ACI Worldwide : The Role of Real-Time Payments in a Better Future for Bill Management

U.S. consumers are responsible for paying an average of 9.3 bills per month, according to our recent ACI Speedpay® Pulse. From rent and mortgage to utility services and essential subscription services, these payments impact the most essential parts of consumers' lives. Creating the best environment to effectively manage and pay them timely is critical for promoting consumer and company wellness.

However, what is considered as the best method for bill payment can vary, especially between generations. For example, while many Gen X and Baby Boomers may be accustomed to the status quo of using ACH as their primary payment method, Gen Z and Millennials prefer alternate payment methods such as Zelle, Venmo and PayPal. This is often based on their experiences using non-traditional payment types as part of their daily lives, ease of use and instant transfer of funds. They are used to instantly sending money to a friend to cover the lunch tab while still at the table, so they have little patience for bill payments that might take days to process. The growing usage of alternate payment methods is influencing consumers' expectations for bill payments.

As younger demographics gain spending power and make up a larger percentage of bill payers, meeting their expectations will help billers stay ahead of the game.

What you need to know about Gen Z and Millennials

Through ACI Speedpay Pulse, we've learned a lot about younger (Gen Z and Millennial) consumers, especially when it comes to their bill pay practices, preferences and perceptions.

• They are struggling with bills. In fact, younger consumers are significantly more likely than older consumers to say their income has decreased compared to before the COVID-19 pandemic and that it led them to miss bill payments. Furthermore, they are also more likely to say they currently have monthly bills that are past due because of their financial situation changing during the pandemic.

• They think payment processes could be simpler. Despite a generally high level of tech competence, younger consumers, especially Gen Z, are significantly more likely to think the bill payments experience is complicated.

• They are more likely to pay at the last minute. Nearly one in three Gen Z and Millennials report making an "urgent" or same-day payment in the past year.

• They are less patient when it comes to speed of payment. Nearly half of Millennials and Gen Z say they check the payment source (bank account, credit card statement, etc.) immediately after paying a bill to see if it processed. These younger consumers are also significantly more likely than older consumers to be frustrated by the length of time it takes for companies to process bill payments.

• They will change their payment channel for faster speed - and even pay for it. Almost half of Gen Z and Millennial consumers (49.1% and 47.7% respectively) would consider changing their payment channel or method of choice if it meant the payment would process faster. 14 percent of all consumers would consider paying a small fee if it meant their payment would process faster, rising to nearly 24 percent for Gen Z and 26 percent for Millennials.

In a world of instant, virtual gratification, it's easy to forget that for the most part, payments are not instantaneous. This is where we must ask ourselves: instead of having younger consumers (in particular) learn through experience, should we take the desire for speed as an opportunity for the industry to address the evolving consumer needs?

How real-time payments can help younger generations with bill management

Now that we've established a better picture of what a growing number of bill paying consumers are dealing with, we can dive into one of the rising solutions to these issues: real-time payments.

Real-time payments would make bill payments as straightforward as splitting the check at the table. Instead of receiving a "Request for Payment" (R2P) from only friends and family, they'll be able to receive requests from billers too. Overall, by incorporating real-time payments into bill payments, we have a better chance at making the chaotic world of bill payments a simpler one. It would make it more efficient, faster and frictionless, resulting in a better consumer experience. It would allow consumers to better manage their funds, make same day payments for their bills without having to incur a late fee, and get instant confirmation that their payment was received. ACI is driving innovation in real-time bill payments around the world, including participation in the FedNow pilot program.

For billers in all industries, the time is now to plan how they can leverage upcoming real-time payments functionality to deliver the instant, virtual gratification that younger consumers expect.

Download the Prime Time for Real-Time reportto learn more about real-time payments innovation around the world.