Unbanked, Underbanked Shun Electronic Bill Pay

February 25, 2010

Unbanked and underbanked Americans have more options for paying bills today than ever before, but the preponderance of these consumers choose to pay the paper way (cash, checks and money orders), and to do so either in person or by mail.

Among unbanked and underbanked consumers recently surveyed by Aite Group, a Boston-based research and consulting firm. 45% responded that they send bill payments via the mail; 41% opt for in-person payments. That leaves fewer than 20% as potential users of electronic bill payment services.

The Federal Deposit Insurance Corp. (FDIC) reports that one in four American households is either unbanked or underbanked. Numerous companies have introduced electronic payment products specifically geared to these consumers, including Wal-Mart, which offers electronic bill payment services through its in-store MoneyCenters.

Aite's research suggests there's insufficient motivation for many of these folks to switch to electronic bill payments, however.

"Electronic bill payment methods have a long way to go to gain greater acceptance among the unbanked and underbanked," says Gwenn Bezard, research director at Aite and co-author of the report.

"The majority of unbanked and underbanked consumers are not yet motivated to use emerging bill payment products," adds Judy Fishman, Aite analyst and co-author of the report, which was published earlier this month.

Amomg adults living in Asia, Africa and Latin America, 2.2 billion (62%) are unbanked