Abstract
Overview
Expedited payments - which mean same day or next day bill payment services -
represent a viable recurring revenue source for billers, financial
institutions, and third parties. This report presents Javelin' s annual
forecast model for expedited payments, building upon four years of solid
historical consumer data. Based upon the current revenue sharing split between
biller and banks, financial institutions stand to lose $5 billion in fee
income over the next five years, unless institutions act now to influence
consumer habits. This report includes an analysis of the likelihood of growth
in consumer usage of expedited payments, channel selection, willingness to pay
fees, and primary sources for seeking out expedited payments services. Primary
marketing strategies and key consumer demographics are defined for 2009.
Primary Questions
- What effect will economic conditions have on expedited payments revenue
and consumer propensity to use expedited payments services?
- How much will consumers save in late fees by executing expedited payments?
- How much do consumers pay for expedited payments?
- With whom do consumers initiate expedited payments - banks or billers?
- Which channels do consumers choose for expedited payments?
- Which key consumer groups use expedited payments more frequently?
- How can financial institutions effectively market expedited payments
services?
Methodology
The consumer data in this report is based on data collected online from
several different surveys:
- A random-sample panel of 2,350 respondents in March 2008. Overall margin
of sampling error is ±2.86 percentage points at the 95% confidence
level.
- A random-sample panel of 3,367 respondents from August 2008. Overall
margin of sampling error is ±1.70 percentage points at the 95%
confidence level.
The surveys targeted respondents based on representative proportions of
gender, age and income compared to the overall U.S. online population. Javelin
also created a forecast model used in this report to analyze factors in the
evolution of expedited payments, based on U.S. census data and Javelin primary
consumer data.
Table of Contents
- Overview
- Primary Questions
- Findings and Analysis
- Methodology
- Executive Summary
- Javelin' s 2008 Expedited Payments Forecast
- Expedited Payments Strategy for 2009
- Substantial Base of Consumers Engage in Expedited Payments
- Expedited Payments Expenditure Varies Based on Economic Situation
- Understanding Consumer Motivators as a Function of Competition and Pricing
- Fewer Households use Expedited Payments in A Struggling Economy
- In a Recovering Economy, Savings Vastly Eclipses Spending
- In a Struggling Economy, Spending Eventually Exceeds Savings
- Frequent Users Present Prime Revenue Opportunities
- Younger Consumers Show High Propensity for Frequent Usage
- Majority of Expedited Payments Made Directly with Billers
- Pricing is Highly Dependent on Economic Factors
- Bring Expedited Payments into the Mainstream Through the Online
Bill-Payment Venue
- Expedited Bill Payments Users Save Substantially on Late Fees
- Mid-Range Fees are Predominant: The Case for Price Increases
- The Importance of Channel Availability: Phone-Based Expedited Payments
Re-Emerge
- Mobile Bankers Use Expedited Payments More Frequently
- Certain Age Groups may be Poised for Mobile Channel Growth
- Prolonged Economic Struggles Mean Lower Consumer Savings
- Appendices: Additional Consumer Information
- Generational Usage of Expedited Payments Shows Minimal Differences
- Middle-Income and Higher-Income Consumers use Expedited Payments more
Frequently
- Younger Consumers Show Slightly Higher Propensity to use Expedited Payments
- Spike Among More Affluent Consumers for Recent Expedited Payments Usage
- Spike for Consumers Aged 25-44 in Avoiding Higher Late Fees
- Lower-Income Consumers Avoid Smaller Late Fees
- Affluent Consumers Pay Lower Fees for Expedited Payments
- Related Research
- Companies Mentioned
Table of Figures
- Figure 1: Consumer Usage of Expedited Payments 2005-2008 8
- Figure 2: Overall Consumer Expedited Payments Expenditures 2005-2013 9
- Figure 3: Household Usage of Expedited Payments 2005-2013 11
- Figure 4: Usage, Spending and Savings in an Improved Economy 2008-2013 12
- Figure 5: Usage, Spending and Savings in a Struggling Economy 2008-2013 13
- Figure 6: Frequency of Usage for Expedited Payments 2005-2008 14
- Figure 7: Frequency of Usage for Expedited Payments by Age 15
- Figure 8: Venue for Expedited Bill Payment Among Consumers 16
- Figure 9: Mean Pricing for Expedited Payments in Struggling and Recovering
Economies through 2013 18
- Figure 10: Screen Shot of ORCC Solution Implemented at Silver State
Schools Credit Union 19
- Figure 11: Late Fees Avoided for Expedited Payments 2005-2008 20
- Figure 12: Consumer Fees for Expedited Payments 2005-2008 21
- Figure 13: Consumer Channel Selection for Expedited Payments 22
- Figure 14: Frequency of Usage Among Various Behavior Groups 23
- Figure 15: Consumer Channel Selection for Expedited Payments by Age 25
- Figure 16: Consumer Savings with Expedited Payments vs. Late Fees
2005-2013 26
- Figure 17: Consumer Usage of Expedited Payments by Generation 27
- Figure 18: Frequency of Expedited Payments Usage by Income 28
- Figure 19: Consumer Usage of Expedited Payments by Age 29
- Figure 20: Consumer Usage of Expedited Payments by Income 30
- Figure 21: Late Fees Avoided by Expedited Payments by Age 31
- Figure 22: Late Fees Avoided by Expedited Payments by Income 32
- Figure 23: Fees Paid for Expedited Payments by Income
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