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Study Consumers save 4.3B in late fees with bill pay
HOUSTON (7/13/11)--More U.S. citizens used expedited bill-pay services in 2010, saving $4.3 billion in late fees, according to a May study by Javelin Strategy & Associates. As service providers expand their mix of expedited payment solutions offered to their financial institution clients, more credit unions will be able to deliver this service to members, the study found. Expedited payments pose a significant opportunity for financial institutions looking for consumer friendly ways to generate revenue in the aftermath of the Dodd-Frank Act amendment, the CARD Act and overdraft reform, said the study, “Expedited Payments: Consolidator Originated Routing Solutions May 2011” (PR Newswire July 12). The study evaluated four different routing options available for expedited payments: overnight check, money transfer services, direct biller connection and virtual card technology such as PreCash’s Billocity. Javelin found financial institutions are under-using this service, even though consumer demand for online and mobile expedited payments is rapidly increasing. Only seven of the top 40 U.S. banks--or 20%--offer expedited payments to their customers. Also, 58% of consumers who never made an expedited bill payment at their financial institution’s website--but who have made such payments at a biller site in the past 12 months--indicated they would like to use a financial institution site to make an expedited payment in the future. With demand for expedited bill-payment services growing, consumers are expected to garner $6.4 billion in savings by 2015, Javelin said. A National Federation for Credit Counseling survey conducted in 2009 found 58 million U.S. adults pay their bills late, and consumers paid $20 billion in credit card-bill late fees in 2009. To read the study, use the link.
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