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Internet-Connected Households Favor Online Bill Payment Over Checks
For the first time, consumers in Internet-connected households are paying more of their bills online than by paper check, according to the 2007 Consumer Bill Payment Survey conducted by Harris Interactive and the Marketing Workshop. Online payments made up 39 percent of the total volume of bill payments among online households, an increase of 4 percent over the previous survey, in December 2005. In contrast, the volume of checks sent through the mail fell 4 percent to 34 percent of the overall volume. The survey, the seventh conducted since 2002, was sponsored by CheckFree. The survey polled 2,018 online respondents as a representation of the estimated 82.5 million U.S. households using the Internet.
Nationwide, consumers paying at least one bill online per month rose to 74 percent, compared to 69 percent of respondents in December 2005. Consumer adoption of online bill payment has more than doubled since January 2002, when only 37 percent of online households reported paying at least one bill online.
Eighty-five percent of survey respondents said that 'paying bills online is faster.' But the rising cost of mailing paper checks also may be helping fuel the trend. Some 85 percent of consumers surveyed said that 'paying bills online saves the paper, stamps and the hassle of paying bills by check.'
An approved postal rate increase will bring the cost of a first-class stamp to 41 cents on May 14. In contrast, the vast majority of consumers (93 percent) reported that they get the online bill payment service for free from their banks or credit unions. Thirty-nine percent of consumers receiving electronic bills at bank websites said they no longer receive mailed copies of the bills.
Among the other key findings related to e-bills:
- Consumers paying bills at bank websites were more willing to stop receiving paper bills than those paying directly at biller sites. Eighty-four percent of e-bill users said they were willing to consider shutting off receipt of paper bills through the mail if offered the choice, compared with 69 percent of those paying at biller sites.
- Fifty-two percent of e-bill users said a major reason they chose to receive e-bills was that 'receiving bills in electronic form saves paper and energy, helping our nation's environment.'
- Overall, the most appealing features of e-bills were convenience, due-date reminders and 'assurance that bills are never late.'
- Among the benefits for banks and billing organizations, consumers using e-bills also reported significantly greater satisfaction with their banking and biller relationships and were less likely to switch providers. Some 58 percent of e-bill users claimed they were less likely to switch banks as a result of receiving and paying bills through online banking sites, while 39 percent of e-bill users said they were less likely to switch to a competitor's service.
- Seventy-two percent of e-bill users said they were satisfied or very satisfied with their online banking experiences, compared with 52 percent for those who didn't use e-bills. More satisfaction also translated into word-of-mouth endorsements. E-bill users were 58 percent more likely to recommend their banks' online bill payment services to family members and friends.
Online Bill Payment Adoption Climbs
The average survey respondent paid 11.5 bills in a typical month, with approximately 39 percent of these, or 4.5 bills, paid online, and 34 percent, or 3.9 bills, paid by paper check.
Consumers who used online banking sites for paying bills reported paying more bills per month and paying far more of them online. These consumers paid 8.2 (63 percent) of their 13 monthly bills online, and just 1.6 (12 percent) by paper check.
The survey also showed growth in consumers' use of online banking sites to pay bills. In the latest survey, 38 percent of survey respondents said they paid at least one bill per month at an online banking site, compared with 33 percent in December 2005.
More online banking users are activating online bill payment services, further fueling EBP adoption. Forty-eight percent of online banking customers pay bills online, compared with 37 percent at the end of 2003.
Biller Sites Growing Steadily
Meanwhile, consumer use of biller websites to pay bills continues to grow, though at a slowing rate. Fifty-five percent of 2007 survey respondents made a payment directly at a biller's website, up from 53 percent in December 2005.
Consumers with household incomes of less than $50,000 were more likely to pay their bills at biller websites, while higher-income groupsÑparticularly those earning more than $100,000Ñwere more likely to pay their bills at online banking sites.
The three most cited benefits of paying bills at online banking sites were 'faster,' 'saves paper, stamps and hassle' and 'provides more control over payment timing.' Non-users cited 'don't know enough' as the leading reason why they don't pay bills at their banks' websites. Concerns about online security were cited by only 13 percent of respondents, compared with 20 percent in the December 2005 survey.
Comments and feedback welcome, please email Jill Morgan at jmorgan@billingworld.com.
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