Moneyhub reveals UK consumers are missing important payments due to the antiquated payment solutions on offer to them, potentially damaging their long-term financial wellbeing, and limiting their choices when it comes to credit.
According to new research by Moneyhub’s Payments Division, three in ten (33%) UK consumers say they have missed a payment in the past year with 8.3% missing payments each month.
The most commonly missed payments are:
- Utility Bills – 41%*
- Council Tax – 29%*
- Credit card repayments – 28%*
29% of those who had missed a payment or gone into their overdraft had money in another account and were potentially causing themselves financial pain inadvertently.
Of those, 42% said that having automatic payments that would move money if one account didn’t have enough would help them to avoid missing a payment or going into their overdraft. A further 38% said receiving a notification of a payment due to be collected would similarly help. Highlighting the positive impact technology such as smart nudges and open banking payments can have.
With Open Banking payments, the provider can much better support the consumer by preventing situations where the consumer is blindsided by an unexpected price increase or payment and at the same time making it very easy for the customer to pay or transfer funds.
The research also shows a disconnect between the 35% of consumers who are paid other than monthly and the rigid structure of direct debits requiring the consumer to manage their budgets for monthly payments when they themselves are paid weekly or fortnightly.
Smart Payments such as Variable Recurring Payments can help to alleviate the pressures by allowing payments to be made when it works for the individual.
Mark Munson, head of payments at Moneyhub explains why these newer payment methods might help alleviate pain points for UK consumers and help deliver a better financial wellbeing.
“Direct debits will be 60 years old in 2024, however today customers demand greater flexibility for bill payments that match their circumstances. New Smart Payment plans facilitated by Moneyhub’s Open Banking Payments division will allow businesses to offer customers a far greater choice of payment schedules - helping customers to stay on track and reduce bill anxiety.
“In the future, it is our hope that more companies will take a flexible approach to payments. When people are paid weekly or bi-weekly, it can be hard to then budget for a big one-off payment at the end of the month for their bills. Using new technology like variable recurring payments businesses can help their customers pay on time and budget more effectively, reducing the strains and stresses they currently face.”
