Online Bill Payments Show Big Gains, But Some Fret over Security

In another indication of the erosion of paper checks in consumer transactions, the volume of bill payments made by check as a fraction of all bill payments has fallen to 37.5% from 61.1% four years ago, according to a report released this week by online bill-payment processor CheckFree Corp. with data based on a recent consumer survey. Some 35% of these payments are now made online, the report indicates, up from 13% in 2002, and more than half of these payers are in the 25-to-44 age group. At the same time, non-users of online bill payment services are becoming more interested in the channel, with 19% of those surveyed showing such interest, compared with 15% in a similar survey conducted early in 2005. But security concerns weigh heavily on the minds of non-adopters. Twenty percent of respondents cited this as a reason for shunning online bill pay, second only to insufficient information (32%). Non-users of online bill payment still account for 31% of bill payers, the survey says. “This indicates a need for education to reach the 'next wave' of mainstream users,” say the authors of the report. “Mainstream Adoption of Electronic Billing and Payment Continues” draws on the results of the sixth of a series of twice-yearly canvasses sponsored by the company. The latest survey, conducted in December by The Marketing Workshop and Harris Interactive for CheckFree, questioned 2,230 U.S. consumers 18 years old or older and who pay at least some household bills. The CheckFree report, which covers payments made to consolidator sites (such as those of banks) as well as those made at billers' sites, indicates free online bill payment at bank sites has become dominant, with 91% saying they pay no fee. Free service, indeed, ranks among the three biggest enticements to non-users, the survey suggests, with the other two being the ability to control the amount and date of payment and fraud or late-fee protection. The three most effective marketing channels to reach non-users for bank-based bill payment are bank branches, bank Web sites, and word of mouth, the survey says. Of the 69% who use online bill payment, those who use only biller sites account for 36 percentage points, while those who use bank sites only account for 16 points. Users of both types of sites account for the remaining 17 points. Recent data from comScore Networks show biller-direct sites claimed 31.8 million users at the end of 2005, up 35% over 2004. Bank sites had 9.1 million users, a 36% increase (Digital Transactions News, April 18). Overall, with overlap between the two camps, the number of active online bill payers reached 37 million, up 36%, comScore reported.