Consumers Demanding Convenience of Online Bill Payments
The main criteria for choosing a bank used to be its proximity to home. Now customers are looking carefully at the quality of a bank's online bill-paying service before they choose.
“Paying bills online is in the mainstream, and for the first time online banking and bill pay has moved into the top three factors considered by consumers when choosing a bank," said Matt Lewis, executive vice president and general manager of CheckFree's Electronic Commerce Division.
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CheckFree Corporation, the electronic commerce services provider, conducted its twice-a-year survey of 2,083 consumers. It found that at least one bill is paid online by 56 percent of U.S. households with online capabilities. The company also said the volume of payments made at a consumer's consolidated bill pay account, usually offered at no charge by a bank, brokerage or credit union, increased 24 percent from June 2004 to March 2005.
In fact, consumers who received their bills electronically, at the same site where they pay multiple bills, are the happiest customers, with 60 percent saying they are “very satisfied” with online banking.
Credit and debit card payments are expected to increase for utilities, cable companies, banks and other companies that set up websites for customers, called biller-direct sites, according to a separate survey of 21 billers that account for 9 percent of all consumer bill payments.
New York-based research firm Aite Group LLC said biller-direct sites will see the share of transactions coming from credit and debit cards jump to 16.5 percent in 2005 from 14.3 percent last year, Digital Transactions News reported.
Billers pay discount fees for card transactions, but consumer pressure and competition with other billers, is forcing them to accept the cards.
Gwenn Bezard, research director at Aite, said some consumers may be strapped for cash and therefore like using credit cards to help make ends meet. "Billers don't like it when consumers pay with a credit card, but they don't want to lose customers to competitors if the competitors accept cards," he said.
The report also said that consolidated bill-paying sites will now face increasing pressure to allow credit and debit cards to avoid losing payments to biller-direct sites.
"The infrastructure set up for consolidator bill payments was not set up for credit and debit card payments," Bezard said. In addition, most banks are hesitant to permit payments on cards issued by competing banks, he said.
Online purchasing is also growing in popularity. Visa reports that online spending using Visa payment cards increased 23.4 percent year-over-year to $2.4 billion for the week ending Nov. 13. Visa processed 28.5 million transactions, representing an increase of 17.6 percent from the same period in 2004.
Fraud is always a concern for consumers paying bills or making purchases online. Computer crimes that target businesses, however, are at their lowest level ever, said Robert Richardson, editorial director for the Computer Security Institute (CSI) in Philadelphia, according to TechNewsWorld. The average loss per cybercrime incident in 2005 was about $250,000, versus $500,000 in 2004 and more than $3 million in 2001, he said during a Nov. 12 Webcast on the annual CSI/FBI Computer Crime and Security Survey.
He added that more than 80 percent of the total cybercrime losses of $130.1 million this year were due to viruses, unauthorized access to computer systems and theft of proprietary information.
"Even though in many ways we've gotten a much better handle on how to handle your everyday virus attack, nevertheless, that's still the top pain point for the respondents to this survey," Richardson said.