Automatic payments surpass cheques
October 28, 2005 Automatic payments have for the first time surpassed cheque writing as the dominant method for paying recurring bills, according to the results of a MasterCard International consumer research study. The 2005 MasterCard Recurring Payments Awareness, Behavior & Attitude study showed that more than two thirds of U.S. households (67 percent) now pay some recurring bills automatically compared to those writing cheques (64 percent). Nearly four in ten households link payments automatically to a credit card (38 percent) and three in ten households charge them automatically to a debit card (31 percent). In addition, among automatic bill paying households, the number of bills paid automatically rose in the last five years, from an average of 3.1 bills per household in 2000 to 4.4 bills today. During the same period, the number of cheques written declined by nearly 50 percent, from 4.4 to 2.4 among these households.
"Consumers have enthusiastically embraced the convenience of using their credit and debit cards to automatically pay their recurring bills," said Donna Johnson, Vice President, New Markets, US Acceptance, MasterCard International. "They value knowing their bills are paid on-time, without worrying about late fees, and even earning rewards, depending on the payment card they use. While there's still plenty of room to grow, our study shows that more consumers than ever realize that cheques simply cannot match the advantages of automatically paying recurring bills through a credit or debit card," added Johnson.
While credit card-based recurring payments remain the number-one method of automatically paying bills, debit card payments have shown the most growth, with the proportion of households using debit cards to automatically pay recurring bills increasing from 26 percent in 2000 to 31 percent in 2005 (see chart).
The survey also found that nearly half of the credit cardholders (47 percent) and more than half of debit cardholders (53 percent) would consider adopting or adding additional recurring payments.
The service categories with the highest proportion of customers using an automatic method for paying recurring bills include telecom, online/internet services, health club memberships, Internet service providers, commuting expenses and toll-paying. Among the bill-payment categories expected to grow are telephone, insurance, utilities and cable/satellite television as well as magazine subscriptions.
Nearly six in ten (57 percent) consumers who use debit card recurring payments, and half (50 percent) of those using credit card recurring payments, cited convenience as their primary motivation to begin automatic recurring payments. About two-thirds of consumers (67 percent who use debit card recurring payments; 64 percent who use credit card recurring payments) said convenience was the reason they continued to use the recurring payments option.
About the Study
MasterCard International commissioned the study as a part of an ongoing effort to better understand recurring payment behavior and attitudes among consumers, including the use and appeal of different payment methods. In 2000 and 2003, MasterCard commissioned related studies, which were used as benchmarks for this year's findings. From May 25 - June 5, 2005, MasterCard International conducted in-person interviews with 762 consumers from 25 geographically dispersed markets. Of the 762 respondents, half were men and half were women. All respondents were between the ages of 21 and 64, responsible for most/all of their household bill paying, and owned a personal credit card and/or debit/ cheque card. The margin of error for 762 completed interviews is +/- 3 percent.