By 2002, 25 percent of all US households will have the ability to view and pay at least eight monthly bills online, according to a report by Internet Research Group.
The “1999 Internet Bill Payment and Presentment Report” also found that more than half of US households will be able to view and pay as many as four bills online. Electronic check-writing and bill payment has been available to consumers for more than a decade, but Web technology, new spending by banks and billers, and improved consumer comfort with online financial transactions are fast converging to create a critical mass for the Internet Bill Payment and Presentment (IBPP) market, according to the report.
“Online billing has always been a chicken-and-egg market, with banks and billers waiting for the consumers to come, and consumers waiting until they could view and pay all their bills online,” said John Katsaros, president of Internet Research Group. “Today’s new technologies, business models, and consumer readiness have now primed the market to explode.”
IBPP technology allows consumers to view and pay a number of bills at the same location. In the past six months, new IBPP services on such Web sites as Yahoo and PayMyBills.com have made it possible for consumers to redirect their paper bills to the site, where they are scanned and presented on the screen. Consumers can then pay each bill from their designated checking account, eliminating stamps, paper checks, and bill storage hassles. IBPP also gives consumers the ability to pre-schedule payments, to set recurring payments, and to download complete records of their transactions into financial management software.
“By offering online bill payment, a Web site creates guaranteed, regular visits from consumers who already have their checkbooks out,” said James Van Dyke, co-author of the report. “It’s a Web marketer’s dream, and it’s one that a lot of major Web portals will rush to offer.”
In addition to Web portals, Van Dyke said, financial institutions and makers of personal finance programs will also be offering online bill payment if they don’t already.
“Because the process of forwarding your bills to a specific IBPP site is fairly time-consuming, customers are probably in for a long-term relationship with whichever site they choose,” Van Dyke said. “These high-value, long-term customers are something every big Web site wants, and that means that competition for users will heat up. While we now see monthly charges to the consumer for bill payment services, for example, we could easily see free IBPP in the near future.”
In the rush to implement IBPP, Web sites, monthly billers, and financial institutions will be investing heavily in technology to make it happen, the report found. Leading the charge to online bill payment will be telephone companies, public utilities, and financial services firms, which will account for 83 percent of the $1.4 billion in IBPP technology expenditures in 2002.
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