Step Aside Cash and Checks, Digital Payments Are Taking Over

Consumers have been embracing digital payments with open arms for a while now and there’s no sign of this love affair slowing down. In fact, the digital payments market is set to grow globally at a 19.4% compound annual growth rate between 2021-2028. The preference for contactless and digital wallets is contributing to the rise in use, as is the pervasive use of smartphones, and the increase in e-commerce sales. As consumers grow more comfortable using digital and mobile options, they’re increasingly leaving old-school payment channels like mail and in-person behind–and they’re expecting billers to adapt along with them. 

Consumers’ Usage and Appetite for Digital Payments Are Growing

Demand for digital payment options has grown significantly since the pandemic causing a shift in consumer behavior. We’ve witnessed a massive 150% increase in the use of mobile devices to schedule or make payments from 2018 to 2020.¹ Additionally, according to the KUBRA Citizen Billing and Payment Report 2021:

• 37.5% of consumers said that their payment preferences changed over this period.

• The top payment channels went from biller website, mail-in, and bank website (pre-COVID) to biller website, mobile apps, and bank website (during COVID). 

• Mobile apps usage more than doubled.

• There was a dramatic 18-point drop in demand for mail. 

• The popularity of walk-in centers to pay bills dropped from 26% to 13%. 

Mobile Apps Are Leading the Pack

Consumers’ desire for convenient and contactless ways to pay has boosted the use of mobile apps for payments. Their fairly modest foothold in the payments space exploded during the pandemic with usage more than doubling to 46%.² Bolstering this rise is also the prevalence of smartphones in the United States which reached an 85% penetration rate in February 2021.³ There are still some consumers on the fence though. For 35% of consumers choosing not to use mobile apps, the primary reason for their hesitancy is security concerns.⁴ 

Billers considering adding a mobile app to their payment options should first learn what their customers want to do with it. Recent KUBRA research shows it’s everything from viewing and paying a bill to locating contact information for their local government.⁵ More specifically, we find that viewing their bill is of greatest importance to customers followed by payment history, bill history, bill alerts, and reminders. 

Providing a Mobile Wallet Is a Must

People are spending more time on their smartphones than ever before, which is leading to a jump in mobile wallet use. 26.7% of consumers say they’re using a mobile wallet more frequently, which is a nearly 10-point increase from 2020.⁶ Further still, our 2021 Customer Experience Report found that during the pandemic, 23% of consumers started using PayPal^®, 18% started using Apple Pay^®, and 13% started using Google Pay™.⁷ This is a trend that’s anticipated to continue as more than 25% of consumers say they expect to use mobile wallets somewhat or much more frequently in the next year than they do now.⁸ A recent study found that loyalty to mobile wallets and contactless payments is building, with 85% of consumers saying it’s important to them that businesses accept these payment methods at checkout.⁹

Consumers Love Paying Through Biller Websites

Biller's website was one of the most preferred payment channels before COVID-19 and it remained the same during the pandemic with 45% of consumers indicating that they prefer to pay their bills this way.¹⁰ They enjoy how easy they are to use and the convenience of being able to create an account where they can view and pay bills, as well as set up payment reminders. Consumers also benefit from being able to save their credit/debits card and bank account information to accelerate the payment process. In addition, biller websites support non-enrolled users. In 2020, 85% of website payments were through My Account and 15% were guest payments.¹¹

What Should Billers Do to Increase Digital Payment Adoption?

It shouldn’t be a tough sell to increase digital payment adoption given 42% of consumers stated they’re likely or somewhat likely to try new payment technologies when paying for their monthly services. Billers may experience some reluctance from older customers as they may be less open to trying new payment methods. A targeted education campaign highlighting the benefits, safety, and ease of use of these channels will go a long way with this demographic. As will ensuring the solutions offered are as user-friendly as possible. More generally, it’s important to ensure customers know what options are available to them. This can be achieved through awareness campaigns on a biller’s website and other marketing channels. Finally, knowing what we know about the growing popularity of digital wallets, all billers should be seriously considering adding them, if they haven’t already.

Keep Up With Changing Consumer Habits 

The key to your customers’ hearts? (Digital) options, options, options. Today’s consumers don’t want to be limited to paying their bills by cash or check. They want to be able to use the same digital options they’re already using to pay for other goods and services. KUBRA EZ-PAY® offers all the digital payment options customers want in one comprehensive solution. Learn more about how KUBRA EZ-PAY builds customer loyalty by providing flexible, on-demand payment options. 

Sources: 

1. 2021 Customer Experience Report.
2. KUBRA Citizen Billing and Payment Report 2021.
3. Smartphones in the U.S. - Statistics & Facts, Statista, 2021.
4. KUBRA Citizen Billing and Payment Report 2021.
5. Ibid.
6. 2021 Annual Report: Billing and Payment Trends and Behaviors, ACI.
7. KUBRA Customer Experience Report 2021.
8. Ibid.
9. Majority of Shoppers Emphasize Importance of Contactless Payment Options, Avoid Use of Cash According to New Inmar Intelligence Survey.
10. KUBRA Citizen Billing and Payment Report 2021.
11. Consumer Payment Preferences, Chartwell, 2020.