Paper or Plastic?  U.S. Consumers Choose Electronic Methods over Paper Checks for the Majority of Bill Payments

2006 will go down in history as the landmark year when electronic methods – debit, credit cards and electronic checks – finally overtake paper checks in consumer bill payments.

Charlotte, NC – February 28, 2006 – Electronic payments are about to overtake checks as consumers’ preferred method for making payments, such as utility and phone bills. While check-based payments accounted for just over half of the 16.57 billion consumer bill payments made to businesses in 2005, they are declining rapidly according to new research from payment consulting firm PayStream Advisors, Inc.

In its recently released white paper – Consumer Payment Automation: Capitalizing on Changing Consumer Preferences – PayStream predicts that 2006 will be the year when consumer electronic payments will finally overtake checks and cash payments. “Following a five year trend, E-Checks, debit and credit cards and ACH payments are continuing to exhibit stunning levels of growth for recurring bill payments”, noted Henry Ijams, Managing Director of the Charlotte, NC-based firm.

Rapidly Changing Consumer Payment Behavior

Consumers’ desire for greater convenience and control over the payment process is the leading driver of change in the consumer payments area. “Consumers are actively exploring payment options that deliver the security, flexibility, and control they desire,” stated Henry Ijams.

The swift move to electronic payments is a strong indication of consumers’ hunger for additional convenience in their financial lives. PayStream believes that the rapid change is being accelerated by the wide choice of payment options made available today from many utility, phone and credit card providers.  At the same time, consumers have increasing access to cell phones and other communications tools such as the Internet and email, making it easier to make payments anytime.

Sush Koka, Senior Analyst at PayStream Advisors warned that “consumer billers such as utilities and insurance companies must keep pace with their customers’ evolving payment preferences or face the consequences—lower customer satisfaction and retention rates, impaired marketing effectiveness, slower collection times, and higher processing costs.”

PayStream’s Research Reports

PayStream Advisors studies providers of financial products and technology and creates reports to help managers make automation decisions. The Consumer Payment Automation white paper is for financial managers who want to learn about opportunities to improve consumer billing and payments operations and are interested in understanding trends that are altering the payment landscape. The report concludes with a framework to enable corporate managers to optimize their payment strategies. PayStream said it sees a promising future for the consumer payments automation industry as a whole.

PayStream is also developing a corporate insights report titled – Consumer Payments Automation: A Buyer’s Guide to Consumer Billing & Payments Solutions – specifically targeted toward large and medium biller organizations. This 60-70 page report, aimed at Fortune 1000 managers in billing, collections and customer service, will be published later this year and will analyze consumer billing and payment automation solutions and providers of electronic payment services. In addition to an overview of the market for these services, the report will include profiles of up to eight leading providers in the industry.

About PayStream Advisors, Inc.

PayStream Advisors is a technology research and consulting firm that improves the way companies plan, evaluate, and select emerging technologies to achieve their business objectives. Our services are designed to minimize risk and maximize the value associated with technology investments. PayStream Advisors assists clients in sorting through the growing complexities of IT applications related to financial automation with the goal of making objective, analytical, and actionable recommendations. For more information, call (888) 436-4335 or visit paystreamadvisors.com.