Online Bill Payments - Consumer Barriers & Solutions
Fear of fraud, lack of website speed, lack of familiarity and technophobia, hidden financial cost, payment delays, and lack of access to devices and infrastructures are consumer barriers to online bill payments. Fraud monitoring tools, local hosting, offering incentives for online payment, and third party integration arrangements to avert payment delays could be a few potential solutions.
FEAR OF FRAUD
- Fear of fraud is a major barrier to online bill payments.
- Financial losses caused by online payment fraud are estimated to double from 2018 to 2023.
- Buyers only prefer payment methods that they consider having the highest level of security.
- Billers should invest in more sophisticated security to avert the fear of fraud that customers experience while making online bill payments.
- Billers have to make sure that their electronic billing and payments are aligned with the PCI-compliant standards.
- Billers should do a proper audit of their online payment system.
- Billers can effectively communicate the security features of their payment site with the customers and offer guarantees against errors.
- Billers can use fraud-monitoring tools, such as the customer account validation services, and purchase tracking.
- Billers can use a certified Level 1 PCI DSS payment processor’s risk management staff to detect fraud before it happens.
LACK OF WEBSITE SPEED
- Low domestic website speed and resulting low reliability is a barrier to online bill payments.
- Local website hosting can speed up the process.
- Content Delivery Networks (CDNs) and geo-based load balancing servers can help overcome the problem.
- A reliable turn-key vendor who is able to give support with dedicated IT resources and geo-load balancing is part of the solution.
- Also, a client request arising from a certain geographic area can be sent "either to a service node that is geographically closest to the client or to a node that has the most capacity."
LACK OF FAMILIARITY AND TECHNOPHOBIA
- Paper billing and bill payment are familiar, but online bill payment lacks familiarity unless one is a digital native.
- Some segments of people, such as the elderly, fear new technologies.
- Billers can offer perks and discounts to customers who make online bill payments, thereby encouraging them to go paperless.
- Billers can campaign to the customers highlighting the eco-friendly nature of online bill payments to arouse their eco-consciousness.
HIDDEN FINANCIAL COST
- People often overlook the financial cost of paper bill payment but get deterred by the financial cost of online bank and e-payment transactions.
- Customers lack the education and awareness to understand and detect hidden costs involved in online transactions.
- Payment services and instruments have costs connected to the use of the service as well as costs based on infrastructure and equipment.
- There may be hidden costs involved in the use of innovative online payment services of, which customers could be unaware of and also in some cases, personal data will be asked in order to use the service.
- Customer empowerment and education initiatives need to be implemented.
- Customers need to be made "better prepared to find key information in disclosure statements, in particular, the fees and charges, and possibly, hidden costs."
- Lack of an integrated system can cause payment delays which is a consumer barrier to online bill payments.
- Credit Unions, a website addressing credit unions, found that people are concerned about the time taken to process online payments.
- Billers can identify online payment providers who offer third-party integration arrangements and engage them.
- Billers can get online service providers APIs so that their development team can do the integration for them.
- A payment processor that supports immediate and individually processed transactions can activate client accounts in more than one acquiring bank, and thus avert payment delays which are part of automated clearinghouse processes.
LACK OF ACCESS TO DEVICES AND INFRASTRUCTURES
- Lack of access to devices and infrastructures is a customer barrier to online bill payments.
- Lack of or limited "access to electronic devices, internet and/or mobile networks, or even electricity supply" is a major barrier to online bill payment.
- In the US, 10% of the population does not use the internet and another 8% access internet only once in a day, according to Statista.
- The infrastructure for US payment systems has remained comparatively stagnant.
- As 50% of US commercial banks are upgrading their payment infrastructure, there will be better customer access to the payment infrastructure.
- The Federal Reserve System in the US has also released the future vision to improve the US online payment system, which includes improving speed, security, efficiency, international reach, and collaboration.
Since online bill payments have the same process as general online payments, the assumption is that the consumer barriers to online payments apply to the online bill payments situations as well. One key barrier, fear of fraud, is identified from a PR Newswire study report on global online payments. This report probably has more barriers to online bill payment identified in it, but the rest of the report is behind a paywall.
The website of Paytabs, a payment processing company features an article that identifies low website speed and the resulting low reliability as a barrier to online payments. A blog titled, Blue Pay observes that lack of familiarity and technophobia, and hidden financial costs deter people from making online bill payments. Lack of familiarity and technophobia are clubbed together for the purpose of this research because they are interconnected. The blog says that people overlook the financial costs involved in making a paper bill payment, and from this, it is deduced that regarding online bill payments, such a worry about hidden costs prevails. Blogs and websites like Blue Pay and Mashable, having a good global internet ranking (as per Alexa ranking), are assumed to be good sources for identifying further customer barriers to online bill payment. Mashable lists payment delays as a customer barrier to online bill payment and offers solutions.
A Finconet study report also provided some details and solutions to the problem of hidden costs, which is another customer barrier. It also identifies the lack of access to devices and infrastructure required for making online bill payment as another barrier. The International Financial Consumer Protection Organisation (FinCoNet) is an international organisation of supervisory authorities, which have responsibility for financial consumer protection. Though this source is from 2016, it is relevant because it identifies two crucial consumer barriers, which are still relevant and offers solutions to them.