HOUSTON, July 12, 2011 /PRNewswire-USNewswire/ -- With less money in their pocket because of the country's constrained economy, more Americans used expedited bill pay services in 2010, saving $4.3 billion in late fees. Javelin Strategy & ResearchExpedited Payments: Consolidator Originated Routing Solutions May 2011 study shows that two-fifths of Americans used an expedited payment service to pay a bill and avoid late fees but that expedited payments services are currently not available through most banks and other financial institutions.
As banks look for consumer friendly ways to generate revenue in the wake of the Durbin Amendment, the CARD Act and overdraft reform, expedited payments pose a significant opportunity. The study evaluated four different routing options currently available for expedited payments, overnight check, money transfer services, direct biller connection and virtual card technology like PreCash's Billocity, in terms of the strength of their ability to meet both consumer and billers' needs. While consumer demand for online and mobile expedited payments is rapidly growing, Javelin found banks are under utilizing this service. Only seven of the nation's top 40 banks or 20% offer expedited payments to their customers.
Javelin data showed 58% of consumers who never made an expedited bill payment at their bank's website—but have made an expedited payment at a biller site in the past 12 months—indicated they would like to use a bank site to make an expedited payment in the future. "This tells us the expedited payment market is relatively untapped by banks and that banks should begin offering the service," said Beth Robertson, Director of Payments at Javelin.
"What makes the PreCash Billocity Expedited Bill Payment Service unique compared to other expedited options is that it not only guarantees expedited payment to the biller, but it also creates a source of revenue for banks and financial institutions that is currently an expense," said Steve Taylor, Chief Executive Officer of PreCash. "Billocity helps consumers avoid late fees, service disruptions and negative credit ratings and allows banks, payment processors and payment consolidators to offer consumers a faster payment for free."
According to Javelin, demand for expedited bill payment services is growing and consumers are expected to reap $6.3 billion in savings by 2015. A 2009, National Foundation for Credit Counseling survey found 58 million U.S. adults pay their bills late, and consumers spent a staggering $20 billion in credit card bill late fees in 2009. Even though providers of expedited payments charge a premium, Javelin found the average cost of these payments was between $6.16 and $10.29 compared to the $20 to $50 or more in late fees that two-thirds of consumers paid in 2010.
"A consumer using Billocity to pay a bill provides his financial institution or bill consolidator cash or a checking account number to pay the bill via the Internet, phone or walk-in option," adds Taylor. "The front end is typically via the consumer's bank account or other familiar bill pay channel. After receiving this information from the bank or bill consolidator, Billocity applies the funds to a virtual Visa or MasterCard account and sends the biller the payment electronically. It integrates easily into virtually any existing payment channel."
The study is available at www.precash.com/billocity_javelin.
About PreCash, Inc.
PreCash is a leader in payments services and processing. Whether helping cash-paying and underserved people access mainstream financial services, helping financial institutions deliver their customers faster transactions, or helping partners generate revenue and build stronger bonds with consumers, PreCash improves lives and business through payments. PreCash offers bill payment processing solutions, prepaid Visa® and MasterCard® products and programs, and walk-in payments for service providers, financial services companies, consumers, the mobile industry, retailers and more. The company serves more than 3 million consumers and touched more than 2 billion dollars in payments in 2010. Its products are serviced in more than 100,000 retail locations nationwide. Founded in 1998, PreCash is headquartered in Houston, Texas, with additional offices in Portland, Oregon. For more information, visit www.precash.com.
