Banks Try to Pave the Way to Online Bill Paying
EVE TAHMINCIOGLU New York Times
RON DILL, a sales manager for a software company in Dallas, had never given much thought to paying his bills electronically. But his bill-paying habits changed last August after he walked into a local Bank of America branch. He had gone to the bank to open a basic joint checking account. While he was there, Janet Meier, a bank employee, convinced him to try the bill-paying service on Bank of America's Web site. Ms. Meier demonstrated the service and set up a free online bill-paying account for him. As part of the demonstration, Mr. Dill made a $1 test payment to himself; a week later, he said, a check arrived at his home. Mr. Dill, 43, says he now pays more than 20 bills online every month. He saves more than $7 in stamps, not to mention the time he previously spent on paperwork and filing. "Now I sit down with my laptop in front of the TV and I can pay them," he said. In some ways, Mr. Dill, busy and technologically savvy, is a prime candidate for online bill paying. He is among a growing number of consumers who have decided to deal with their monthly bills in cyberspace. About 19 million American households do some bill paying online, up from 7.8 million in 2001, according to Bruce Cundiff, an analyst at Jupiter Research, a technology research firm in New York. By 2008, he said, about 61 million households are expected to pay at least some bills online. Beth Robertson, a senior analyst at TowerGroup, a research firm based in Needham, Mass., estimated that about 40 percent of major creditors already had electronic payment programs, and that an additional 35 percent planned to introduce them in the next two years. "The big drivers are that these services are increasingly being offered for free, and a lot more billers are making electronic bill payment available," she said. Also fueling the trend, she and other experts say, are the spread of high-speed Internet connections and improvements in bill-paying Web sites. The training inside branch offices is also bringing more people on board. Bank of America says 3.2 million customers use its bill-paying site, up from 1.8 million at the beginning of 2003. Some banks are offering incentives. Last year, Chase began sending letters to customers who were already doing some banking online but were not yet paying their bills electronically. It offered them $5 for each bill they paid online, up to $25, to help them start. "We found that works well; once they try it they're hooked," said Leslie Ehrlich, senior vice president for marketing of the bank's electronic channels group. The number of customers paying bills online has risen 25 percent since 2002, according to Chase, which would not be more specific. The average Chase customer who pays bills online usually pays about eight a month, Mr. Ehrlich added. Banks and other companies, of course, have a vested interest in having customers deal with bills electronically. Online payments mean less expense for printing, handling and mailing paper. But Internet bill paying has a long way to go before consumers give up paper forever. For one thing, most people who pay bills online still receive them in the mail. And some people just savor the ritual and perceived control of paying bills with pen and checkbook in hand. Still, there are potential time-saving advantages as the process is streamlined and as payment choices expand. Many online bill payers now go directly to businesses' Web sites, like those of telephone or utility companies. Others like to pay several bills from one site. That is where the banks and brokerage firms come in, along with services like Yahoo Finance, Paytrust and Checkfree. While some of these services are free - though banks may require that you keep a minimum balance with them - others charge $5 to $13 a month. When paying a utility or other company directly, customers can log on to its Web site and authorize a credit card or debit payment. Verizon, among many other utilities, offers customers the option to make automatic monthly deductions from their bank or credit union accounts. Verizon will stop sending paper bills on request, but customers can still read complete bills online, including the usual promotional material and regulatory notices found in envelope stuffers, according to Maria Malicka, executive director of e-commerce at Verizon. The company will send a notice via e-mail when a new bill is available online. The number of Verizon bills paid online, including automatic and one-time debits, doubled in 2003, to 6.6 million from 3.3 million in 2002, she said. Of course, going to the Web site of each creditor can be time-consuming. The average household gets 13 monthly bills, according to TowerGroup. Many people prefer to consolidate the process. Banks and independent financial Web sites offer a one-stop approach, allowing consumers to handle payments in one place on everything from mortgages to lawn services. Users of these one-stop shops create a password-protected account. They may need an hour or so to set up their profile, listing names, addresses and account numbers of the creditors they want to pay - and when. The services, however, often have information about major companies in their systems, so users need only click on the right one. Automatic monthly payments can be set up for fixed charges like rent or the minimum payment on credit cards, although these, too, can be adjusted as needed. Bill payers who need to send out a paper check, instead of transferring the money electronically, can do so online as well. When Mr. Dill needed to reimburse his father in Jacksonville, Fla., for football tickets, Bank of America issued a check for him and mailed it at no charge as a courtesy. (Of course, he could also have written a check himself.) Although online payments are often debited immediately from a bill payer's account, the time they take to clear can vary. Payment directly to a company through its Web site is often completed in a day, while payment through a third party like a bank can take two to seven days. Of course, not all services let bill payers take funds from a variety of accounts. Bank of America, for example, does not allow customers to pay bills directly from outside brokerage accounts or credit unions, but Paytrust does. For people who want to see their bills in their entirety online, there are companies that provide the service, but customers will have to redirect their paper bills to these firms, which, in turn, scan the bills into their systems. Paytrust (www.paytrust.com), a product of the Metavante Corporation in Milwaukee, is among the sites offering this service, for which it charges $12.95 a month. Paytrust and some other services also offer to send CD's at year-end with all billing information, for about $20. Many banks also allow customers to view a year's worth of bills so they can print and file them for tax or other purposes. This kind of service is usually free. Cesar Malaga, 34, a utility technician from Bellport, N.Y., says he still likes to get all his bills in the mail, even though he has been paying them online through Chase for nearly three years. "If something goes wrong I want to be able to return to a piece of paper," he said. Lynnette Khalfani, 35, a writer from West Orange, N.J., knows firsthand that things can go wrong occasionally. She said she discovered recently that her checking account had been debited twice for the $800 annual maintenance fee on her time-share vacation home in Antigua. She said the extra charge was removed after it was reported. Companies that offer online bill paying say billing errors typically affect very few customers - less than half a percent of all their online accounts, on average each month. Many companies say they offer to pay late fees if they are a result of their own error, and some say they will help in disputes with businesses or credit reporting agencies. MATT COFFIN, the chief executive of LowerMyBills.com, a price-comparison service based in Santa Monica, Calif., suggests that consumers who are considering electronic bill payment start slowly, perhaps by paying one bill directly on a creditor's Web site. Most sites allow customers to make a one-time payment online. A confirmation number is usually supplied via e-mail or directly on the screen. Mr. Coffin advised consumers to write down the number or print it out. And if you are still worried, he said, "call the company in a few days to make sure it went through." "Then go back and try a few other bills," he added, "and then sign up to do it every month." The bottom line, he said, is that the process will save money, trouble and time, and "maybe you'll save a tree."