Increasing Autopay and Tackling Brazil’s Late Fee Problem
How do you get consumers to choose payment methods that are better for their financial health? And how do you shift cultural norms to improve financial behavior? We partnered with a top Brazilian bank to solve this challenge through behavioral design—driving a 73% increase in autopay among account holders.
The Challenge
Increase Autopay
Autopay, a payment method offered by banks and financial institutions, simplifies bill payments by automatically debiting recurring expenses like utilities and phone services from a client’s account. This helps reduce late payments – a challenge affecting 46.2% of Brazilian households who have at least one overdue bill, which leads to penalties and financial stress. Despite autopay’s benefits, only 23% of Brazilians used it as of a 2018 study.
Unsurprisingly then, autopay was underutilized by our client’s existing customer base, only 3.5% of whom were using the feature. To address this challenge, the bank teamed up with Irrational Labs to increase autopay enrollment among current account holders.
Identifying Behavioral Barriers
Our behavioral diagnosis identified two major barriers to autopay adoption:
- Limited Attention: Users’ attention is finite, making it difficult to capture their focus to consider activating autopay, especially when they are focused on other tasks within the banking app.
- Status Quo Bias: People tend to stick with their default options, especially if it requires effort to change. For the bank’s cardholders, manual one-time payments were the default behavior.
Our Experiment: Get Attention and Prompt a Decision
We aimed to develop a low-cost intervention that could cut through the cognitive clutter of daily life and make autopay more salient. Research indicates that simply asking people to make a decision can increase the opportunity’s salience and drive behavior change. We hypothesized that users who were prompted to decide actively about autopay would be more likely to adopt it and break from the status quo of manual payments.
We developed two versions of a pop-up prompt that opened the next time the user logged into the banking app:
- Passive Choice Condition: This prompt asked users if they wanted to activate autopay. The prompt featured a simple opt-on CTA structure: ‘activate auto debit’ or ‘not now.’
- Active Choice Condition: This prompt required users to make a more deliberate decision with CTA options: ‘YES – activate auto debit’ or ‘REFUSE – I’ll remember to pay manually later.’ We hypothesized that this approach would be more effective, as it emphasized selecting one option over another and highlighted the negative consequences of sticking with the status quo – continuing to remember to pay manually each month.
We compared these conditions to a baseline Control Condition, where no prompt was displayed. In the control condition, participants have the option to turn on autopay within the app settings or when setting up bill pay. Participants in this experiment included 80,000 bank customers who had not yet signed up for autopay.
Results: Who Adopted Autopay?
In the baseline control group, the autopay conversion rate was 0.43%. Both prompt conditions led to higher conversion rates. In the Passive Choice Condition, the conversion rate increased to 0.60%, representing a 40% improvement over the control group, though this increase was not statistically significant. In the Active Choice Condition, the conversion rate rose to 0.74%, marking a significant 73% increase in enrollment compared to the control group.
Want to learn more about this work, or to partner with us to leverage behavioral science to solve your toughest financial services or other product problems? Contact us at [email protected].