The Digital Payments Gap in Utility Companies

Although utility and consumer finance companies have made steady improvements to their electronic billing and payment systems in recent years, the pandemic has fast-tracked their embrace of digital payments.

As PYMNTS’ research has found, billing and collections executives at these companies are attuned to this new reality, with nearly half of them saying they expect digitization of their financial processes to be a key growth driver over the next five years.

Another 48% say they believe the digitization of the business environment will have the largest impact on industry growth during that period. Fifty-one percent said it is “very” or “extremely” important to improve digital billing, while 50% say the same about digital payments capabilities.

However, there’s a gap between desire and reality.

Fifty-three percent of utilities and consumer finance firms can accept and process all of their monthly bill payments digitally, but only 12% do so.

This suggests these businesses could greatly improve their efficiency by accessing this unused capacity. The billers PYMNTS spoke to process an average of nearly 80,000 bills a month and can tackle 71,900 of them digitally.

But these billers are processing only 62,800 bills digitally, meaning that more than a fifth of their bills are needlessly stuck in manual processing. PYMNTS also found that 96% of these billers accept digital payments via the web, but significantly smaller shares are accepting digital payment options such as mobile wallets (15%) and text-to-pay (5.8%), even though they have the capacity to process additional types of digital payment methods.

The companies PYMNTS spoke to are at different stages of their digitization initiatives. Nineteen percent say their plans are underway, while 13% say they’re planning to make investments in the next year. One-third of billers said they will not start accepting digital payments for another year.

And not every company is prepared to digitize its billing and payments processes. Of the billing and collection executives we surveyed, 8% said they were unsure about their plans, and 27% have decided against upgrading.

This suggests that many executives aren’t aware of how digitization could benefit their businesses or that they worry the necessary technology may not be available or affordable.

For more on how utilities and consumer finance firms can enhance their billing, download The Digital Payments Edge, a PYMNTS and ACI Worldwide collaboration.