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Payments Briefing: Why can’t Americans pay their bills on time?

  • This week, we explore why US adults are struggling to pay their utility bills, personal loans, auto loans, and mortgages on time.
  • We also look at how to stand out as a BNPL provider with Affirm’s VP of marketing and communications, Erika White.

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Payments Briefing: Why can’t Americans pay their bills on time?

Americans are struggling to pay their bills on time. Over half (51%) of US adults paid at least one bill late during the last twelve months, according to a recent survey by payments firm PayNearMe.

Young Americans are significantly more likely to pay late versus their older counterparts. Nearly 30% of respondents aged 18-29 missed more than four bill payments over the past year, while a quarter of those aged 30-44 did the same.

In comparison, only 19% of respondents aged 45-60 missed more than four payments during the same period, and only 8% of those aged 60 and above did the same.

Late bill payments by type

To better understand consumer attitudes around late bill payments, we need to determine not only how often they’re missing payments, but also which types of payments they’re missing most and why.

Source: PayNearMe

The survey results show that personal loan pay­ments are most at risk overall: nearly one in three US adults (30%) admit to making late payments on their personal loan, which makes this type of bill the least likely to be paid on time.

This is in line with previous industry trends, which have his­torically shown that consumers are likely to delay this bill because there is no chance of shutoff of service (as in the case of utilities), repossession (in the case of car loans), or foreclosure (in the case of mortgages). Of course, there’s still a chance of a negative credit impact.

Utility bills are not far behind, though. Only 53% of respondents say they never miss a utility bill, and 29% say they pay utility bills late “sometimes”, “frequently”, or “always”.

What’s causing the late payments?

Now let’s take a look at the data on the most common reasons behind late payments. While many people would assume that most consumers miss their payments due to a lack of funds, that isn’t the primary reason. It turns out that in most cases, the process of bill payment itself is what stresses consumers out.

29% of respondents say that the complicated bill payment process causes them stress and anxiety. Remembering login information is the top driver (52%) of this uneasiness.

Source: PayNearMe

Here are some trends across age groups:

  • Young adults aged 18-29 are most likely to miss payments, in part because they have a hard time keeping track of due dates (53%) and remembering passwords when they try to log in to pay a bill (51%).
  • People aged 30-44 are most likely to lose or overlook their bill in a stack of mail (28%) or in their email (33%). They are also most likely to become frustrated with the online bill pay process and not complete their payments at all (38%). 
  • Adults aged 45-60 are most likely to procrastinate or forget to make a bill payment (33%). They are also most likely to not have enough money in their bank account to make a payment (36%), and to have paid late because they lost their job due to COVID-19 (32%).
  • Baby Boomers (aged 60 and above) are the least likely to pay their bills late compared to other age groups.

How to encourage more on-time payments

So, how do billers make it easier for consumers to pay on time to avoid headaches on both sides?

Mobile payment options

Consumers of all ages agree that having more mobile payment options would make it easier to pay bills on time. 30% of respondents say that being able to pay bills using Venmo or PayPal would help them make more on-time payments.

Additionally, consumers say they can better manage their finances when they are able to view and store bills in a digital wallet. Given the option, 38% of people would be likely or very likely to pay their bills using Apple Pay or Google Pay. And more than a third of respondents (35%) say that having the ability to store bills in their Apple or Google Wallet would make it easier for them to pay bills on time. 


Sending reminders is also a good way to get customers to pay on time. 45% of people say receiving a text message or email reminding them when the bill is due would make on-time bill payment easier, and 38% say that a reminder that includes a clickable payment link would be even more convenient. 

Automatic payments

Many billers continue to use physical sign-up forms that must be filled out in person, making the bill payment process time-consuming and inconvenient for customers.

30% of people say that having a simple way to set up automatic payments would help them pay on time, which means it might be a good idea for billers to provide automatic payment options. When creating an auto-payment functionality, billers could drive more adoption by making online sign-up easy and secure.

By providing mobile payment options, sending reminders, and simplifying the user experience, billers can help encourage consumers to make more on-time payments. For the consumers who simply procrastinate completing their bill payments, a better online user experience could go a long way in encouraging them to pay on time.

I spoke with Anne Hay, head of consumer research at PayNearMe, to get her thoughts on what she sees as the most important takeaways from this research. Here’s what she had to say:

“We’ve seen that across generations, consumers are missing payments – but it’s not for a lack of funds. Our research shows that billers aren’t using the technology that consumers prefer or need to successfully manage paying their bills on time. 

When consumers were asked why they pay late, the top reasons were not “I don’t have money” or “I lost my job.” Those were actually in the bottom three. In fact, the top reason was that consumers simply procrastinated or forgot to make the payment, and right behind that, they lost a bill, or simply overlooked it. 

Nearly one in five adults say they paid a bill late because the online bill payment process was so complicated that they became frustrated and didn’t complete the payment.

When tens of millions of people are paying their bills late, that means billers need to adapt the bill pay process to meet customers where they are – and they are on their mobile phones.

Having a mobile bill pay strategy can increase on-time bill payments across all age groups. Our hope is that this data will help businesses create a plan for reducing late payments by improving their overall payments strategy.”

How to stand out in a crowded space like BNPL with Affirm’s Erika White

As the pandemic deepened financial stress for the average consumer, fintechs are looking to position themselves as friendlier alternatives to the traditional system. But given the wide array of options available, it can be difficult for marketers to find a strategy that makes their company stick.

And in a crowded space like Buy Now, Pay Later, differentiation and customer stickiness brings its own challenges. But the key is to help people demystify their relationship with money by providing support and understanding what their real needs are.

Speaking at Tearsheet’s Acquire Conference, Erika White, Affirm’s VP of marketing and communications, said that money has always been a delicate matter for people, and everyone has a different relationship with their finances. But for most people, it’s a source of stress and anxiety. Looking at consumer insights, Affirm found that the average consumer worries about money six times a day.

“That’s where we really want to intersect with the consumer – we want to guide and help them manage their finances, and really take managing their money from a place of angst or ambiguity to a place of control and confidence,” White said. 

One of the drivers behind this uncertainty around money is that many traditional financial products can be really complicated. There’s a lot of terminology an average consumer doesn’t understand, plus a lot of hidden tricks, leaving them skeptical and hesitant about a new financial product – especially one that feels like a credit card. 

There’s a barrier there that BNPL companies like Affirm want to overcome as they continue to engage with consumers. One way to do this is to position itself as a friendly entity that has customers’ best interests at heart and designing its products accordingly by not charging any fees for late payments. This way, customers won’t feel like the company is looking for them to fail, but that their interests are actually aligned. 

Beyond customer acquisition, another important part of a company’s market strategy is focusing on customer re-engagement. White noted the need to bring customized messages to people who have tried Affirm once to continue to pull them back.

This entails informing people of other products, such as savings accounts. The fintech is also on its way to launching a new debit card that will allow customers to pay now with a debit feature, or pay overtime with Affirm. 

“I think the consumer is very open – especially in financial services – to try something other than their bank, because most people don’t like or trust their bank that much,” said White.

Millennials and Gen Z are the most interested in trying out new things, and are also the vast majority of BNPL users, according to studies. More than 40% of BNPL users in 2021 were Millennials, while Gen Z represented around 30% of users. But being flexible also means that they can easily switch between services. 

As interest grows, so does competition. There’s a growing number of BNPL services, and checkout screens are getting increasingly crowded with all kinds of financing options. 

“The work we really feel we have to do is to help consumers make an educated decision about which player in the category is right for them,” White said. “And that’s why a lot of our marketing today is focusing on comprehension of our benefits. We have no “gotchas” at Affirm. That’s a policy – nothing hidden in the fine print, what you see is what you get.”

Highlights from our recent coverage

Fast approval fertile for stolen and synthetic identities: BNPL’s fraud problem

BNPL fraud rate grew by 66% YoY between 2020 and 2021. Bad actors are defrauding BNPL payment systems to steal items ranging from fast food to video game consoles. The ecosystem’s fast-approval loans, coupled with speed-oriented identity verification mechanisms and loose credit checks, have set the stage ripe for such activity. 

Through its partnership with Airbase, Amex dives deeper into SMB banking

The corporate spend space has seen a boom in funding recently. On February 16, Amex announced that its venture capital arm Amex Ventures is investing in spend management platform Airbase. Along with that, the credit card company is launching a pilot program that will let its SMB clients get access to Airbase’s spending platform. This also means that Airbase’s users can get access to Amex virtual cards.

Data snack: The rise of BNPL and what consumers want from installment pay options

BNPL continues to gain momentum, but what will it look like as a mainstream form of payment? A recent survey from Splitit sheds some light on the topic, from BNPL’s relation to credit cards, to demand for flexible installment plans.

What we’re reading

  • Atlantic Money wants to challenge Wise with even cheaper international money transfers (TechCrunch)
  • Marqeta turns in a $144 million quarter -- predicts net revenue growth of nearly 50% (Crowdfund Insider)
  • ACI launches PayPal, Venmo options for IRS filers (PYMNTS)
  • Brother-sister founders of Stax reach unicorn status following $245 million funding, to take on Stripe (Fast Company)
  • Selfbook raises $15 million to give hotels a way to accept ‘one-click’ payments (TechCrunch)
  • Dollar General moves into BNPL (Finextra)
  • Card processor Zeta secures $30 million in new funding (Finovate)
  • Visa to cut consumer credit fees for US small businesses by 10% (Reuters)
  • Mastercard and Visa block multiple financial institutions in response to Russia's invasion of Ukraine (Finextra)
  • BNPL consolidates: Zip to buy Sezzle (Finovate)
  • Cash App is the real cash-maker for Block (WSJ)
  • Klarna losses swell to $748 million (Finextra)
  • Wise, Remitly suspend money transfer services to Russia (PYMNTS)
  • SWIFT vets bid to make cross-border payments as easy as texting (Finextra)

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