ATLANTA - A new study reported today finds that for the first time, consumers in Internet-connected households are paying more of their household bills online than by check. The survey was conducted in January 2007 by Harris Interactive and The Marketing Workshop. (Source: CheckFree Corp.). (PRNewsFoto/CheckFree Corporation)
ATLANTA, GA UNITED STATES
For the first time, consumers in Internet-connected households are paying more of their bills online than by paper check, according to a new study conducted by Harris Interactive and the Marketing Workshop.
The 2007 Consumer Bill Payment Survey showed that, for the first time, online bill payments exceeded bill payments made by paper check among online households.
Online payments made up 39% of the total volume of bill payments among online households, an increase of 4 percentage points over a December 2005 survey. In contrast, the volume of checks sent through the mail fell 4 percentage points to 34% of the overall volume.
The Checkfree Corp.-sponsored survey, the seventh since 2002, highlights consumers' growing use of online banking and electronic billing and payment services to help them manage their household finances.
The January 2007 survey polled 2,018 online respondents who were at least partly responsible for household bill payments. Respondents are representative of the estimated 82.5 million US households using the Internet, and the margin of error is plus or minus 2%.
The survey revealed that a growing number of consumers are turning to their computers, rather than their checkbooks, to pay household bills. Paying bills online has become a mainstream activity among US households.
Western states, followed by the South, have embraced online bill payment faster than other regions, driven in part by higher broadband penetration rates and online banking use in these areas.
Paperless bills appear to be catching on as consumers recognize their convenience, security and environmental benefits.
"The fact that online bill payment has overtaken paper checks shows that people feel secure managing their finances online,” said Gwenn Bezard, research director with Aite Group. “Once considered a nice-to-have add-on, online bill payment is now the foundation of the Web banking user experience. I expect further growth in this area due to Generation Y's greater reliance on technology in their everyday lives as they move into early adulthood, and the increasing adoption of electronic bills, especially as the environment becomes a mainstream issue.”
Nationwide, consumers paying at least one bill online per month rose to 74% from 69% of respondents in the December 2005 survey. Consumer adoption of online bill payment has more than doubled since January 2002, when only 37% of online households paid at least one bill online.
The West is the highest adopter of electronic billing and payment, with 78% of online households paying their bills online. The South ranks second, with 76%, followed by the Northeast with 72%, and the Midwest with 71%.
Factors helping drive regional differences include higher broadband penetration rates, greater online banking use and technology-savvy populations in the West and South.
In the West, 80% of surveyed households receive their Internet service through a broadband connection and 83% use online banking to check their account activity or transfer funds. By contrast, in the trailing Midwest, 70% of households have broadband Internet connections and 76% use online banking.
Consumers in Western states also were more likely to pay bills at online banking sites (42%), than those in the South (38%), Northeast (37%) and Midwest (33%).
Among the survey's six consumer bill-payer personality segments, there were more e-savvy planners living in the West (11%) and South (15%) than in other regions. This consumer segment enjoys trying the latest technology products and using financial management tools to organize their finances.
E-savvy planners pay bills online because it's safer than mailing a check, they regularly check their credit reports and are more likely to use online banking (94%) and online bill payment (91%) services than other consumer segments.
Rising postal rates
American consumers increasingly rely on online bill payment services to save time. Eighty-five percent of survey respondents said, “paying bills online is faster.”
The rising cost of mailing paper checks may also be helping fuel the trend. Some 85% of consumers surveyed said, “paying bills online saves the paper, stamps and the hassle of paying bills by check.”
A first-class stamp, which cost only 37 cents in 2005, now cost 39 cents. 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% -- said they get the online bill payment service for free from their banks or credit unions.
More growth seen
Paperless billing seems to be catching on as consumers become more aware of the environmental benefits of e-billing. Thirty-nine percent of consumers receiving electronic bills at bank Web sites said they no longer receive mailed copies of the bills.
Consumers paying bills at bank Web sites are more willing to stop receiving paper bills than those paying directly at biller sites. Eighty-four percent of e-bill users are willing to consider shutting off receipt of paper bills through the mail if offered the choice, compared to 69% of those paying at biller sites.
Fifty-two percent of e-bill users cited “receiving bills in electronic form saves paper and energy, helping our nation's environment” as a major reason they chose to receive e-bills.
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% 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% 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 to 52% for those who didn't use e-bills.
More satisfaction also translated into word-of-mouth endorsements. E-bill users were 58% more likely to recommend their banks' online bill payment services to family members and friends.
The average survey respondent paid 11.5 bills in a typical month, with approximately 39% of these, or 4.5 bills, paid online, and 34%, 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%) of their 13 monthly bills online, and just 1.6 (12%) by paper check.
The survey also showed growth in consumers' use of online banking sites to pay bills. In the latest survey, 38% of survey respondents said they paid at least one bill per month at an online banking site, compared to 33% in the December 2005 survey.
An increasing number of online banking users are activating online bill payment services. Forty-eight percent of online banking customers pay bills online, compared to 37% at the end of 2003.