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Take On Payments, a blog sponsored by the Retail Payments Risk Forum of the Federal Reserve Bank of Atlanta, is intended to foster dialogue on emerging risks in retail payment systems and enhance collaborative efforts to improve risk detection and mitigation. We encourage your active participation in Take on Payments and look forward to collaborating with you.

Take On Payments

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November 13, 2018


In Payments, What I Say May Not Match What I Do

How do you like to pay your bills? Perhaps you schedule bills to pay automatically by bank account number so you don't miss a due date. Or maybe you would rather review a paper statement and then mail a check.

By number, U.S. consumers report paying 4 in 10 bills by electronic means—for example, by using their online banking bill pay function or providing a bank account number at a biller's website. By dollar value, the practice of using electronic transactions to pay bills is also prevalent: about half of bill payments by dollar value are made using online banking bill pay or bank account number payment. These are among findings from the Diary of Consumer Payment Choice, a survey of U.S. consumers released in September of this year.

Chart-one

Source: 2017 Diary of Consumer Payment Choice

The diary also asks respondents how they prefer to pay bills, so we can look at how consumers' stated preferences compare to what they actually do in specific situations. It turns out that 36 percent of consumers prefer online banking bill pay or bank account number payment, and about the same percentage prefer either a debit card or credit card.

Keep in mind that 38 percent of bill payments and 36 percent of consumers are not comparable. Actual behavior is measured in percentage shares of transactions. Preferences are measured in percentage shares of consumers (about 2,900 U.S. adults responded to this nationally representative survey).

We can see, however, the transactions for which consumers deviate from their stated preferences for bill payments. Of the bill payments recorded in the 2017 DCPC, about half were made using the consumers' preferred payment instrument.

Why do we consumers deviate from what we say we prefer? Think of your own payment choices. You might be constrained by what is feasible. For example, you might prefer to pay most bills with a paper check but for bills you pay online, it's impossible to use paper payment instruments. Your choice could be limited by what the payee prefers to accept. For example, your plumber might prefer payment by cash or check. Or you might deviate from your preferred method to save money. For example, your local municipality might put a surcharge on card payments, so paying with your bank account number is less costly. Or, for larger bills, you might use a credit card to earn points.

To see more about how consumers adjust our payment choices given the situation, take a look at the interactive charts detailing payment choice by dollar value, payment type, and remote or in-person payments, as reported in the 2017 Diary of Consumer Payment Choice.

Photo of Claire Greene By Claire Greene, a payments risk expert in the Retail Payments Risk Forum at the Atlanta Fed

 

November 13, 2018 in cards , payments study | Permalink

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