fraudulent charge increasing by 26% over the past two years. Criminals use many methods to access payment information, including data breaches and phishing. In 93% of cases, fraudulent charges were made using a card still in the owner’s possession. In light of these problems, it’s no wonder consumers are increasingly worried about data security. According to Deloitte, there’s been a decrease in the number of consumers who say they trust online services to protect their data.
How Can Businesses Appeal to and Engage Consumers?
Businesses may not care how they get paid – they just want to make sure they do get paid. For consumers, though, the payment method makes a big difference.
If payment options are inconvenient, consumers may waste time. Worse, they may procrastinate the task, which could lead to late or missed payments.
In some cases, consumers may even decide to leave a company over a lack of convenient payment options. This is especially likely for businesses where payments make up most customer interactions, such as insurance.
How can businesses appeal to consumers?
Provide multiple payment channels. If you only accept payment in person or by mail, you’re setting yourself up to have a lot of frustrated customers. However, since payment channel preferences vary and generational differences are significant, there’s no single alternative that will appeal to everyone. The more options you offer – including ACH, digital wallets, credit, and debit – the more people you’ll please.
Offer recurring payment options. Some consumers still like to make their payments manually each month. However, recurring payments provide two advantages: consumers don’t have to worry about missing a payment and they don’t have to spend time on payments each month. Some consumers prefer automatic payments – encourage them to utilize this option. Take security seriously. For many consumers, the best payment method is the one that’s secure. Data breaches and credit card fraud cause headaches for consumers. Make sure you keep payment information safe.
Are You Meeting Consumer Expectations?
If you’re not meeting consumer expectations, consider working with a payment services provider. Tranzpay supports inbound and outbound payments via a variety of channels, including credit cards, ACH, online bill pay, and recurring billing. Our payment system is PCI and SOC2 compliant, and we take security seriously. Learn more.
