Why the Bill Pay Experience Cannot be One-Size-Fits All

For decades, something has been broken in the bill pay industry. Loans and recurring billable services serve consumers of all ages who have a wide range of needs, preferences and circumstances. Yet typically, the model for paying those bills has been the same for everyone.

As a result, the cost of accepting payments is escalating for billers and lenders. 

A limited, rigid payment experience can lead to more customers paying late or skipping payments, calling to pay by phone when the biller portal is frustrating or switching providers entirely to find a better, easier way to pay a loan.

Those behaviors are sometimes very pronounced across age groups. That was the focus of PayNearMe’s consumer research that explored how attitudes and preferences for paying loans vary across different generations. Here we’ll spotlight some of the key differences. You can view the full report here.

How top challenges differ across generations

With ongoing inflation and high interest rates, consumers across every age group are feeling the pinch when trying to pay loans and manage their finances. However, our research singled out certain pain points that spark the most anxiety for different generations:

Gen-Z: Tracking payment due dates 

Consumers ages 18-29 are just growing into their earning years and may be newer to paying bills and managing finances on their own. As a result, nearly half (48%) of those surveyed say the most difficult thing about paying loans is tracking due dates. And 51% of Gen-Z, higher than other age groups, need reminders to make it easier to pay on time.

Timing is everything when cash flow is limited. Pew Research noted consumers ages 18-24 earn on average only $20,000 a year, and the median income for 25-29 year-olds is $43,000 per year. Yet this Gen-Z cohort carries an average total debt of over $16,000, according to Credit Karma. Understandably, staying on top of payments is a significant challenge for this generation.

Millennials: Remembering logins

As consumers get older, many take on more financial responsibilities and debt. In fact, 58% of millennials are living paycheck to paycheck. Our survey found this generation and older consumers have considerable anxiety about paying bills, which is exacerbated when payment processes are complicated. 45% of millennials consider remembering logins and passwords as a major hurdle in paying bills. It’s also a top issue for 43% of baby boomers (ages 60+) and 42% of Gen-X (ages 45-60).

Gen X: Lack of alternative payment options

Gen X typically carries the highest levels of debt, with an average of over $158,000 of non-mortgage debt, according to Money.com. Meanwhile, those who earn more than $100,000 a year have the highest stress around paying bills, not necessarily due to cash flow issues but frustration over payment processes that don’t fit their lifestyle. Specifically, this age group more than others prefers using digital wallets such as Apple Pay or PayPal to pay their loans. Yet many billers support only ACH and card payments.

Baby boomers: Difficult payment interface

Older consumers ages 60+ have had some of the highest rates of digital adoption in recent years, and 46% now use their smartphone to pay their loans. At the same time, they’re often frustrated with biller websites that make it hard to navigate and enter payment information.

How mobile needs differ

Consumers across all ages now rely on mobile devices for managing their needs. However, when it comes to bill payment, certain aspects of the mobile experience matter more to various age groups. It’s important for billers and lenders to pay attention to these differences as they consider how to modernize to improve business outcomes.

Here’s a snapshot of what different age groups prioritize for mobile:

Gen-Z – Digital wallet options and personalization

Many young digital natives have grown up using mobile wallets like PayPal, Apple Pay and Venmo for purchases and P2P money transfers, so it’s natural they want to pay bills that way, too. 61% of Gen-Z surveyed would be willing to make a loan payment with a digital wallet. And because this age group often stores money in wallet apps for future use, they show the highest desire (47%) to pay bills with a stored balance.

Gen-Z consumers might prioritize lenders that offer those options, which may also make it easier for them to pay on time. Personalization is another top demand of this generation. In particular, they expect the bill pay experience to pre-populate their account details so they can simply choose their payment method and tap to pay. Nearly 7 in 10 (67%) of those surveyed agree this personalization is important to them.

Millennials – Easy, no-login convenience

This age group puts a premium on features that remove friction in bill payment. For example, a whopping 79% think it’s important to get a personalized link that takes them directly into their personalized payment flow—with no login required. Millennials want that convenience to continue post-payment, such as receiving personalized options to set up autopay or refinance a loan.

Gen-X – Tailored to their payment preferences

The 45-60 year-old age group is tech-savvy and want that in their bill pay experience, with flexible mobile-friendly options. That said, although they consider it important to use alternative payment types, 52% said they feel overwhelmed when presented with many payment options. They would value a dynamic interface that prioritizes options based on their preferred ways to pay or past payment behavior.

Baby boomers – Digital reminders and minimal data entry

Receiving a due date reminder via text message or email is highly valued by all generations, but baby boomers want reminders even more than their counterparts. 60% agreed they would find it very helpful to get reminders, even though they expressed more confidence than their younger cohorts about managing bills. Another consideration with baby boomers is that many now pay bills using their smartphone, but struggle with entering payment details on their device.

Of those surveyed, 77% of those prefer pre-populated screens, removing the need to enter details manually. Simplifying the mobile experience this way could dramatically reduce the risk of payers abandoning the process and calling an agent to pay by phone.

Across generations, consumers have a range of different challenges and preferences around bill payment. The traditional one-size-fits-all payment experience is no longer enough—and may be resulting in more costs for billers in delinquencies, support calls, exceptions and loss of repeat business.

The good news is that you don’t need multiple solutions to satisfy different age groups. Innovative payment platforms, such as PayNearMe, are built to enable the ease, flexibility and personalization necessary for meeting diverse needs.

Consider modernizing with the following capabilities:

• Enable digital reminders – Consumers of all ages agree that being reminded via text or email about payment due dates will make it easier to pay on time. That makes digital reminders an extremely valuable feature for both payers and billers.
• Offer more payment types – Meet more needs and preferences by enabling more ways to pay beyond ACH and cards, including digital wallets (Apple Pay, Google Pay, PayPal, Venmo and Cash App Pay). You might even add a digital option to pay cash at retail locations where many people frequently shop, such as Walmart, 7-Eleven, CVS, Walgreens and others.
• Eliminate login friction – Provide personalized links that are embedded with each customer’s unique account details. From a text message or email, they can seamlessly access their account in a self-service payment website without having to enter a username and password, and pay in just a few taps.
• Increase autopay flexibility – Too often, autopay is just an ‘on or off’ feature. Yet a consistent trend across generations is that people want more control over when and how they pay bills to better manage cash flow. Consider that 65% of consumers told us they would be more likely to enroll in autopay if it offered more scheduling flexibility. A modern platform could enable payers to select their preferred due date, split payments within a month and even vary the payment method they use.

Start personalizing payments for more profitable outcomes

Businesses that rely on legacy systems to collect recurring payments may be facing rising overall costs and declining market advantage. Staying more profitable and competitive now requires a frictionless, flexible payment experience, as well as automated workflows to reduce the total cost of accepting payments. 

PayNearMe can get you there, easier and faster. Our modern payments platform and collaborative approach make us the ideal technology partner to help you satisfy more customers and optimize for more cost-efficient operations. Learn more and schedule a demo.

Interested in a deeper dive on generational loan payment trends? View the report here.