Consumer Payments Trends

Consumers today have many ways to pay bills with new bill payment innovations seemingly introduced every day. Technology is driving these new electronic payment options offering more convenience, faster speed, greater security and lower costs.

This dynamic shift in consumer payments is most evident when considering the dramatic transition away from paper-based payment instruments. With consumers continuing to move to online channels, the digital transformation of payments only grows stronger each year. The biggest driver of this shift over the last ten years has been adoption of the Internet by U.S. consumers with penetration now over 75 percent of all U.S. households and most of those are consumers having broadband connectivity.

Paper check writing is quickly becoming a thing of the past for many consumers. In the last year, checks dropped by eight percent while online bill pay at banks and credit unions increased by 11 percent, as consumers increasingly utilized online payment tools. In terms of volume of payments, the total number among online households grew by 53 percent in the last ten years while paper-check payments dropped by 57 percent. This trend will continue as electronic payment continues to grow and more traditional paper-based payment methods such as checks continue to decline. Consumer check writing is forecasted to decline another 57 percent from nine billion consumer-to-business payments in 2009 to an estimated four billion in 2020.

The shift to electronic payments been seen across all segments of the U.S. population. In 2010, consumers age 21-34 made up 28 percent of online bill payers, consumers age 35-54 made up 48 percent, and consumers over age 55 made up 24 percent of all online bill payers. Also consumers of all income levels have embraced electronic payments with more than a third of online bill payers having an annual household income of less than $50,000.

The payments landscape is undergoing a huge wave of change arising from economic conditions; emerging payment platforms; and new consumer habits driven by Internet penetration and the maturation of Gen Y. This is a direct response to consumers that expect a comprehensive array of options to meet their rapidly changing lives and demand new ways to pay and receive their bills.

* Fiserv, 2010 Billing Household Survey: Consumer Survey of Offline and Online Billing and Payment Practices