Consumers expect payment experiences to be simple and seamless. E-commerce giants like Amazon, Apple, and Netflix set the bar with nearly invisible embedded payments – and people now resist or avoid payment experiences that don’t fit those expectations.
Businesses with outdated payment systems could see escalating costs by sticking to the status quo, with more customers paying by phone, paying late, or not at all. For lenders, this could spell disaster, as 65% are already seeing a rise in delinquency in 2023.
Granted, a consumer’s mindset behind paying for a product or ride share is very different than repaying a loan obligation. But part of the monster success of commerce leaders is because they make it so easy and flexible for customers to pay. By contrast, many bill payment experiences are rigid and out of step with today’s lifestyle needs, especially amid high inflation and economic uncertainty.
64% of consumers wish companies would respond faster to meet their changing needs. Beyond being customer-centric, businesses now need to be ‘life-centric’ – accommodating shifting life impacts with relevant options – and many billers are lagging far behind.
It’s also important to consider how consumers prioritize their monthly bills. Auto and personal loans are often the bills consumers pay last or late, after other lifestyle basics. Lenders need to look at how to climb the payments priority ladder. If a loan bill is the easiest to keep track of and pay vs. the hardest, lenders could see a significant increase in bills paid on time.
How can companies avoid pitfalls and remove pain points to motivate on-time payments? Here we’ll look at some common mistakes in the payment experience, and how to fix them.
1. Making it hard for people to pay bills
Imagine this: A customer receives a paper bill, but doesn’t want to mail a check. They want to pay online, but the biller requires them to first download an app or sign up to use a portal. They need to create a login and password, maybe enter an account number, and link to their checking account (which often is not their preferred way to pay). Then every month they have to remember their login details to access the app or portal, and root around to find the bill pay tools.
With all that hassle, people often give up and either delay or forget to pay, or contact the call center to pay – all of which can be costly for billers. Consider that each support call costs about $8, whereas digital self-service costs only $0.10 per interaction. It’s a powerful incentive for billers to modernize with a flexible mobile payment experience.
Imagine how easy it would be if there was a QR code on the bill that customers could scan with their phone to instantly access a payment screen where they can pay with PayPal or other options. In a few taps they’re done – no need to remember a login, no typing in account details, no friction.
2. Requiring customers to remember logins
Speaking of logins, 52% of Americans said that remembering . Eliminating the need for people to remember and enter username and password on a biller site or app solves a major pain point and removes a potential barrier to paying on time.
With a modern self-service payments platform (like PayNearMe), billers can simply text or email customers a unique URL tied to their payment account, so they can seamlessly pay in a few taps. People can even save their personalized link to their mobile wallet (e.g., Apple Pay, Google Pay, Cash App, etc.) for easy one-click access to make future payments.
3. Offering limited ways to pay
All too often, bill pay experiences allow only debit or ACH payments, which is no longer the preferred way to pay for many consumers. 8 in 10 people use mobile wallets. And one-third of unbanked consumers (often subprime and non-prime borrowers) store money in digital wallets instead of bank accounts, or prefer to pay in cash.
Increasing on-time payments now relies on offering more flexible options, including apps like PayPal, Venmo, Apple Pay, and Cash App, as well as the ability to pay with cash at a retail location.
Flexibility also needs to extend to when customers pay. To make it easier to pay on time, 76% of consumers say flexible due dates would help, and 54% say that splitting payments within a month would help. And what about the struggle to get people to enroll in autopay? 65% say they would be more likely to enroll in autopay if it offered more scheduling flexibility.
Lenders who use PayNearMe can increase autopay adoption by empowering customers with multiple options for both how and when to pay each month. People can pay monthly, weekly, twice monthly or every other week —or any combination of those options.
Enabling bill pay via mobile wallet and cash at retail offers even more cost-saving wins for billers. As many digital wallets are biometrics-verified, it helps reduce fraud-related chargebacks. And cash payments at retail locations are guaranteed, so there’s no risk of non-sufficient funds (NSF) returns.
4. Confusing communications
Payment interfaces that use ‘bank-speak’ financial jargon or have unclear messages (especially on error screens) may confuse customers, and make it harder for them to take action or complete payments.
Companies need to ensure that all messaging in their bill pay website or app is clear and actionable with customer-friendly language, so people easily understand what to do. An added consideration is to provide communications in other languages based on the customer base. For example, Spanish-speaking individuals make up a substantial portion of customers in many US markets.
Ah, but how to detect problem areas? Too often, the business only finds out through customer support calls. Offering a seamlessly simple interface can solve a lot. And beyond that, a modern payments platform can provide analytic insights into where in the process payments are failing or people are falling out of the funnel. A fix might be as simple as updating messaging.
5. Creating decision fatigue in bill pay
Many biller payment experiences lump numerous steps into one long screen – which can be overwhelming for some customers. Especially when they’re used to easy walk-throughs like with Amazon or Netflix for making payments and setting up autopay.
Streamline payments by breaking the process into simple steps. The goal is to keep each screen focused on one decision at a time, and minimize the amount of information people need to enter.
For instance, in a few quick screens, the customer selects how they want to pay, then enters an amount, then a pay date, and maybe the last screen offers help to enroll in autopay.
Optimize the Bill Pay Experience – and Maximize On-time Payments
Consumers have many competing priorities for managing their money. Anything that makes bill pay easier may help people pay on time.
Although 88% of companies think their customers are changing faster than their businesses can keep up – innovating at the speed of change IS possible. That’s our focus at PayNearMe.
The PayNearMe platform empowers organizations to automate exceptional, self-service payment experiences that help improve profitability, operational efficiency, and customer experience.