This September, Paymentus Holdings Inc. and PYMNTS Intelligence released the Service Commerce Performance Gap Report study measuring differences between what consumers expect from billing and payment experiences and what service providers believe they deliver. PaySpace Magazine team sat down with Chris Trainor, Head of Platform Strategy, Innovation and AI at Paymentus, to discuss the findings in more detail.
The report finds that up to $330 billion in annual service bill revenue is at risk due to payment delays tied to billing dissatisfaction. Chris Trainor believes this is partly due to the fact that customers and service providers are living two different realities. Unfortunately, the disconnect carries very real consequences for both perceived service quality and actual revenue service providers get. Discover more insights in the interview below:
- Your recent research revealed a striking gap between service providers’ and customers’ perspectives on billing experience. Why do you think providers are so out of sync with their clients?
Service providers have underestimated what billing and payments can bring to their entire operation beyond just revenue. As our study shows, the value of the transaction far exceeds the balance due.
The disconnect between service providers’ and customers’ perspectives is rooted in how they view the process and measure success. Providers generally view billing and payments as an operational function and transactions as discreet events rather than existing on a continuum. If a bill goes out and a payment is received, that’s success.
The customer lives a far different experience. A bill arrives but they don’t understand all the charges. Money is tight and they don’t have enough to cover the entire balance and need to shift the due date. They are busy and want to pay it quickly, but have to reset their username and password first. Or they start the process on their phone and then try to finish it on their laptop but must reauthenticate first and start from the beginning again.
Even if the bill ultimately gets paid, was that really a successful interaction from the customer perspective? How much time did they have to take out of their busy day to send money to a service provider? Did the experience enhance the relationship between the customer and service provider? And, most consequentially, what will it mean for the future of that relationship?
Customers and service providers are living two different realities. And the disconnect carries very real consequences.
- Have you observed similar gaps in other payment-related surveys? Or is it unique to the service categories studied this time?
Being a leader in the service commerce sector for more than two decades, we have recognized this dynamic for a long time. This is why we have continually emphasized the importance of the customer experience and have evolved our technology platform to make the entire process feel more intelligent and intuitive for customers and for service providers.
This survey is the first time we’ve gathered the data to not only identify the disconnect between what customers expect and what service providers are prepared to deliver, but also quantify the financial consequences of that divide. In the four service categories we studied, upwards of $28B in delayed payments every month – more than $330B per year – can be attributed to customer frustration with the billing and payment process. What’s more, the level of billing and payment dissatisfaction directly tracks with a customer’s intent to change service providers.
- For more than half of consumers, the billing experience is a major factor in their overall judgment of service quality. While for one of the categories you studied (auto loans), that could be easily justified, since money movement is the essence of financial services, I still wonder how poor billing can cloud the quality of service for insurance, utilities or healthcare. Can you offer some explanation?
Service providers have done a remarkable job of becoming an invisible part of our lives. Utilities have invested billions of dollars to make sure that when you flick a switch and the lights to turn on. You hold homeowners and health insurance because not having them would be impractical – or impossible. But how often will you interact with those providers out of need?
The simple fact is that the monthly billing cycle is the most consistent, recurring touch point between a service provider and a customer. Customers expect to pay bills each month. When they encounter clunky authentication, limited payment options, or few self-serve options, they are more than minor inconveniences, they reflect whether a service provider values them and their business. In that regard, the bill pay experience must be considered as part of the total experience. It’s not just about keeping the lights on or providing a safety net through insurance, it’s about building relationship value.
Service providers consider and measure performance in discrete silos: uptime, delivery, CSR, customer support. Customers experience service relationships as a continuum. And the most constant interaction on that continuum is the monthly bill.
- Large share of customers fail to understand the billing mechanics. What do you think providers could do to boost the transparency of bill calculation, scheduling and processing?
Digital accessibility is the real disconnect. Most service providers already offer the options that customers want such as payment plans and adjusted payment schedules. They even have programs that will save customers money or provide them with services more closely tailored to their specific needs. The challenge is that most of these options and programs are gated behind a phone call.
Customers – especially Gen Z and millennials – who will be paying bills the longest, want to find answers, schedule payments, and make adjustments on their own, and receive confirmations instantly. These consumers have become accustomed to self-serve models in nearly every aspect of their lives and become easily frustrated when they encounter barriers.
- Seventy percent of providers cited legacy systems as a barrier that prevents them from making the billing process better. With plenty of fintech solutions on the market today, why does that still remain a major problem?
The root of the legacy system challenge is the proliferation of point solutions that litter the billing and payment landscape. Delivering an end-to-end, intelligent service commerce experience requires integration across disparate systems. Service providers have neither the expertise to integrate these complex systems nor the capital budgets to scrap their legacy cores and build from the ground up.
That’s why we have built and patented an AI-native service commerce integration layer to facilitate back-end legacy system integration at scale. AI-enhanced integration can normalize data from across disparate systems, as well as interpret business rules and comply with security and governance protocols to establish an intelligent core that can then inform customer-facing interactions.
- Do you think the conditions in which healthcare and utility service providers operate (i.e.,people often don’t have much choice in which service to use) might negatively influence their desire to improve customer relationships and experience?
Improving the billing experience isn’t just about retention; it’s about bottom-line performance. Every service provider is competing, because every customer will prioritize their bills in various ways. For most, the easiest bills get paid first. Those they have questions about or can’t pay how they want, get held until later. So while a service provider may not have a direct competitor in their market, they are always competing to get to the top of the monthly bill pile. DSO, payment reminders, fielding calls to customer service to answer a question or request a change, service shut-offs and re-connects, collections – all have a negative impact on revenue, business performance and provider reputation.
- Why do you think friction points most painful for consumers (e.g., contacting support and limited control over payment timing) are also most ignored by providers as potential issues affecting customer experience?
It’s hard to say that they are being ignored. Billing and payments is not the core function of a service providers’ offering. They may believe that customers actually want to contact a live representative to address an issue or adjust a due date.
Consider this: 4 in 10 consumers in our study said they encountered a billing issue that required a call to customer support to resolve. At the same time, 95% of service providers rank their ability to resolve issues as ideal or better.
Providers count a customer service representative resolving an issue as a win, but their customer is frustrated by making the call in the first place. Providing a better billing experience is about recognizing that customers want to engage on their terms – not yours.
- In your observations, why would Gen Z service ratings be much lower than other generations? Are they just used to better payment conditions as the default, or is the harsher judgment based more on psychological factors?
As digital natives, Gen Z has a much lower friction tolerance, especially for digital experiences that do not track with their experience using apps, digital wallets and eCommerce rails. Also, for older bill payers who remember bills arriving in the mail and being paid by check or in person at a counter, the digitization of billing and payments has represented a sea change. Gen Z does not have this same frame of reference. They just know that the system today does not meet their expectations.
- Did you also track any differences in service quality assessment among demographic groups beyond age (e.g. based on gender, ethnicity, income/education levels, etc)?
Our study focused on the gap between bill payers in general and service providers across the four major categories – and the consequences of those differences. We did not stratify consumers across additional demographics. That said, there was a significant correlation between affordability and frustration tolerance.
The respondents who said they struggled most keeping up with their bills and household budgets ranked every dimension of the billing experience lowest across every category. We know frustrated customers delay bill payments on purpose. For service providers, the ongoing affordability crisis is a call to action to remove as much friction from the process as possible.
Chris Trainor is the Vice President of Platform Strategy, Innovation & AI at Paymentus. He has more than 15 years of payment and technology experience and has been particularly influential in the growth and development of Paymentus’ AI-powered capabilities. Previously, Chris has served as Senior Vice President for Bank of America and spent five years as the Product Management and Innovation Executive in the bank’s Insurance Services Group.
