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Updated: February 11, 2013

What a Difference a Day Makes – Or Does It?

By Eric Leiserson, Senior Research Analyst, Fiserv

The recent U.S. Postal Service announcement that it plans to end Saturday letter delivery made big headlines, but it wasn't entirely unexpected for those in the industry who depend on the USPS for delivery of bills and statements. This chart spells out the economic realities of declining mail volume pretty clearly:

 Trends of Mail Volume, Revenue and Adjusted Expenses

(Source: 2012 USPS 10-K)

So what impact will the end of Saturday delivery have? The short answer is no one knows for sure. In discussions we've had with billers and financial institutions, most have anticipated the need to modify their workflows, billing cycles and distribution schedules to adjust to five day mail delivery. From the consumer point of view, we asked in our 2010 Billing Household Survey (shortly after the idea of eliminating Saturday delivery was first proposed) whether the change would make it more likely that they would pay bills electronically. While the majority of surveyed consumers said it would make no difference in whether they would pay bills electronically, almost a third said they would be more likely to do so. The same holds true for their likelihood to receive e-bills rather than paper bills.

 Does the elimination of Saturday delivery change whether you pay bills online?

(Source: 2010 Household Billing Survey, Fiserv)

However, at the macro level, this is a significant shift to a major distribution center and there will be long-term implications. One thing is for sure: no one sees mail volumes returning to previous levels. There is already a permanent and lasting demographic shift that is impacting consumer preference towards digital. The echo boomers and Gen-Y generations are fully connected. Paying a bill with a check in the mail is almost a novelty to them.

For billers, the elimination of Saturday delivery highlights their ongoing need to think about consumers' preferences in how they receive and pay bills, especially the growing segment that prefers to receive and pay them electronically. This means offering online payment capabilities through billers' websites, e-bills that are delivered through financial institution websites, and now mobile-enabled payment capabilities through apps that can provide alerts and reminders. They cannot, however, ignore the segment that doesn't have access to a computer or smartphone, or prefers other channels. So options like walk-in payments at retail storefronts and phone-based payments are still important, as is adjusting their workflows for those who still prefer paying bills through the mail.

Consumers are all different, so billers and financial institutions should support a full range of convenient ways for them to receive and pay their bills. A well rounded and holistic approach will help billers mitigate the risk of these changes to one of their primary distribution vehicles and, in the process, help increase customer satisfaction and improve the bottom line.

Eric Leiserson

Eric Leiserson is a Senior Research Analyst at Fiserv