Consumers saved $4.3 billion using expedited payment services, study says

Despite a recovering economy, American consumers were able to save themselves $4.3 billion in late fees using expedited bill pay services in 2010, according to a recent study by Javelin Strategy & Research. Although expedited payments are not available through most banks, 40 percent of Americans used these services to pay bills and avoid late fees, according to the study.

With the recent overdraft reform, Durbin Amendment and CARD Act, expedited services stand to face significant financial opportunities. Javelin looked at four available expedited routing options to determine how they met consumer and biller needs - direct biller connection, money transfer services, overnight check and virtual card technology, such as PreCash's Billocity. Despite the possibility of receiving increased financial benefits, only seven of the top 40 banks in the country offer expedited payment services.

"What makes the PreCash Billocity expedited bill payment service unique compared to other expedited options is that it not only guarantees expedited payment to the biller, but it also creates a source of revenue for banks and financial institutions that is currently an expense," said Steve Taylor, CEO of PreCash. "Billocity helps consumers avoid late fees, service disruptions and negative credit ratings and allows banks, payment processors and payment consolidators to offer consumers a faster payment for free."

According to the study, 58 percent of responding consumers who have made an expedited payment through a biller would like to have the opportunity to do so through a bank, which Beth Robertson, director of payments at Javelin, said banks should begin to offer. By 2015, consumers are expected to save $6.3 billion using expedited payment services.

Whether or not banks tap into this burgeoning market is up in the air at this point, but American consumers continue to spend. According to a comScore study, in the 2011 first quarter, Americans spent $38 billion for online goods alone, which is an increase of 12 percent from the 2010 first quarter.

"Faced with rapidly rising gas prices and stubbornly high unemployment, consumers continued to take advantage of the internet’s lower prices by shifting their spending from offline retail stores," said comScore chairman Gian Fulgoni. "In fact, in the first quarter, the growth in ecommerce spending was roughly double that observed at offline retail."

With American consumers expected to continue their spending, banks may want to look into offering expedited payment services to not only generate revenue, but meet consumer demand for such a service.