ANALYSIS: Why no killer app for paying bills online?

Sep 15, 2011, 1:23 p.m.
A Motorola Droid phone is seen displaying the Google search app in New York August 15, 2011. REUTERS/Brendan McDermid


What trips people up the most with online banking are one-off payments to people who don't take electronic payments - like the mom collecting for a fundraiser or the brother who paid for your amusement park tickets.

Some banks will also allow you to manually add payees, and then they will send a paper check out on the date specified, which saves users the cost of a stamp but not the variability of the postal service.

"There are efforts out there, and there are ways to do it, but there's no ideal solution for the consumer, because it's another site to go to and password to remember. You can write a check in one minute, and be done with it," says Schwanhausser.

Until more individuals start accepting credit card payments via their smart phones, the old-fashioned checkbook is still your best option.


Another pain point for consumers is not being able to pay bills in one spot across accounts at multiple financial institutions. While most banks allow you to make payments to other banks - say, if your mortgage is with another company - they aren't set up for you to access accounts at other institutions. So if you have a checking account with one bank and a savings account with another bank, it does not compute.

This is where third-party bill paying services like MyCheckFree, Quicken BillPay and PayTrust offer the most promise, except for their monthly fee structure. Mint (also owned by Intuit) has scored a huge following by offering users the ability to see all of their accounts in one place for free, and others like PageOnce are bubbling up. But while you can get bill reminders now and analyze your spending, those money management programs stop short of allowing you to follow through on bill paying directly.

The ideal is to marry the personal finance management with the bill-paying ability, and have it available for all your accounts and on any mobile device - and be free. Knapp says that banks could do better on this score. "Proactive banks realize that online has become biggest interaction points with consumer and will continue to grow," he says, and you should start to see more personal finance management tools surfaced when you login, plus more payees available for digital payments, plus more options for alerts across mobile and desktop devices.


If setting up a system to manage all of these disparate tasks is too much for you, there are services emerging to do it all for you. Balance Financial, a venture-backed startup that just emerged from beta, provides personal bookkeepers for a monthly fee. These paid organizers manage your finances for you, tell you when your bills are due, keep your receipts organized, and all without having access to your personal passwords.

"We think the reason why there is such a scatter-shot method is based on the fact that people don't like to do personal finance. They know what they should do, they just don't do," says CEO Devin Miller. "We look at retail banking and we see an industry that forgot that people think of banking as a service industry. More do-it-yourself tools just overdo it for consumer. People will pay for service."

(Editing by Linda Stern and Lauren Young)

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