Choice, Convenience and Control Driving Consumer Payment Behavior

Did you know that Kellogg’s has more than 60 varieties of cereal? Or that each Starbucks store offers almost 70 different types of beverages? Most people might not know this kind of trivia, but anyone who has walked into a Wal-Mart cereal isle or a Starbucks is aware of the virtually limitless options they have when it comes to cereal or coffee.

Order a Blended Crème Frappuccino at any one of the 12,000 Starbucks locations worldwide and don’t be surprised if they ask if you want to make that a Double Chocolate Chip, a Tazo Green Tea, a Strawberries-and-Crème, or one of five other types of Blended Crème Frappuccino. It is all about choices, and where there is consumer demand, there are bound to be options.
Consumers today are bombarded with numerous choices whatever they might be shopping for, and we have to admit that it has become a way of life. It is not surprising, therefore, that consumers not only demand a range of products and services, but also a variety of options when it comes time to pay the bill.

They are also looking for convenient payment options, as well as control over the frequency and timing of the transactions.
These three aspects – choice, convenience and control – are driving the dramatic shift in consumer behavior from paper payment options to electronic mechanisms. This is especially true when it comes to making remittance payments. Remittance payments comprise of recurring bill payments to utility, telecom, credit card and mortgage service providers, but do not include point-of-sale transactions.

As consumers begin to realize that conventional paper checks cannot provide the level of flexibility and control they desire, they are turning to electronic payments.
Research from PayStream Advisors revealed that 2006 was a watershed year for this migration from paper-based to electronic payments. In 2006, for the first time in history, consumer remittance payments made via electronic methods overtook check and cash payments. Considering that electronic payments represented only eight percent of recurring bill payments in 1995, this is quite a sea change.

The year 2007 proved that this was not a one-time phenomenon, but rather a harbinger of the future of consumer to business payments. In 2007, electronic bill payments comprised 62 percent of all remittance payments, while cash and check accounted for only 32 percent.

READ MORE HERE in PayStream’s complimentary white paper: Consumer Payment Automation: Consumer Behavior and the Payments Landscape.