Point, click, pay

Accounts: An increasing number of Americans are setting aside their checkbooks in favor of paying bills online.

October 23, 2003|By Richard Newman | Richard Newman,KNIGHT RIDDER/TRIBUNE

With just a few taps on the keyboard and a few clicks on the mouse, Joe LaSala makes his mortgage, car and insurance payments.

The housing developer, who lives in Washington Township, Pa., pays nearly all of his family's bills - the phone bills, electric bills, even the landscaper - the same way.

"It's a great thing," LaSala said. "They'll even print out a personal check to somebody and mail it."

LaSala, 38, is one of a growing number of Americans moving away from the time-honored chore of writing checks and stuffing envelopes in favor of pointing and clicking.

A new online survey by Insight Express, a marketing research firm, says the percentage of those who say they have paid at least one bill online has soared to 57 percent from 17 percent three years ago.

"We were surprised to see how quickly it jumped," said Lee Smith, president of the company that conducted the survey last month.

Most of the nation's largest banks have been publicizing their increasingly popular online bill payment services. Some, including Citibank, HSBC, Bank of America and Bank One, have dropped monthly fees.

Banks are not the only businesses that offer the service.

Fee-based bill consolidation services, which enable you to pay a slew of bills from a single Internet portal, are also offered by Yahoo Inc. and Time Warner Inc., among others.

Some utility and credit card companies encourage customers to use the Internet to receive and pay their bills. It saves the companies big bucks on billing.

Beth Robertson, senior analyst with the TowerGroup, a Needham, Mass., research firm, said 24 percent of American households - more than 26 million - are using online bill payment in all its various forms.

That's up from 2 percent five years ago. Consumers will pay 1.2 billion bills online this year, up from 283 million in 1997, Robertson said.

Bankers are debating the wisdom of charging fees for the service, though it costs them plenty to provide it, she said.

"It's a competitive issue," she said. "Adoption rates are much higher if there is no fee."

Online bill payers tend to be good long-term customers, holding more accounts and keeping higher-than-average balances, she said.

They also have proven to be good targets for banks when they set out on loan marketing campaigns.

LaSala's bank, Wachovia, charges $6.95 a month for online bill payment for regular checking account holders, but because he is a premium account holder, he pays nothing.

Fleet Bank charges $4.50 a month and also waives the fee for premium account holders.

Neal Wolfson, director of interactive banking for Fleet Bank, said Fleet handles about 2.5 million bills a month, and the number has been growing at better than a 20 percent annual clip.

"From talking to our customers, we don't see price as a barrier," he said.

When you take into account savings on postage, it seems like a good deal.

The average household pays 12 to 15 bills every month - and at 37 cents a stamp, the average bill payer would save $4.44 to $5.55 a month in postage.

Online bill payers have not completely broken away from writing checks, said Smith of Insight Express.

When asked, "What are all the ways you pay your bills?" 87 percent of the more than 500 online respondents said they write checks.

More than a third said they use the payees' individual Web sites, and 31 percent said they use a bill paying service through their bank.

LaSala says the only checks he writes are for the IRS and such items as his daughter's school pictures.

For him, the biggest benefit of online payments is the time savings.

The only problem he has had was a $36 credit card payment to Bloomingdale's that did not get credited because he made a typographical error entering the account number.

The bank sent the money to Bloomingdale's on time, but Bloomingdale's kept billing him for the charge and he had to call the store a number of times before the errant payment was found.

"It took a couple months to straighten that out," he said.

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