Wednesday , October 21, 2020

How Consumers Struggling with Covid-19’s Impact Have Paid—Or Not Paid—Their Bills

The impact of the economic downturn sparked by the coronavirus pandemic has affected payments of all sorts, but perhaps none so much as consumer bill payments. Indeed, some 56% of consumers said it was harder to pay bills because they’d lost their jobs or had sustained a reduction in income, according to a second-quarter survey conducted by Aite Group, a Boston-based financial-services research firm that talked to 3,039 consumers. Aite released its report, commissioned by BillGO Inc., Tuesday.

But the impact on bill payment was seen not just in reduced income but also in increased expenses taken on by consumers to deal with the pandemic. Fifty-three percent of consumers said it was harder to pay bills for this reason.

Forced to choose bills they can pay and those they can’t, consumers are holding off on donations (39%), followed closely by student loans (34%) and cable and Internet bills (26%), the report says. At just 3%, water and sewer bills are the least likely to be spiked, lower even that federal and state income taxes and property taxes.

The pandemic has thrown people out of work as businesses shutter, some permanently, in the face of measures states and localities adopted beginning in March to combat the virus’s spread. Others have retained their jobs but seen their income reduced because of shorter hours. The resulting recession follows a long period of economic expansion in the United States.

Overall, in the year through the second quarter, U.S. consumers paid a total of about 15.5 billion bills for a total of $4.6 trillion, the study found. Of those bills, consumers paid about 9.5 billion, or 62%, online through a biller or bank site or via a third-party site. Continuing a longstanding trend, some 76% of those online payments came through biller sites, up from 62% in 2010, while the share for bank sites has dropped to 22% from 38% 10 years ago.

The share of bill payments made online will only grow faster now because of the impact of Covid-19, predicts David Albertazzi, an Aite analyst who co-authored the report. This process will likely result in smoother–and faster–payments, he adds. “The long-term impact is that both [financial institutions] and billers are going to revamp the bill-payment experience (which has not changed for years) for consumers as more financial activities are now taking place online. Covid has accelerated the needs for these transactions/interactions to be made online,” he says via email.

The automated clearing house dominates payment methods, at 7 billion transactions, though consumers still write some 2.3 billion checks. Debit cards accounted for 2.5 payments, while credit cards were used for 2.6 billion.

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