Bank on it

companies help millions pay their bills online.

June 12, 2000|By Noella Kertes | Noella Kertes,SPECIAL TO THE SUN

Like many other consumers, David Gomberg sits down at least once a month to pay his bills.

But instead of whipping out a checkbook, the 59-year-old Laurel resident logs onto his banks Web page and tells the bank what bills to pay and when to pay them. Ten minutes later hes done without addressing an envelope, writing a check or licking a stamp.

Like millions of consumers, Gomberg has turned to the Internet for help with one of lifes more monotonous and depressing little chores.

"The bank sends paper statements, which at this stage of the game I dont even look at anymore," Gomberg said. "I file them for posterity if I need them, but basically, at the beginning of the month or whenever its convenient, I go in and balance the checkbook based on whats on the Web site. I dont even need to wait for the paper. "

Industry analysts estimate that 8.5 percent of U.S. households engage in some type of online banking, and Forrester Research of Cambridge, Mass., reported last year that more than 2 million households use an online bill payment system. That number is growing as the infrastructure falls into place.

"If you look at consumer research, the most-hated regular recurring task that people are faced with is dealing with their bills, said Ed McLaughlin, chief executive officer of Paytrust, an online company that offers electronic bill payment services."

Consumers have a variety of services to choose from. Traditional banks are expanding their online presence to compete with Web-based operations such as,, and Microsofts MoneyCentral. Last month, the U.S. Postal Service unveiled its own online bill-paying program under a partnership with Checkfree and

Many services offer free tryouts for periods of up to six months. After that, they charge a monthly fee, about $9 on average for 25 payments, with a surcharge for each payment over the monthly limit.

As a result, they may not be for everyone. For consumers with only a handful of bills, the service charge may outweigh any savings in postage. And many bill payers dont feel comfortable with the whole idea.

"The people that are doing it tend to be your time-pressed, technologically comfortable kinds of consumers," said Forrester analyst Ken Clemmer. Because in almost all [circumstances] youve got to pay for the privilege thats a deterrent for a lot of people to start up to even try the service plan.

"And then you have to have sort of a reason to abandon the old tried-and-true system of sitting down every month with your checkbook. And that seems to work for a lot of consumers," he added.

How does it work? First, most customers who pay online still receive their bills in the mail. Once they receive a bill, they can log onto their bank account and authorize the bank to cut a check, specifying when to send the check and how much of the bill to pay.

Some services make payments electronically, eliminating the post office altogether, although not all creditors are equipped to do so.

Companies such as Paytrust and PayMyBills go a step further. For a monthly fee, which can range from $2.95 to $29.95, the companies will physically receive and aggregate your bills at a processing center, post them on a secure Web site and notify you by e-mail. You can then review each bill online and authorize payment.

For recurring bills such as rent, mortgages or car loans, many services will set up automatic payment on the same day each month.

Some services will arrange with your creditors to send you an electronic bill, eliminating paper altogether. This is known in the trade as bill presentment, and although fewer than 100 companies bill their customers this way, Internet analysts say the number is growing. "Bill presentment means you go to the Web and your bills come to you there instead of your mailbox. The [online] payment thats going on right now is almost entirely bank-based, said Clemmer, who predicted that $2 billion worth of bills will be presented annually by 2004.

Giant Bank of America, which has the largest retail banking operation in the Baltimore area, has 2.1 million online customers nationwide. Of those, approximately 700,000 use the banks online billpaying service, and the company has announced a bill presentment alliance with

"We conduct about $800 million worth of online bill-pay transactions a month," said Linda Mueller, a Bank of America spokeswoman. With the alliance, she said, the bank hopes to accelerate consumer interest.

To alleviate consumer fears about fraud, some online companies such as Paytrust and PayMyBills insure their customers for up to $100,000 against unauthorized transactions. But many consumers remain skittish about giving companies access to their bank accounts.

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