2008 Expedited Payments Forecast: Banks Must Add Expedited Payments Now or Lose $5 Billion in Fees to Billers

Abstract

Overview

Expedited payments - which mean same day or next day bill payment services - represent a viable recurring revenue source for billers, financial institutions, and third parties. This report presents Javelin' s annual forecast model for expedited payments, building upon four years of solid historical consumer data. Based upon the current revenue sharing split between biller and banks, financial institutions stand to lose $5 billion in fee income over the next five years, unless institutions act now to influence consumer habits. This report includes an analysis of the likelihood of growth in consumer usage of expedited payments, channel selection, willingness to pay fees, and primary sources for seeking out expedited payments services. Primary marketing strategies and key consumer demographics are defined for 2009.

Primary Questions

• What effect will economic conditions have on expedited payments revenue and consumer propensity to use expedited payments services?
• How much will consumers save in late fees by executing expedited payments?
• How much do consumers pay for expedited payments?
• With whom do consumers initiate expedited payments - banks or billers?
• Which channels do consumers choose for expedited payments?
• Which key consumer groups use expedited payments more frequently?
• How can financial institutions effectively market expedited payments services?

Methodology

The consumer data in this report is based on data collected online from several different surveys:

• A random-sample panel of 2,350 respondents in March 2008. Overall margin of sampling error is ±2.86 percentage points at the 95% confidence level.
• A random-sample panel of 3,367 respondents from August 2008. Overall margin of sampling error is ±1.70 percentage points at the 95% confidence level.

The surveys targeted respondents based on representative proportions of gender, age and income compared to the overall U.S. online population. Javelin also created a forecast model used in this report to analyze factors in the evolution of expedited payments, based on U.S. census data and Javelin primary consumer data.