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Navigating the New Card Funded and Emergency Bill Payments Landscape

A new transactional research study from Fiserv explores the pros and cons of offering card-funded and emergency bill payments for free or with a fee.

ONCOMING WAVE

ONCOMING
WAVE

The Oncoming Card-Funded Bill Payment Wave

As consumers and businesses use debit, credit and prepaid cards more than ever before to pay bills, an expensive card-funded bill payment wave is confronting billers. Successfully navigating this wave requires understanding its fast moving and complex legal, security, customer satisfaction and cost implications. Ultimately, it is forcing many Billers to consider charging customers for certain payment types and channels. With new insights and expertise from Fiserv, Billers can ride the wave instead of being pulled under.

According to the Federal Reserve, Card Payments Are Growing Across the Board

TEST YOUR KNOWLEDGE

Since 2003, which of the following have experienced the largest transaction growth¹?

Credit cards

Debit cards

Prepaid cards

Checks

ACH

Since 2003, which of the following have experienced the largest transaction growth¹?

+4%

Credit Cards

+13%

Debit Cards

+31%

Prepaid Cards

-8%

Check

+5%

ACH

6

offers

Each American household receives approximately 6 credit card offers a month.2

288

mi high

Stacking all the credit cards in the United States would create a tower 288 miles high.2

Consumer Card Payment Habits are Translating Into Bill Pay Trends

Card-funded bill payments are increasing faster than ACH and billers are expecting more growth.

Annual growth rate in Direct Payment via ACH and Credit Cards over past two years3

9.7%

ACH

15.2%

Credit Card

Over half of Billers surveyed...

believe card funded bill payments will grow 30% or more over the next 5 years4

Why Consumers Pay Bills with Plastic5

Debit Cards

50%

It's easier to track payments

45%

I use a debit card for everything

44%

I prefer immediate credit for payment

Credit Cards

60%

Earn rewards points

37%

Safer and better record keeping if there is a dispute

21%

Delay payment

Prepaid Cards

48%

Helps with budgeting

45%

Avoid credit card debt

33%

Avoid overdraft and other fees

Millennials and Mobile Will Fuel Even Greater Card Funded Bill Payment Growth

TEST YOUR KNOWLEDGE

Which generation has a higher likelihood to pay bills with a card than average?

Millennials

Generation X

Baby Boomers

Millennials are 27% more likely to pay a bill with a card than average.5

78%

Mobile Bill Payments Boosts Card Funded Bill Payments

78% of Billers believe mobile bill payments will increase card funded bill payment usage.6

Consumers Value Fast and Easy Emergency Bill Payments

Most consumers expect the option to make fast emergency bill payments to avoid being late. Having it improves customer satisfaction.1

30% have made an emergency payment⁵

74% expect billers to offer a way to make emergency payments⁵

57% said offering emergency payments would increase satisfaction with that biller⁵

GUEST CHECKOUT

28%

Faster Non-Registered “Guest Checkout Option” Growing in Popularity for Bill Payments

Non-registered bill payments have grown as consumers growing tiring of password fatigue and want speed and convenience. 28% have used guest check out option at biller sites to pay bill vs 7% in 2013.6

Card Funded and Emergency Bill Payments Are the Most Expensive for Billers to Process7

Average Costs

$5.16

Credit Card CSR

$4.13

ACH CSR TEL

$2.28

Credit Card TEL

$2.21

Credit Card WEB

$2.18

Automatic Credit Card

$1.92

PINless Debit IVR

$1.80

PINless Debit WEB

$1.50

Walk-in Bill Pay

.

$0.32

Papercheck

.

$0.22

ACH TEL IVR

.

$0.16

ACH WEB

.

$0.14

Automatic ACH

.

$0.04

HomeBanking

So What Does It Mean For Billers?

Almost 40% of households have paid a bill with a debit, credit card or prepaid card in the last month.5

Billers must determine the pros and cons of offering increasingly popular yet expensive card funded and emergency bill payments for free or with a fee.

66% of billers experience “a lot of pain” related to growing card funded bill pay processing costs and complexity.6

Fiserv’s Transactional Research Results8

Weighing the Pros and Cons of Free Card Funded and Emergency Bill Payments Insights

PROS

26% higher web bill payments compared to fee based card payments enabling additional online self-services and e-bill adoption

Increase usage of recurring payments, which provides billers with more timely and predictable payment revenue

CONS

80% higher credit card payment usage which typically amounts to 2%-3% of payment amount

Significant cost increases from more costly business and commercial credit card transactions

Billers need to take customer satisfaction impact into account when determining whether to charge a fee, but they must realize that it can come with dramatically higher card-funded transaction volume and related costs.

Free or Fee? In-house or Outsource? Critical Considerations Regarding Costs Complexity, Risk and Regulations

Card processing interchange rates can be complicated to determine – they are comprised of several factors including card types, networks and industry transaction types.

The Durbin Amendment from Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010 regulates debit card “swipe fees” – But not all debit cards qualify – for example banks/credit unions under $10B are exempt.

*Credit cards are NOT protected under the Durbin Amendment

Visa / MasterCard Settlement allows more flexibility for card payments – interpreting rules of how billers can optimally position card payment options takes expertise.

Payment Card Industry (PCI) Data Security Standard addresses fraud and is performed annually – Compliance and audits can be expensive and time consuming.

75% of Billers surveyed are more concerned about billing and payments security than a year ago.9

What’s the So What?

Billers should partner with experienced experts who can provide leading solutions and trusted advice to help them navigate and surf the oncoming card funded bill pay wave.

“Fiserv demonstrates market leadership in both the walk-in and online bill payment space”

– Mercator Advisory Group

↓ See Why ↓

BillMatrix Card Funded Bill Payment Processing

Whether you need Web, mobile, IVR or agent-assisted payment functionality, BillMatrix® Payments from Fiserv has the solutions to meet your customers at their bill payment points of preference - while keeping costs under control.

Fully PCI Compliant
Redundant data centers and transaction monitoring
Industry leading authorization approval rates resulting in charge back rates of below 1%

See the process →

Card Funded Bill Payment Process

BillMatrix® Payments from Fiserv

1

Consumer or business applies and is issued a card from a financial institution

2

Cardholder pays a bill with the issued Card.

3

BillMatrix submits payment to card processor on behalf of biller and manages the process.

4

Financial Institution approves/ declines payment request. Funds are held until transaction settled.

5

Payment request is routed to the financial institution that issued the card.

6

Payment request goes through Visa, MasterCard, Discover or American Express.

← BACK

Want to learn more about how to successfully Navigate the New Card Funded Bill Payment Landscape and Deploy Creative Solutions that both serve customer payment needs while boosting customer satisfaction?

©@@CurrentYear Fiserv, Inc. or its affiliates. All rights reserved. Fiserv is a registered trademark of Fiserv, Inc. Other products referenced in this material may be trademarks or registered trademarks of their respective companies.

Fiserv, Inc.

255 Fiserv Drive
Brookfield, WI 53045

800-872-7882
262-879-5322

getsolutions@fiserv.com www.fiserv.com

Navigating the New Card Funded and Emergency Bill Payments Landscape

A new transactional research study from Fiserv explores the pros and cons of offering card-funded and emergency bill payments for free or with a fee.

Download Full Study

Download Full Study

Download Full Study

Download Full Study

Download Full Study

The Oncoming Card-Funded Bill Payment Wave

According to the Federal Reserve, Card Payments Are Growing Across the Board

TEST YOUR KNOWLEDGE

Since 2003, which of the following have experienced the largest transaction growth1?

Since 2003, which of the following have experienced the largest transaction growth1?

+4%

Credit Cards

+13%

Debit Cards

+31%

Prepaid Cards

-8%

Check

+5%

ACH

6

Each American household receives approximately 6 credit card offers a month.2

288

Stacking all the credit cards in the United States would create a tower 288 miles high.2

Consumer Card Payment Habits are Translating Into Bill Pay Trends

Card-funded bill payments are increasing faster than ACH and billers are expecting more growth.

Annual growth rate in Direct Payment via ACH and Credit Cards over past two years3

9.7%

ACH

15.2%

Credit Card

Over half of Billers surveyed...

Over half of Billers surveyed...

believe card funded bill payments will grow 30% or more over the next 5 years4

Why Consumers Pay Bills with Plastic5

Debit Cards

50%

It's easier to track payments

45%

I use a debit card for everything

44%

I prefer immediate credit for payment

Credit Cards

60%

Earn rewards points

37%

Safer and better record keeping if there is a dispute

21%

Delay payment

Prepaid Cards

48%

Helps with budgeting

45%

Avoid credit card debt

33%

Avoid overdraft and other fees

Millennials and Mobile Will Fuel Even Greater Card Funded Bill Payment Growth

TEST YOUR KNOWLEDGE

Which generation has a higher likelihood to pay bills with a card than average?

Millennials are 27% more likely to pay a bill with a card than average.5

78%

Mobile Bill Payments Boosts Card Funded Bill Payments

78% of Billers believe mobile bill payments will increase card funded bill payment usage.6

Consumers Value Fast and Easy Emergency Bill Payments

Most consumers expect the option to make fast emergency bill payments to avoid being late. Having it improves customer satisfaction.1

30% have made an emergency payment5

74% expect billers to offer a way to make emergency payments5

57% said offering emergency payments would increase satisfaction with that biller5

GUEST CHECKOUT

28%

Faster Non-Registered “Guest Checkout Option” Growing in Popularity for Bill Payments

Non-registered bill payments have grown as consumers growing tiring of password fatigue and want speed and convenience. 28% have used guest check out option at biller sites to pay bill vs 7% in 2013.6

Card Funded and Emergency Bill Payments Are the Most Expensive for Billers to Process7

$5.16

Credit Card CSR

$4.13

ACH CSR TEL

$2.28

Download Full
Study

Download Full
Study

Since 2003, which of the following have experienced the largest transaction growth¹?

Since 2003, which of the following have experienced the largest transaction growth¹?

30% have made an emergency payment⁵

74% expect billers to offer a way to make emergency payments⁵

57% said offering emergency payments would increase satisfaction with that biller⁵