The Fee For Speed: Paying More to Rush
The use of expedited payments is increasing, according to a new study from Crone Research and Javelin Strategy & Research. The study, conducted on behalf of electronic payment company Fort Knox National Co., says the percent of people making at least one expedited payment per month has grown from 9 to 16 in the past year, while the figure has grown from 5 to 8 percent for people making more than one expedited payment per month. Expedited payments are ones made via that feature at the biller's own Web site or over the phone.
"One in five households is now making expedited payments," says Richard Crone, founder of Crone Research. "The other interesting finding is that people are making payments closer and closer to the payment date. What this shows is that customers are using [expedited payments] as a cash management tool." Even so, 28 percent of survey respondents still prefer to pay bills via mailed checks.
Customers are also paying as much as $5 for expedited payment transactions, according to the survey. Over 90 percent of survey respondents indicated they would be willing to pay expedited payment fees of $1 to $5. This makes sense, Crone explains, because it's much less costly than a late payment fee. Additionally, while late payment fee can negatively affects a customer's credit rating, an expedited payment has no effect, according to Crone.
"If you look at that in comparison to the average late fee is for payments, then you'll see that this is a comfortable range for the people paying the bills," says Mary Ann Mays, marketing and communications manager for Fort Knox National. "It feels more comfortable [for the customer] to pay an expedite fee rather than a late charge--the customer doesn't feel like he's being reprimanded. So customer satisfaction is better maintained with expedite fees rather than with late charges."
"If you look at the contact center, that is the focal point for these types of payments," Crone says. "The first line of service for these 'panic' payers is the contact center." By empowering the contact center to handle such requests via the phone or the Internet, Crone suggests, the contact center could become a revenue generator, turning into a new line of business for a company.
"Customers are happy to pay for this as long as they get the expedited service," Crone says. "This is the same thing FedEx does. The whole idea is a fee for speed."
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