ANALYSIS: Why no killer app for paying bills online?
Sep 15, 2011, 1:23 p.m.
This is easiest when payments don't vary in amount and arrive consistently each month. Sending payments electronically like this saves the cost of a stamp and the fear of depending on the U.S. postal service.
Another popular route is to bill most regular payments to a credit card (usually issued by a bank), and then pay your credit card once a month, or mix and match along the way - bill your cellphone to your credit card, but your electric bill to your checking account, as we do in my house.
The major drawback to auto-billing to a credit card is that you have to update the payment info when your card expires, or if you change account numbers due to a security breach or other incident. The major drawback to auto-billing a checking account is over-drafting. So you have to weigh your options based on the balances in your account and your personal ability to manage details.
"I pay my student loan through auto-deduction from my checking account because it gets me a lower interest rate, for example," says Geoff Knapp, VP of online banking for Fiserv, a technology company that provides the backbone of most online bill-pay and e-commerce systems for banks.
VARIABLE BILLS ON DEMAND
What trips up a lot of dedicated online bill payers are those one-off bills that come in for things like doctor's bills or lab fees that your insurance doesn't cover, one-time tuition payments, your lawn service and so forth.
Some banks participate in an eBill system where your bills from various places - like your cellphone carrier, cable company, etc. - get sent to the bank's system, which sends you an alert when a bill needs to be paid.
"Consumers love it. The highest satisfaction of all of online banking is from people who are active eBill payers," says Knapp. "Certainly anyone over hurdle of online bill payment in general isn't going to have a problem with the process of it."
Bill payment services like Quicken BillPay (run by Intuit), Mycheckfree.com (run by FiServ) or PayTrust (also run by Intuit) will also take care of these itinerant bills - all for a fee. Despite the convenience of this, Javelin has found that many people still go directly to a biller's website to pay a bill instead.
"In general, people want to control when payments are made. They want to pay directly and they want to see a bill," says Schwanhausser.
Services like Billeo specialize exactly in this process. Basically, Billeo will consolidate your various payments directly to vendors online in one place, so you don't have to go to 10 different sites and remember all the passwords.
"Credit card bills are always number one, utilities are next in line (gas, electric, garbage collection), then wireless, cable, telephone, satellite, says Billeo CEO Murali Subbarao. "What's new is that people are also paying mortgage payments, loans, rent and tuition. The number of companies we have that accept electronic payment has grown from 14,000 to 20,000 in the last 18 months."