How are Americans going to pay their bills?

Aite Group sees a projected drop in the share of digital payments made on bank sites continuing

Boston, September 18, 2013 – Changes over the past 10 years in how Americans pay their bills have resulted in additional revenue for debit and credit card issuers, cost savings to billers, and lost revenue, according to a new report How Americans Pay Their Bills: Sizing and Forecasting Bill Pay Channels and Methods, 2013-2016.

Aite Group surveyed 1,242 US consumers for the study. It is seen that for the most frequently paid types of bills, US consumers will pay more than 14.7 billion bills in 2013, spending US$3.8 trillion doing so. Bills for utilities, phone services, and insurance account for roughly half of all bills paid. 

Payments made through the mail will account for 18% of all payments in 2013, a sharp decline from 34% of payments in 2010. The percentage of payments made in-person in 2013 will also decline from its 2010 level, from 15% to 9%. Online and mobile payments will account for nearly half of all bills paid in the United States in 2013.

While the percentage of payments made by check is steadily declining, online and mobile bill payments will account for roughly 55% of all bills paid by Americans by 2016. Payments made through the mail are also expected to decline from 21% of bills to 15% by 2016. Credit, debit, and prepaid debit cards will be used to pay for 43% of all bills by 2016.

With a projected drop in the share of digital payments made on bank sites from 36% in 2010 to 30% in 2013, Aite Group concludes that banks are losing the bill pay game. Although the growth in card-based payments—particularly debit card payments—produces additional revenue to banks in the form of interchange fees, some factors that influence bill pay behavior are working against banks as younger consumers prefer biller sites rather than bank sites. 

“Convincing younger consumers to shift their online bill pay activity to bank sites will require banks to add new features and functionality e.g. peer analyses, not found on biller sites,” says Ron Shevlin, senior analyst in Retail Banking at Aite Group. “In addition, as prepaid debit card issuers improve online bill payment sites, additional bill pay volume is likely to be siphon

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