In many respects, paying bills online has become just as American as mom and apple pie. For all the right reasons, it’s a valued, trusted, and beneficial practice. Yet today, most Americans pay very few bills online per month. What’s causing this inertia?
There are very real and immediate benefits to taking bill payment out of the paper realm and moving it online, like bill and payment tracking, saving time, paying bills at the last minute, and saving the environment, to name a few.
Everyone -- from the local utility, to credit card companies, department stores, banks, and schools -- is allowing and even encouraging online payment. This appears to be a case where perfect synchronicity exists between the desires and practices of supply and demand.
However, many consumers still fear for the safety of their personal information when transacting online. According to a recent JupiterResearch/PayPal survey, 54 percent of those surveyed said that keeping their financial information secure was also a major factor in determining what Websites to use. Many online bill paying sites, such as BillCharger or Billeo, use the standard AES 128-bit encryption. Many sites also store your personal data in encrypted files on your own computer, as opposed to a centralized server.
While a certain amount of inaction can be blamed on reluctance or fear to change, we can’t ignore the fact that the behavior of some billers plays a role in slowing adoption.
Some banks, mortgage companies, and other billers charge fees when consumers pay online. For example, a mortgage company may allow you to pay your bill via ACH (the automated clearing house that moves money from the consumer’s bank account to the biller’s bank account) or via credit card but charge you a hefty fee to do so, especially if you want to pay on the last day your bill is due. There’s no cost-based reason for this fee -- your bill technically is being paid and paid on time.
Some billers will allow you to pay online, yet they still haven't built the systems for electronic delivery or presentation of statements, which is unnecessary and more wasteful.
More billers are realizing that offering free and easy electronic bill paying attracts and keeps customers, results in faster collection, fewer bounced checks, and lower paper costs, and allows them to reduce waste. Trade organizations, such as The Electronics Payments Association (NACHA), are taking active efforts to educate and assist billers to shift from paper to electronic. Many billers are reducing or eliminating fees to encourage online bill payment, enabling them to differentiate themselves from competitors.
Online payment options are increasing not only in number, but in creativity. Companies like eBillme, Green Dot, and BillMeLater provide consumers with greater financial options including payment via prepaid money cards, instant, online credit approval, and purchase and payment anonymity via third-party payment “escrow” agents, and billers are making these choices available on their Websites.
Innovation, consumer demand, and the desire to reap greater revenues through online transaction options will lead to greater adoption of online bill paying over the next two years. And, while there may be some “old school” thinking exhibited by consumers, sellers, and banks, ultimately this won’t stymie a practice that puts money in everyone’s pockets.
— Murali Subbarao, Founder and CEO of Billeo