Online payments take center stage

By CheckFree Corp.

More and more US online households are turning to online payment to settle their bills, replacing traditional checks. According to "The Latest Consumer Billing and Payment Trends," a survey conducted every nine months by CheckFree Research Services with The Marketing Workshop Inc. and Harris Interactive, 69% of US online households are paying at least one bill online, up from 56% in March 2005.

The survey, which tracked bill payment behavior, polled 2,230 individuals aged 18 years and above who paid at least some of their household bills. It included consumers who paid any bill from a single "consolidated" Web site, such as a bank, and those who paid individual bills at a "biller direct" Web site, such as a telecom or credit card company.

Online payments are steadily replacing check writing as the way to pay bills among those surveyed, with paper checks used for 37.5% of all bill payments and online payments used for 35%.

Interest in subscribing to a consolidated bill payment service was also higher among households that did not currently pay bills online, with 19% indicating they were "definitely interested," up from 15% last year.

Among consumers who recently enrolled in a consolidated service, the most influential source of information in their decision was the bank branch, followed by the bank Web site and word-of-mouth recommendations. Over the past three years, the percentage of consumers citing the influential role of the branch had almost doubled.

"As paying bills online has evolved into a mainstream consumer activity, ironically, face to face interactions such as conversations with account managers or tellers, and brochures given out at the bank branch, remain the most effective way to market the service," says Matt Lewis, executive vice president and general manager of CheckFree's Electronic Commerce Division.

"The Web site must also be easy to use to lead interested consumers through the enrollment process, then on to making payments and receiving bills online," he adds.

Consumers who currently paid bills online at consolidated sites said they did so because of convenience, ease of use, control and speed of payment.

Asked to rate the most important overall benefit, 28% of current users ranked saving on paper, stamps and hassle as the biggest benefit, followed by 16% who said paying via consolidated sites was the easiest way to pay bills.

Other important benefits included ensuring that bills were paid on the day of their choice with 12% of consumer votes, and the fact that online payments were faster than paying by check with 11%.

Higher consumer satisfaction

Electronic bills (e-bills) contain the same information as a typical paper bill and are delivered directly to a consumer's consolidated bill pay account or a biller direct Web site. Of all online consumers, consolidated users with e-bills were the most satisfied with their bank, as well as their online banking and bill payment services.

Some 61% of consolidated users with e-bills rated themselves as very satisfied with online banking, against 54% without e-bills and 51% of consumers who used online banking but did not pay bills online.

 

E-bill users said they were more likely to recommend electronic bill payment to a friend or relative, making 1.9 recommendations on average over the past three months, against customers without e-bill service who made 1.2 recommendations.

Consumers who currently used e-bills said the top three reasons they did so was to make sure their bills were paid on time (26%), click-and-pay convenience (22%), and the presence of email reminders (17%).

Cost has virtually been eliminated as a barrier to adoption. Currently, 91% of users who pay their bills from a single consolidated Web site, such as a bank, brokerage or credit union, say they receive the service for free.

Among the surveyed consumers who are not currently paying their bills online, the most common barrier to adoption was lack of information about the service, followed by security concerns.

According to a study released by Javelin Strategy & Research and the Better Business Bureau and sponsored by CheckFree, Wells Fargo Bank and Visa USA , when known, 90% of unauthorized access to sensitive information is through non-electronic traditional channels, such as a lost or stolen wallet.

The study recommends that consumers replace paper invoices, statements and checks, which can be stolen from unsecured locations such as mailboxes, with electronic versions to help prevent identity theft.

It also recommends that consumers monitor bank account activity through the phone, ATM or Internet to detect potentially fraudulent activity more quickly than through paper statements.

 

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