Monday, February 7, 2011

How Much Longer for Transaction Mail

The Postal Journal has just posted three recent studies looking at the changing ways that consumers and businesses receive and pay bills.    The articles as a group suggest that consumers are increasingly looking toward web and mobile methods of handling bills and web, mobile and in-person methods of paying bills.

The studies, listed in order of their publication and their relavent conclusions are as follows:

Consumers Shift to ePayment to Get Control Over Finances 

 With the release of the 2010 Billing Household Survey by Fiserv Corporation provides a significant update on how the availability of multiple web and mobile based payment and bill presentment delivery modes has changed consumer use of traditional and new modalities. The survey, conducted by The Marketing Workshop, showed that consumers that have online access are gravitating toward payment options that provide them more control and allow them to hold onto their money as long as possible. In particular, the number of online consumers that use checks declined to 54.5 million households, below the 65.0 million households that use either biller direct or financial institution bill pay services.

Federal Reserve Study Shows More Than Three-Quarters of Noncash Payments Are Now Electronic

The Federal Reserve’s 2010 study of noncash payments revealed that in 2009 more than three-quarters of all U.S. noncash payments were made electronically, a 9.3 percent annual increase since the Federal Reserve’s last study in 2007. This growth and other statistics in the study emphasize consumers’ increasing adoption of electronic alternatives for payments in the United States. The 2007 study revealed that in 2006 roughly two-thirds of the payments were made electronically.

e-Bills Will Surpass Paper Bills By 2016

This study conducted for NACHA, the national electronic payment association by Blueflame consulting showed that 26.6% of all bills are now sent electronically with the largest percentage among customers of educational institutions and wireless telecommunications companies.  The study also showed that on average firms surveyed had e-bill volumes grow by 32.3% on average over the past two years.   The study indicated that at this point consumers are more amenable to e-billing than businesses.

 Implications of These Studies

These studies confirm the Boston Consulting Group's (BCG's) conclusion that the primary purpose of mail in 2020 will be the delivery of advertising as the volume of bills and payments in the mail decline.   These three studies suggest that the Postal Service and others interested in the future of the Postal Market need to take a second look at the forecasts developed by BCG and presented publicly last spring in order to determine if the more recent data suggests a faster or slower decline in transaction mail than previously believed.

From a policy standpoint, these studies suggest that more information is needed about:
  • the proportion of the population that are only using mail continues to handle bills and payments continue to shrink and better information is needed about the characteristics of U.S. households that continue to use mail as their primary means of handling transactions; 
  • how the shift of the mix of mail senders affects demand for collection and delivery services and the accuracy of the Postal Service's understanding of the business needs of its advertising mailer and parcel shipper customers;
  • the appropriate role of the Federal government regarding the maintenance of an infrastructure to deliver advertising containing media (both direct mail and periodicals) when the volume of printed communications handling transactions or information becomes significantly smaller; and
  • the relevance of the Postal Service's money order product when unbanked individuals are increasingly using walk-up electronic payment services rather than mailing postal or private sector issued money orders.

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