The Consumers' Perspective

Their real online billing behaviors and preferences
Author: Bruce Cundiff

Certainly, it is no secret that billers are continually attempting to drive customers online for presentment and payment of their bills. Although this approach is highly regarded among the companies who produce high-volume transactional documents, there seems to be a persistent hurdle to the adoption of online billing - the consumer. Thus, bridging this gap between financial institutions and other billers and their customers is essential to ensure the increased utilization of this electronic service. Producing strategies to increase such adoption, therefore, must begin with the examination of consumers' billing habits and preferences. Javelin Strategy & Research, a research and consulting firm focused on financial services and payments, with its latest study, focuses on the online billing behaviors and tendencies of consumers today who, in essence, will dictate the future of this industry trend.

The State of Online Bill Payment
Online bill payment continues to erode traditional methods, with Javelin data indicating that 51 million US adults engage in online bill payment activity at their financial institution's site, representing 38% of online households and 23% of US households. In fact, US financial institutions have had varied success in

converting their account holders to use online bill payment options on their websites. Bank of America has, by far, the most online bill payment consumers in sheer numbers (9.5 million) and also the largest percentage of account holder base (56%) among the large financial institutions. Wells Fargo comes in second with over 2.6 million account holders- 34% of its base - engaging in bill payment activity.

Online bill payment engagement with consumers is not limited to a small number of institutions, and consumers will seek and utilize this functionality from their primary financial services provider, regardless of size. Almost 60% of consumers who indicate engaging in this activity cite either a credit union or another institution. Smaller institutions, therefore, understand the need to compete with larger institutions based on, in general, the online offering and specifically, the online bill payment functionality.

Consumer Preference and Behavior
There is a disparity, however, between consumers' preferred websites for bill payment and the websites they actually use to view and pay bills. By a two-to-one ratio, consumers prefer to pay bills at their banks' or credit unions' websites as opposed to the individual biller's sites. But nearly 60% of consumers

In fact, 37% of households now indicate a preference for using their debit cards for bill payment. This sizeable portion of consumers translates to direct interchange income for financial institutions. Focusing on the potential for interchange revenue and promoting the use of the debit card for bill payments could serve institutions well - turning the seemingly negative consumer behavior of paying bills at billers' websites into a positive outcome for the institution.

Bruce Cundiff is a research analyst for Javelin Strategy & Research. For more information, visit or email him at