Bill payment Archives

Billpay: After 20 Years as a Loss Leader, Check/PageOnce Shows Path to Profitability

By Jim Bruene on April 24, 2014 4:07 PM | Comments


In the United States, banks have squandered $10+ billion providing free billpay during the past 12 years. But that's about to change, if the model from Palo Alto-based Check (formerly PageOnce) takes hold.

First, a history lesson for anyone born after 1980.

For the first few years of the online era (mid-1990s), "electronic bill payment" was offered by banks and credit unions with monthly fees of $5 or $6. That made it roughly breakeven, at least if you didn't count the sometimes heavy burden on customer service to solve problems caused by the very analog back-end of the so-called "electronic" service.

But then in 2002, Bank of America ruined even that by offering free billpay and advertising it widely on television (note 1). It even released internal data purporting to prove that what the bank gave up in fee income was more than compensated by intangibles such as higher deposit totals and lower customer churn (note 2). I like to think that if Bank of America had read their OBR more closely, it would be booking an extra $300 million per year in fee income (note 3), but I digress.

Back to present day: American consumers have grown accustomed to free billpay, and I don't think that will change. But that's what makes Silicon Valley's mobile-billpay upstart so intriguing.

Let me introduce you to Palo Alto-based Check (still better known as PageOnce) which originally launched as a personal scheduler (hence, the original name). It quickly morphed into the first native mobile PFM, landing on the scene in 2008, just a year after Mint launched.

But given the difficulty of monetizing budget-and-spending PFM, Check has tried several ways to earn revenue including offers, credit bureau monitoring, subscription billpay, and now transaction-fee-based billpay. Apparently, the last has the most promise, so the company rebranded as Check (with URL, a big risk given the prominence of its PageOnce brand.


How it works

1. Choose biller from previous entries or add a new bill (see screenshot #1)

2. Enter account number with biller OR enter username and password and a check will download for you (screenshot #2)

3. Choose amount (screenshot #3)

4. Choose speed of payment (screen #4):
- Scheduled
- Send now: Standard
- Send now: Expedited

5. Choose payment type: Credit card, debit card or bank account (screen #5)
(Note: credit card option is not available for paying other credit cards, which is a Visa/MasterCard rule according to the company).

6. Confirm and pay (screenshot #6)

And now for the twist. Were you imagining this service displayed across your spacious desktop browser? No way. This is mobile-only and works like a charm, though the fees are a little confusing (see below).

The mobile interface is great, using state-of-the-art technology tricks to cut down on data entry:

  • Mobile camera used to import card details, powered by (see screenshot #8)
  • Account aggregation to gather billing info (note 4)
  • Comfortable mobile layout for selecting payment options



Check has free billpay of course. Just enter your bank account details, schedule the payment at least a week in advance, and you are good to go. However, for those not quite as organized, or who don't like revealing their checking account number, users can choose to pay a 4% fee (min. $4.99) to pay via credit/debit card within two to three days. Or for $6.99 (flat), the payment can be made the next day.  

Here's the freemium pricing model:

   3-to-5 day ACH >> Free for any size payment (subject to account-specific maximums)
   2-3 day debit/credit card >> 4% service fee (minimum $4.99)
   Next-day debit/credit card >> $6.99 flat-rate service fee (note 5)



Check's billpay system is designed for the mobile channel. For the most part, it works. Allowing users to easily choose payment source and delivery date (including next day) is critical to making billpay valuable. Banks would be wise to use a similar design (or license from Check), to increase fee revenues. I think it's entirely possible that billpay becomes a stand-alone profit center under this model (note 6).

That said, with three or more payment sources combined with three payment speeds, scheduling new payments can get confusing, especially trying to determine tradeoffs between speed, source and price. When I originally set up the account, it seemed relatively straightforward. But when I went back the next month, it was hard to re-engage.

The company also needs to help users choose the payment method providing the best bank for the buck (optimizing price, speed and convenience). The company recently added a pop-up box (screenshot 7) that helps. And the applicable service fee is clearly shown at every step of the process, albeit in fairly small type (screenshot 6). I understand the company needs expedited and/or card-based payments to make a profit (similar to how PayPal defaults users to bank transfers instead of credit card payments). But users need to fully understand their options throughout the process (note 7).

Long-term, the Check service is more valuable if its users become accustomed to paying all their bills from the site, even if most are free bank transfers. That way Check becomes the go-to spot for billpay, and are more likely to be remembered when users need expedited payments or a credit card charge when funds are low.  



#1 (left) Bills due list
#2 (right) Add a biller form

image           image 

#3 (left) Choose amount
#4 (right) Choose payment speed

  image          image

#5 (left): Choose payment source/type
#6 (right) Confirm payment screen (with fee disclosed)

image          image

#7 (left) Clicking on "?" on screen 6 launches a box with the fee schedule
#8 (right) Add credit and debit cards via scan

 image          image


1. For more details of the history of billpay pricing, see our post from 2004 and OBR #109, Pricing Online Services (subscription, Aug 2004).   
2. I have read dozens of these case studies, and I still don't believe that anyone has proven that billpay CAUSES those results. Everything I've ever seen proved CORRELATION. Yes, billpay customers are more profitable and more loyal. But they would have been anyway without without subsidizing them with a costly, trouble-prone service. I still maintain that lifetime statement archives would be a better retention device, and far less expensive than free billpay (see OBR 118, Lifetime Statement Archives (subscription, June 2005).   
3. Assume Bank of America would have 5 million active billpay customers paying $5 per month x 12 months = $300 mil 
4. Hopefully, it's only a matter of time (and a licensing deal with Mitek), before Check imports the billing statement directly into its app.
5. Due to its various payment-provider contracts, Check's expedited payment pricing doesn't always seem logical. For example, the company charges a flat fee of $6.99 for next-day delivery of any size payment. But for 2- to 3-day service, the charge varies by payment size (4%) with a minimum of $4.99. So, for any payment above $175, it's cheaper to send overnight than via the slower 2- to 3-day service. On a $500 payment, that's a savings of $13 to send overnight. To pay my current statement balance, it cost $90 to send via 2- to 3-day service or $6.99 overnight, a whopping $83 savings. And Check does not mention this when you cue up a $2,000 payment.    
6. Besides fees based on transaction speed and payment source, we also believe there are significant potential revenues from credit lines used to cover payment-account shortfalls and the newest fee-income opportunity, expedited mobile check deposits (see IngoMoney, believed to be powering Regions Bank among others).
7. In the month I've spent testing the service, Check has made the service fee much more transparent, so I believe they are moving in the right direction. 


Fintech Four from Last Week

By Jim Bruene on November 25, 2013 3:01 PM | Comments

Since my previous Fintech Four (when Bitcoin was a lowly $200), it's been an interesting few weeks. Here are the standouts last week:


One: Coin is an overnight YouTube sensation

image Who would have guessed a $50 payment gadget could be a viral hit? In the week since it was announced, the 105-second demo video (made Sandwich Video) has racked up more than 6 million views, 26,000 likes, and almost 9,000 comments. The company said it's original $50,000 crowdfunding goal was hit in 47 minutes, they have not said how many have been sold since. According to a button on its site, the pre-order period will last 30 days.

Many of speculated about why this happened, but the most concise summary is on Quora written by Brian Roemmele. He lists five reasons:

1. The product solves a real problem, too many cards in the wallet

2. Coin implies there is a limited supply

3. It was selling at for a limited time at 50% off

4. It appealed to early adopters with a blend of "old" meets "new"

5. $5 referral credit (against the $50 cost) with a built-in sharing button at the end of the purchase process.


Two: The latest fintech prize winners

Fintech startups have been taking home awards at various fall tech events this fall. Here are six winners in from the past 10 days:

1.  imageFinovateAsia Best of Show winners from Singapore (post):

image2. Innotribe Disrupt winner at NextBank LatinAmerica (Bogota, Columbia)

  • Intoo, a 6-person Brazilian small business financing portal, won the Latin American round of the year-long Innotribe contest 

image3. Get In the Ring winner at this Dutch startup competition (Rotterdam)

  • EyeVerify (FinovateSpring 13) took home $11,000 in cash, plus a potential million euro investment, for its eyeprint authentication technology (post)


Three: Finovera launches "PFM for your bills"

Finovera (FinovateSpring 13), officially launched its billing/PFM portal and landed a favorable TechCrunch post. The service competes in the PFM space, but is more focused on the billing and payments side (along with Manilla and doxo). Unlike analyzing/charting spending, the process of organizing, paying, and archiving bills is a near-universal need. So, it's an area that retail banks should pay close attention to (note 1). 



Four: Virtual currencies gain more real-world backing

U.S. regulators didn't exactly endorse Bitcoin and other virtual currencies, but they didn't condemn it either (Financial Times article). That was enough to send prices through the roof, touching $900 by some reports, a nice 50x gain since Jan 1. Most assets that appreciate so rapidly fall back to earth, but no one knows for sure if Bitcoin isn't than 1-in-a-million item that defies common sense.

But this is not JUST a Bitcoin story, it's about the "Internet of money." And it could be the biggest financial innovation since the credit card. However, it's still boggles my mind that regulators who are having a hard time letting normal people invest in privately held companies, are not clamping down on unregulated virtual currency trading. This story is far from finished. 

Table: USD value of a Bitcoin at Mt. Gox (last 6 months)



1. For a deeper dive, see our report on paperless billing and banking (Nov. 2010, subscription).
2. All Finovate alum videos are available free of charge at our website. 


First Financial, US Bank Launch First Photo Billpay Services

By Jim Bruene on March 7, 2013 5:17 PM | Comments

imageI started this post Monday, before I knew US Bank would be making headlines today as the first "major" bank with photo billpay. I got that news last night, when I updated my US Bank iPhone app (see inset).

But First Financial Bank (Abilene, TX; $3.7 billion deposits) actually imagebeat US Bank ($235 billion) to market by more than a month with its 22 Jan 2013 launch (press release; YouTube video). The bank said it had 12,000 bill uploads during the first 10-days of availability.

 US Bank mobile photo billpayBoth services use the Mitek engine to read the image and handle the OCR work. But First Financial also uses Allied Payment Network to process images that don't get properly digitized on the first pass and Malauzai Software for app development. 

Like remote check deposit, the system will improve over time as it learns the nuances of the thousands of billing statements fed into the front end. But today, there is still work to be done on the minority of statements that don't read correctly (see note 1).

First Financial features the new service front and center on its homepage (see first screenshot below) with a clever:

Tell your bills to say, "Cheese."

US Bank has no mention of it on the front page (nor in site search), but if you navigate to its mobile banking page, you can't miss it (third screenshot below).

image Bottom line: I'm not sure how many people will ultimately use photo billpay (though First Financial seems to be off to a good start). It's an interim technology until we can convert the country to ebills.

But since that may be a decade from now, using your smartphone to snap-and-pay is the best answer for now. So, we are bestowing our first OBR Best of the Web of 2013 to First Financial  for raising the bar in remote delivery (notes 2, 3). And an honorable mention to US Bank for getting it out to a broader market.  


First Financial features its new photo billpay on its homepage (6 Mar 2013)

First Financial Bank homepage featuring photo billpay powerd by Mitek

First Financial landing page (link)

First Financial Bank landing page for photo billpay

US Bank's mobile page features photo billpay prominently (link)

US Bank mobile banking page featuring photo bill pay


1. Just today, the Chase ATM couldn't read the amount on a computer-generated check we fed into its deposit slot. So we had to manually add.    
2. This Best of the Web goes to First Financial since it was first. Mitek already won when it introduced the technology in 2010 (see our Online Banking Report on Paperless Banking (subscription).
3. Since 1997, our Online Banking Report has periodically given OBR Best of the Web awards to companies that pioneer new online- or mobile-banking features. It is not an endorsement of the company or product, just recognition for what we believe is an important industry development. In total, 89 companies have won the award. This is the first for First Financial. Recent winners are profiled in the Netbanker archives.


Westpac Launches iPad Banking with Drag-and-Drop Transfers

By Jim Bruene on July 11, 2012 3:38 PM | Comments (3)

image Touchscreen technology isn't particularly game changing in banking. For the most part, users simply look at transactions, type a few numbers, and press a button or two. Touchscreen or mouse, it works pretty much the same. 

However, Australia's Westpac Bank (creators of Cash Tank and Impulse Saver) has figured out a way to use the swipe motion to simplify the funds transfer process. In its new iPad app (launched today), each account is shown on the screen in a small summary box.

To initiate a funds transfer, users move the summary box for account A over the summary box for account B, then type in the amount (see first screenshot below). Similarly, to initiate a payment, users drag the summary box over to the "payments zone" on the right to begin a bill payment (second screenshot).

Bottom line: While pushing a box around on a screen may not be faster than using a mouse in desktop online banking, it's an intuitive way to use an iPad app. Kudos to Westpac for incorporating it into their app.


Westpac (AU) iPad funds transfer (10 July 2012)
Simply drag the "from" account box over "to" account to begin the funds transfer


Westpac (AU) bill-payment process
Drag to "from" account over to the payment zone on the far right to begin a payment


Comments (3)

Doxo Provides the Missing Login at Small Billers

By Jim Bruene on June 5, 2012 5:46 PM | Comments

image I dropped by doxo's Pioneer Square (Seattle) digs this morning to get an update on their latest news, payment capabilities added to its mobile app. That's potentially game changing for smaller billers who still struggle with online payments, let alone the nuances of mobile delivery. We'll get back to that later.

But what opened my eyes this morning was the website of one of doxo's smaller clients, the Lake Stevens Sewer District, which serves 10,000 customers in a community a half-hour north of Seattle.

The utility, like 54% of the billers in doxo's database, had no online account info available prior to adopting doxo Connnect. Now, customers visiting the utility's homepage are directed to login in to doxo to view AND pay their bill online (via ACH), for free. Previously (note 1), customers could use an online form to pay via credit card. But this required filling out the form every month and paying an extra 3% to 7% convenience fee.

Not all customers are going to like the requirement of creating an account at a third party. But considering the alternatives, mailing a check or filling out a form and paying a $5 fee (note 2), it's pretty compelling. And as more people get used to logging in at various sites with their Facebook or Twitter credentials, the doxo Connect option for bills makes perfect sense. You could even say it fits the bill (sorry).


Lake Stevens Sewer District offers doxo Connect login on its homepage (link, 4 June 2012)

doxo payment at Lake Stevens Sewer District


1. The credit card option is still offered, see "Pay Here" link in the middle of the homepage (under the photo of the lake).
2. Of course, a number of the utility's customers will continue to pay their bill via bank billpay systems, generally free of charge. But that's not really a choice for customers visiting looking to make a payment and/or review their account info. 
3. For more info, see our report on paperless billing and banking (Nov. 2010, subscription).


Citibank Helps Users Better Understand Prior Payment Activity When Paying Credit Card Bill Online

By Jim Bruene on May 16, 2012 4:19 PM | Comments

image As I was paying my Citibank business credit card bill last night, apparently one day late (oops again), I noticed three new data fields to the payment summary box (note 1):

  • Dollar amount of payments in process as of today from any channel(note 2)
  • Number of payments made online this statement period
  • Dollar amount of payments made online this statement period

Consumers often forget whether they've paid the bill or not, so it's important to provide help so they needn't click around the site, or worse, call customer service.

While I love the functionality, the bank could have been a bit clearer in language used. For example, I don't think real people call their credit card payment a "payment request." While that term satisfies the legal folk, who I'm sure argued that it's only a "request" until the money actually arrives, it's not consumer-friendly language and the bank does not provide an explanation.

Lastly, there's an unfortunate lag in the updating of the "payment in progress" field. Immediately after paying my $30.80 statement balance, it shows up in the "online payment requests" field, but not in the "payment in progress" (see first screenshot). A day later, everything was in sync (second screenshot).

Despite these drawbacks, it's a good improvement in transparency, and every issuer should offer similar info.


Citibank online credit card system (16 May 2012)
Note: This screenshot was taken after I'd paid the statement balance, so the "requests" fields shows 1 payment for $30.80. Unfortunately, "The Total Payments in Progress" did not reflect that yet, a confusing misalignment of posting times. 

Citibank online payment info box

Payment info box a day later (17 May 2012)
Note: Now the dollar amount in both fields match up.

Closeup of Citibank online credit card payment box


1. To be honest, I'm not sure how long this data has been available. It's possible the bank has been showing it for a long time and I just hadn't noticed. Perhaps someone from Citi will comment and I'll update the post.
2. The exact explanation of this field from the Citi help popup:

This is the total amount of payments that you have recently submitted that have not yet posted to your account. This amount includes payments made through: Online Bill Pay, AutoPay or Pay by Phone. Please Note: Any payment made on a weekend or holiday will be applied as of the day you make it. However, it will not be posted until the next business day. Any payment scheduled to be applied for a future date is not included.

Categories: Bill payment, Citibank

Pageonce Removes Billpay Subscription Fee in Favor of Per-Transaction Pricing

By Jim Bruene on April 25, 2012 6:33 PM | Comments (1)

imagePageonce, the largest PFM from a company not named Intuit, is abandoning its $4.95/mo subscription for mobile billpay and moving to a yet-to-be-determined transaction fee for each bill paid (note 1). The change was revealed at Monday's Future of Money conference and I confirmed yesterday with COO Steve Schultz.

image The company has been testing various price strategies and found that per-transaction prices were more popular with customers. Its model predicts a five-fold increase in volume with the new fee structure, moving from $40 million annually to $200 million (note 2).

Schultz speculated that customers are used to paying this way for financial services. And it helps that an electronic billpay transaction displaces an out-of-pocket cost of $0.50 or so (stamp & paper check).

Pageonce is positioning itself as a mobile wallet, starting from a position of strength on the billpay side, rather than POS transactions. Schultz says eventually they'll be at the point of sale and P2P as well. Because those three activities are all part of the "wallet experience."

But the company is not abandoning its PFM roots. Mobile wallets also need tools to manage and track spending. Pageonce is chock full of those. 

The company's business model going forward largely focuses on offers and lead-gen, similar to Mint. But it's also not completely subscription-fee averse. Its mobile credit score/monitoring service, Credit Guard, is priced at a very competitive $6.99/mo.

My take: While I can't point to specific tests of my own, most banks that have experimented with transaction fees have found them to be quite unpopular (of course, so are subscription fees). My advice <cue broken record>, for banks anyway, is to bundle several value-adds popular with the target segment and sell the package for a monthly subscription fee (or a discounted annual fee for your fans) (note 3).

How they do it:

  • Billpay processing is powered by TIO Networks (note 4).
  • Account aggregation was built in-house
  • Credit Guard is powered by IdentityIQ

Pageonce showcases its apps for every major mobile platform (link, 25 April 2011)


1. The company is testing fees from $0.25 to $1.00 per bill. I see no reason to undercut the price of postage, so I'd guess they end up closer to $1.
2. Assuming $1,000 in monthly billpay volume per active user, that implies the company currently has only 3,000 active billpay users.  
3. For more information on subscription pricing for financial institutions, see our Online Banking Report (May 2011).
4. See TIO Networks demo at FinovateSpring May 8/9.

Comments (1)

Self-Serve: Chase Bank Allows Users to Create Their Own Billpay "Proof of Payment" Letters

By Jim Bruene on February 14, 2012 8:16 PM | Comments (3)

image Last night, my son was having trouble convincing his college landlord that the Feb rent payment had been sent via online billpay. I was not happy, envisioning an extended conversation with bank customer service, something that is very, very low on my list of Monday night activities.

So I logged in to the Chase account to see if the check had cleared. At best, I expected to see that the payment had been sent via billpay, but no way to prove that the check had actually arrived. 

Bit I was pleasantly surprised. Not only could I see that the payment had cleared, the bank had posted an image of the check so I could see the landlord's endorsement (see screenshot 1 and 2).

That was great on its own. But wait, there was more.

The bank offers a self-service "Note to Payee" function that automatically creates a letter to document payment details, including a copy of the check image (see screenshot 3). All you have to do is download the PDF and attach it to an email to the payee.

The only hitch in the system is finding these functions. They are located under the Payments & Transfers tab (see screenshot 1). That's not bad, but it would be more intuitive to place a direct link from the the online statement (My Accounts) to the bill payment details. Also, the "Print to PDF" button is easily missed (screenshot 2).

Still, the entire process took less than two minutes. And I didn't have to call customer service, a saving of 15 minutes of my time and $15-20 in customer service expense by the bank. 

The letter worked perfectly. Within an hour, the landlord had backed down, apologized for her error, and went back to her day job. This pretty much makes up for the unreadable bit of correspondence I got from the bank last week. 


1. Chase bill payment activity screen (14 Feb 2012)

Chase bill payment activity area within online banking

2. Chase proof-of-payment screen
Note: Print to PDF option

Chase bill payment details page

3. Chase automatically generated "Note to Payee" letter in PDF format

Chase proof of payment letter

Note: See our Online Banking Report for more info on bill payment, messaging, customer service and much more.

Comments (3)

Pageonce Adds Billpay; Showcases Multiple Mobile Apps on Single Page

By Jim Bruene on October 24, 2011 5:54 PM | Comments

image Last week, we looked at how Square makes a single webpage look great across various mobile platforms. Today, we look at the exact opposite problem. How to showcase your various mobile apps on a single webpage. 

Pageonce does it as well as we've seen, using a single showcase panel that includes all five of its mobile app platforms across the top: iPhone, iPad, Android, BlackBerry and Windows. Users can scroll horizontally to see two sets of screenshots for each platform.

The company also includes version number, date of the last update, and app size in the lower right corner. And of course, there's a link to download the appropriate marketplace to download the app. The Android page uses a QR code instead of a link.

In other news, Pageonce added bill payment to its iPhone and Android app today, moving ahead of Mint in the features arm race. The new Gold service, which we haven't tested yet, is priced at $4.99/mo, good news for fee-starved online financial providers. Mint says it has bill payment coming too. It will be interesting to see if they put a fee on it.

Relevance for Netbankers: The addition of transactional services such as bill payment makes third-party PFMs, or virtual banks such as BankSimple, bigger threats to mainstream banks and credit unions. As uber-consultant Richard Crone always says, "He who enrolls, controls."


Pageonce iPhone app

Pageonce iphone app showcased on its website


Pageonce on ipad


Pageonce on Android


Pageonce on BlackBerry


Pageonce on windows phone


Note: We cover mobile banking and payments periodically in our Online Banking Report (subscription).


PG&E's Convenient Mobile Bill Payment App

By Jim Bruene on September 26, 2011 5:37 PM | Comments

image Skimming my news feeds in the post-Finovate logjam, I flagged a news release about a new app that just landed in the Android Market (the iPhone version rolled out last December). The app allows Californians to easily pay their PG&E power bills from their mobile phone using a credit/debit card or checking/savings account. It's powered by Tio Networks

And while you'd think that three years into mobile app era, there'd be hundreds, if not thousands of similar apps, a quick search of the Apple App Store came up empty (see note 1). 

The app is drop-dead simple to use, as it should be (see screenshots below). The amount owed (across multiple PG&E accounts if necessary) is shown. Then, users select payment method, "sign" the screen with their finger, and submit. An email confirms the transaction.

TIO levies a $1.45 transaction fee per payment (well disclosed, see second screenshot below), which is a buck more than a stamp, but it also gives customers the option of paying by card, something that can't be done in the mail, online or in person. And payments received by 5pm are posted the same day, an important benefit for the large segment of the population that prefers to pay bills at the last minute.

Summary: Company specific same-day billpay apps are a great convenience for the majority of customers who pay their bill upon receipt (rather than relying on automated options). We expect to see many more like this. FIs and payment processors that serve billers would be wise to help them mobilize their payments.


PG&E mobile billpay screenshots (iPhone version)

image  image  image

image    image


1. There are likely at least a few others that I didn't find. The app search tools are not super sophisticated.
2. As of 7 July 2011, there are more than 425,000 available apps and more than 15 billion cumulative downloads.


Launching: Balance Financial Introduces Hybrid Billpay/PFM/Bookkeeper

By Jim Bruene on March 3, 2011 2:38 PM | Comments

image Internet-enabling every service and device on the planet creates fascinating new business opportunities. And we are seeing our share of them in the fintech space (note 1). Knowing how to deliver the proper blend of personal service and automation is an area of extreme importance to financial institutions: The optimal solution varies by customer, by product, and even by time of day.

One relatively neglected area involves premium services that offer state-of-the-art tech married to specialized human service, for a fee. Large banks have private banking departments that handle the bills and day-to-day finances of households with millions in assets. But those that fall outside the private banking threshold are generally offered free, self-service tools available to everyone.

Back when only 10% to 20% of households were online, that distinction was necessary. But now that 60% to 70% or even more of a bank's households use the Internet, there are enough customers to slice and dice financial management services into a variety of offerings and price points. There's a lot of revenue available for service offerings in the wide range between free and private banking.

Enter the newest player in high-end bill payment: Balance Financial, an angel-funded company based in Seattle that launched its new service this week. CEO Devin Miller was also involved in the launch of one of our favorites new services of 2010, Finsphere's PinPoint mobile location-aware fraud-alert service (previous post).


How it works

image Balance is a unique mixture of automatic bill pay and human bookkeeper, with an online PFM thrown in to help keep track of it all. The company has built a rich PFM, added billpay powered by Online Resources, and given each customer their very own actual person who oversees the account.

Unlike previous generations of billpay and the scan-and-pay offerings from PayTrust and others, Balance Financial does everything for you. It receives the printed or electronic billing statement, it uploads the docs to its website, and then the most important piece, it pays the bills automatically based on your prior instructions, just like the private banking officer. The end user is only contacted if the bill falls outside the preexisting parameters.

Sound too good to be true? Maybe, if it were free, but it's far from it. The company tested a variety of pricing options and settled on a price that's borderline ridiculous for the retail banking mindset: $75 per month.



Are they crazy? Maybe, but probably not. The company has been delivering personal bookkeeping services for seven years, and has paid more than 100,000 bills for its clients (note 3). It knows from experience there are affluent households and small businesses that are happy to offload this task for much more than $75 per month. When paying larger bills, the late fees alone can easily be in this range (note 2).

Balance admits the audience for $75/mo is tiny. But as its technology gets better, and its bookkeepers can take on bigger client loads, it believes it can push this price down, maybe even way down. So if you are interested in finding a new way to serve your mass affluents with something they can't get anywhere else, take a look at Balance.

Balance Financial integrates the human side throughout the Web-based app (3 March 2011)

Balance Financial integrates the human side throughout the web-based app (3 March 2011)



1. From the look of the applications for the upcoming FinovateSpring, the number of startups is growing at an even faster pace.
2. Our record penalty for paying a bill late at our business is $1,100. We'd just made a huge charge and by being that one day late, our APR was bounced to 25%, and we went into revolving mode over two cycles. Even though we paid the balance off within 7 days of making the charge, it still cost $700 one month and $400 the next. Anyway, that one incident alone would pay for Balance for 1.25 years, not to mention avoiding the huge frustration of making a thousand-dollar blunder.
3. The original bookkeeping service was founded in 2004, by Devin's wife, Rebecca Miller.
4. For more on online personal financial management (OFM/PFM), see our Online Banking Report.


Launching: Hearst's Manilla Wants to be Your Online Hub for Bills, Statements, Rewards and Subscriptions

By Jim Bruene on February 28, 2011 7:02 PM | Comments

image Manilla, a new account aggregation service from Hearst Corporation, launched today at Demo. Here's the official announcement and its demo video is embedded below.

Manilla currently aggregates accounts in four categories (more are on the way):

  • Household for keeping track of bills
  • Finance for keeping track of bank accounts and credit cards
  • Subscriptions for keeping track of magazine subscriptions
  • Travel for tracking mileage programs

In the first screenshot below, I've added an account in the finance category (American Express, which is shown as pending) and one in the travel section (American Airlines, which displayed the account balance immediately). I have yet to add a household bill or a magazine subscription.

In the second screenshot, you can see what it will look like after the account has been populated with many accounts (this is an example directly from the Manilla website).

The service will not show third-party advertising. Like Doxo, it will display marketing messages only from participating billers. And also like Doxo, billers will pay the freight, sending the company a small fee for each electronic bill it sends through Manilla (more on its business model here).

As I've mentioned in several posts about Doxo, there is a huge need for a secure, easy-to-use hub to help households organize their bills and statements. While Doxo is currently focused on delivering bills only from participating billers, Manilla allows users to aggregate bills and statements from virtually anyone supported by its Yodlee-powered aggregation engine.

So, if you are willing to sit down and enter usernames and passwords, the service can begin delivering value immediately. Consumers have been reluctant to do that unless they trust the company. But with Hearst Corp. backing it and with the credibility of two major billing partners, Comcast and Citibank, Manilla may be able to get over the trust hurdle.   

1. Initial Manilla homepage prompts new users to add accounts in four categories (28 Feb. 2011)

Hearst's Manilla aggregates accounts in four categories (28 Feb 2011)

2. Manilla homepage after the user has set up accounts
Note: The icons are for bills, statements, notices and offers

Manilla homepage

3. Reminders area

Manilla reminder

Demo video (link)


For more info, see our recent reports: Paperless Billing and Banking and Email Banking: Revitalizing the Channel.


American Express Wants to Power Your iTunes Purchases

By Jim Bruene on February 15, 2011 4:05 PM | Comments (1)

image How much does the average American Express cardholder spend in the iTunes store each month? A lot. And how often do you go to iTunes and change your default card? Never. Is it worth $5 to have your card powering an iTunes account? To American Express it is.

I'm sure the card company's spreadsheet shows a payback within a year or two on incremental interchange alone. But more important is the added stickiness these frequent Apple purchases give to the card. Plus, it can't hurt to associate your brand with the most valuable tech company on the planet.  

The fine print
To earn the five-song credit, cardholders must make a purchase with their Amex card between Feb. 10 and March 15. That earns a statement credit equal to five song downloads. It doesn't say which song price-point is used in the calculation, but I'm guessing the standard $0.99.

Relevance to Netbankers
It's always good business to get your card installed as an automatic payment source. Interchange goes up, credit card receivables improve, and you've added one more electronic hook to the account. So consider taking a similar approach and offering a small bounty after your card is used with a new biller.

iTunes promo on main Amex account page (Business Gold, 11 Feb. 2011)

iTunes promo on main American Express account page

Enrollment screen (link)

 Amex Enrollment screen

Comments (1)

Ebilling Update: Doxo Adds Payment Capabilities

By Jim Bruene on February 3, 2011 7:36 PM | Comments (4)

image Striata and AcceptEmail delivered two of my favorite demos this week at FinovateEurope. Both are working on ways to help move consumers away from antiquated and wasteful (but easy to use) paper billing and into the 21st century with interactive PDF versions delivered via email (also see ActivePath's FinovateFall 2010 demo video).

Unlike certain personal finance products which have more intangible benefits, ebilling stands to drive tens of $ billions of wasted expense out of the system while at the same time making consumers' lives simpler. That's worth paying attention to.

And I like the Striata/AcceptEmail/Activepath approach. Migrate consumers to an interactive email bill which is far superior to its paper ancestor and is aggregated within a familiar interface, the email client (see note 1). This is the most likely method of gaining mass adoption.

Ebilling hubs
But email inboxes are notoriously messy and over-crowded making it easy to overlook emailed bills (note 2). So I really like the idea of an ebilling hub, a place where all my bills are stored so I can review the history, communicate with billers, and make sure everything was paid on time (note 3).

That's why I've been following the developments at Doxo; Volly from Pitney Bowes; and Zumbox, which all have very different ideas on how to pull this off. But one thing they'll all need is payment capabilities. It's not enough to just view a stack of ebills, you have to be able to complete the task with payment. 

So it was good to see Doxo add payments to its ebilling hub this week. The Seattle startup, which moved into public beta late last year (see previous post), now allows users to pay any bill received into the hub (currently only Sprint and KCPL).

Users press the Pay button displayed by the bill in the "to do" section (see first screenshot). A popup screen is used to schedule the payment.

Bottom line: There's plenty of opportunity here for multiple approaches. Email bills are a pretty safe bet, while the ebill hub is a longer shot. But ultimately, we believe there's a place for both models. 

Doxo's ebilling hub now includes a Pay button (3 Feb. 2011)

Doxo's ebilling hub now includes a Pay button

Popup payment-scheduling screen

Doxo's Popup payment scheduling screen


1. See our recent reports: Paperless Billing and Banking and Email Banking: Revitalizing the Channel.
2. Also at FinovateEurope, Yodlee demoed a clever solution to help organize bills. It's new app will automatically search your hard drive to find downloaded bills and statements and automatically upload them into the Yodlee PFM where they can be aggregated and stored in the cloud.
3. You can do this with individual billers by logging into their sites, but that is a time-consuming chore best avoided.

Comments (4)

New Online Banking Report Published: Paperless Finance, Banking & Billing

By Jim Bruene on November 29, 2010 6:11 PM | Comments

imageWhen I first began writing about online banking in 1995, there were many unknowns. But by the late 1990s, most people were pretty sure of three things:

  • Online would trump the ATM, call center, and branch for routine information queries and simple transactions.
  • Alerts would keep users informed of account activity and status.
  • Bills would be paid online and delivered the same way.

Most of this vision has come to pass. The only holdout is bill/statement delivery, which has remained stubbornly paper-based, despite a decade of trying to coerce consumers to do without the paper security blanket.

imagePaper bills and statements are an enormous waste of resources, costing $40 billion or more annually in paper and postage. Plus, there's all the time customers spend storing, sorting, and rummaging through paper statements. And there's the tens of thousands of calls to customer service that could have been avoided with better organization.

But consumers will continue to cling to the paper until there are:

A.) Clearly better alternatives
B.) Tangible incentives to turn off the paper

Both of these themes are addressed in the latest Online Banking Report (link). Financial institutions, situated at the intersection of the bill and the payment, are in a great position to drive paper out of the system. But so far, it's not happening as fast as it should.

Doxo, which launched an ebilling hub last month, could be the catalyst for change, at least on the billing side. It's encouraging to see two billing innovators, Sprint and Kansas City Power & Light teaming with the startup, even before the service gets out of private beta (see previous posts).

So what can you do to take part in the inevitable movement away from paper? Read our latest report for 34 ways to convince customers to part ways with paper.

About the report:

Paperless Banking & Billing (link)
Cloud computing combined with mobile capture mark
the beginning of the end of paper statements

Author: Jim Bruene, editor & founder

Published: 26 Nov. 2010

Length: 40 pages

Cost: No extra charge for OBR subscribers, $495 for others here



Why Mitek's New Photo Bill Pay Could be a Way Bigger Deal than Mobile Deposit

By Jim Bruene on October 25, 2010 6:10 PM | Comments (4)

imageFor the second time in three years, Mitek completely wowed me on the floor at BAI Retail Delivery. In 2008, I was amazed to see them deposit a check with their mobile phone; this year, the trick was similar, but with a bill.

Mitek CEO James DeBello demonstrated the new systam to me at their booth (press release). He grabbed a bill from a pile, took its picture via the Mitek iPhone app, and sent it off via 3G connection to servers which read the characters through OCR and queued it up for payment. The billing and payment-due info was presented in an easy-to-read table for the user to verify before hitting the "pay" button (see screenshots below). I coveted it for my checking account ... now. 

While the deposit of a paper check has a little more of a "wow" factor (as in wow, I don't have to go to the branch anymore), the mobile scan-and-pay of a bill is actually far more useful. The potential market for mobile deposit-capture is limited by the shrinking number of personal checks in use, especially by iPhone-wielding early adopters. I'd guess the total U.S. market for mobile deposit is no more than 10 to 15 million households and shrinking.

And even though paper bills will eventually be eliminated by Doxo or someone, they are still a fact of life for just about everyone with a checking account. And even if consumers start accepting ebills from their major payees, most will still have a few paper bills every month for at least another decade or two.

So not only is the market for photo bill-pay about 10x that of mobile deposit, but the service also solves a peskier problem for most end-users: getting bills paid on time, something that has far more financial consequences than processing the occasional paper check gathering dust in the drawer. 

And for financial institutions, photo bill pay provides several important benefits:

  • Helps get customers started with online bill pay by eliminating the data-entry task of setting up new billers
  • Helps convert customers from other bill pay providers by eliminating much of the conversion hassle of re-establishing payees at a new bill pay service
  • Provides a tangible, value-added mobile service to differentiate from the competition
  • Provides a fee-revenue opportunity from either monthly subscriber fees and/or expedited payment fees

The downsides:

  • Cost
  • Tech support/customer service
  • Potentially harder to wean customers off the paper bill, if it's so convenient to just point-and-shoot to get it paid

Bottom line: Without knowing costs, what type of back-office integration hurdles the app faces, or even personally testing the user experience, I can't say for sure how popular it becomes. If the scanning is finicky, it could be a non-starter. But, if it works like it did in the demo, Mitek may have figured out how to finally eliminate the data entry from the electronic bill payment process, a HUGE win.

1. Main screen                               2. Scan with mobile camera

image     Mitek photo billpay camera view

3. Verify data (3 screens)

 Mitek photo bill pay verify data    Mitek photo bill pay verify data    Mitek photo bill pay verify data

Note: For more info on mobile banking, see our mobile banking series in Online Banking Report.

Comments (4)

Launching: Will Ebilling Startup Doxo Become a Household Word?

By Jim Bruene on October 22, 2010 4:55 PM | Comments (1)

image The Internet has already yielded some great solutions for a number of modern-day consumer problems.

  • Finding info: Google
  • Purchasing and organizing music: Apple iTunes + iPod
  • Keeping track of your friends: Facebook
  • Booking travel: Expedia and others
  • Getting rid of stuff: eBay and Craigslist
  • Paying for it: PayPal
  • Tracking your money: Online banking

But despite all these advances, does anyone feel like they are more organized today than they were 10 or 15 years ago? Most of us still deal with stacks of paper bills, receipts, statements, privacy notices, along with emails, alerts, and the occasional voice message from our service providers. And if we forget to pay someone, the financial consequences can be huge. So, it's no wonder we decide to keep the paper statements coming to help us remember to pay each bill. 

The company that solves the paper-based "organizational mess" could be the next big thing online. While it's way too early to project a winner, a Seattle-based startup launching this week has as good a chance of taming the paper beast as anyone I've ever seen. The company is Doxo, which I wrote about briefly this summer (see note 1 for invites). The company's DNA is Qpass, an early billing and payments company sold to Amdocs in 2006 for $275 mil. Co-founders Steve Shivers, Mark Goris and Roger Parks all worked at Qpass.

Here's Doxo's service in a nutshell, using the Facebook metaphor:  

  • Create a secure place online where bills can be stored; let's call it
  • Allow authorized biller "friends" to communicate directly to their customers via, this includes sending the bill itself, plus customer service and marketing communications
  • Once the biller and end-user are friends, turn off the pesky paper statements and store everything forever, for free, on the platform

The business model:

  • Consumers pay nothing
  • No advertising (other than marketing message from biller "friends")
  • Billers pay for the entire platform since it costs them a fraction of what they pay today sending paper bills and processing payments

Why would billers pay for it?

  • It's a fraction of the cost of paper + postage
  • Adoption of estatements has stalled at 10% to 15% of consumers even for billers who've worked relentlessly to get rid of paper; and the easy way to get adoption, charging for paper statements, gets both consumers and politicians all worked up
  • The Doxo platform provides a direct, secure communications path to end users, including marketing messages
  • No advertising from competitors makes Doxo more desirable than other third-party systems where billing info might end up residing (e.g., Google/Gmail, Mint, etc.)
  • The network effect; managing multiple bills in one place is the carrot to get consumers to give up the paper

What's missing?

  • Billers are not yet on the system in this private-beta release (note 1). Users can set up pages for each biller and populate it with their account info and uploaded statements. This is a temporary limitation; I've been assured that some big-name billers are on the way.
  • It's currently a read-only system, meaning there's no way to pay the bill. Eventually, it makes much more sense to allow customers not only to receive the bill, but also to pay it from within Doxo.

Why it could be huge: This is a classic "network" play. The more billers on the system, the more the consumer benefits and vice versa. Whoever gets this system to scale first will enjoy an enormous "eBay" network effect which will be difficult to dislodge. CheckFree/Fiserv and others have been down this road but have not achieved critical mass, leaving the door open for an aggressive startup to fill the void.

I like what I see at Doxo. And not just its slick UI. I've interviewed company execs several times and they have this thing nailed, at least in theory. The user-experience is great, assuming the startup brings in the billers. And the biller's business case is a no-brainer, if Doxo scores the end-users. We'll know it has a good shot when a half-dozen big-name billers come on board.   

Why it could lose: Consumers are absolutely not looking for another place to manage their bills. And very few care enough about it to do a lot of work populating a website with account info. Finally, until the portal develops a recognized brand, users won't trust it. It's critical that a few big billers endorse Doxo to get it jump-started. Even then, end-users may simply not be willing to spend the few minutes it takes to get set up on Doxo. 

Bottom line: I love it and want all my bills to go here now. So here's to being able to "doxo" statements to me sometime very soon.    


Electronic biller page at Doxo for fictional Goliath Bank (21 Oct 2010)
Note: The "To Do" tab is where account statements are delivered

Electronic biller page at Doxo for fictional Goliath Bank

Doxo inbox for receiving statements and other communications

Doxo in-box for receiving statements and other communications

Doxo storage area for filed statements
Note: Users can upload their own electronic documents to supplement (or in lieu of) those received through the Doxo platform

Doxo storage area for filed statements

1. The company has tweeted that it will hand out invites to its followers on Update: Doxo sent us some invite codes, use "netbanker" as your access code. 

Comments (1)

Now That's Payments Innovation: Parkzing Puts Your Parking Tickets on Autopilot

By Jim Bruene on April 18, 2010 9:52 AM | Comments (1)

image When talking about payments innovation in the 21st century, PayPal is usually the first thing that comes to mind. The company took existing payment methods (debit, credit, and electronic/ACH transfer) and used the Internet for delivery and messaging. Ten years later it is one of a handful of financial companies that can claim nine-figure customer bases. 

And there are dozens (hundreds?) of companies working on creating their own PayPal in relatively new frontiers: mobile, social networks, health care, micropayments, and so on. We'll have several of them demoing at our upcoming FinovateSpring event May 11 (lineup here).

image But you don't need millions of users to create something of value. Case in point: Parkzing is a new service (with a great name) created in his spare time by Aren Sanderson, CTO of Third Ave Labs, the creator of mobile app discovery service Apptizer (great name #2).

Parkzing is a mostly free service that removes the hassle, and worry, from remembering to pay your parking fines. How it works:

  • Users register their license plate number with the service
  • Parkzing scans city parking fine databases daily
  • If it finds a match, it contacts the user with a reminder to pay; reminders continue until the fine is removed from the database
  • Optionally, users can give Parkzing their credit card number and the ticket  will automatically be paid for a very economical $5 per ticket fee (see note 1)

This is one of those ideas that is so simple, yet so valuable, that you cannot believe it wasn't invented the day that city databases went public. As you might suspect, not all cities post this info online, so it currently only helps those in San Francisco, Washington D.C. and NYC (request your city here).

Relevance to Netbankers: This would be a valuable service to offer online/mobile banking customers. It would differentiate you from the competition, help fill your city's coffers, and add value to your payments card(s). The main downside? Liability for technical glitches that cause fines to go unpaid. A nominal fee for the service could fund a payments guarantee and provide a small bit of revenue.   

Also, think about the bigger picture here. Why limit this to parking tickets? How about if my bill-pay provider scanned all my accounts every day and told me what I owed? Utilities, credit cards, school lunch account, the dentist, and so on. To some extent Mint, Yodlee and the other PFM/bill-pay players already do this. But as Parkzing demonstrated, there's still room for innovations in bill pay. 

1. Five bucks is incredibly low considering the convenience and the savings in late fees; in Seattle we owe an extra $25 after only 15 days. I'd be willing to pay $25 per year + $5/ticket for the service.
2. HT to VentureBeat for writing about it. 

Comments (1)

Numbers in the News: P2P Payments Usage at First General Credit Union

By Jim Bruene on February 11, 2010 7:40 AM | Comments (2)

image It's always difficult to gauge actual consumer demand for new services. Traditional market research, while providing some broad intent data (e.g., "yeah, that sounds like something I might buy"), doesn't really do a very good job in telling you whether real customers will use the service. The problem is that in the real world, customers have real concerns about new products and most are unwilling to spend very much time learning about them.

So it's always great to find financial institutions willing to share usage data on their online or mobile services. This week, First General Credit Union wins our undying gratitude (and a free subscription to Netbanker) by revealing its person-to-person payments numbers in the latest issue of Credit Union Journal

The CU uses iPay Technologies P2P payment service which is provided at no-cost to its deluxe bill-payment clients. Keep in mind, this is a small $44 million credit union serving 5,000 members, so the raw numbers aren't large but the percentages are interesting:

Number of online banking users: 500 (10% of members)
Number of bill-pay users: 200 (40% of online banking users)
Number of P2P payment users:    3 (1.5% of bill-pay users,
       0.6% of online banking users

Analysis: The credit union says it hasn't promoted the P2P feature, which is offered free of charge. It's not even mentioned on its website, except on slide 22 of its online demo. So this isn't a representative sample for a financial institution looking to drive usage to the product. However, a 2% penetration (of online/mobile customers) is along the lines of what we expect this year nationwide. Longer-term, we expect usage to grow at least 10-fold from that level (see note below).

Note: For more information on P2P payments including a 15-year usage forecast, see our recent Online Banking Report: Making the Case for P2P Payments (published Dec. 2009).

Comments (2)

Banks Help Fundraising Efforts for Haiti Relief

By Jim Bruene on January 18, 2010 1:47 PM | Comments (2)

image One of the lasting benefits of the Internet is it's ability to quickly rally resources. The latest proof point: raising funds for Haitian earthquake relief. The big Internet companies, such as Amazon, Google, Bing, Craigslist and PayPal, post links almost immediately to provide site visitors with a trusted path to donate funds (see screenshots below). 

Consumers trust those companies and visit frequently, so it's a great way to raise awareness and funds. But there's another group of Internet powerhouses that historically have not participated in Web-based fundraising: financial institutions.

Even during the New Orleans flooding in 2005, we found only three top-50 banks linking to the Red Cross. It's not a whole lot better this time. But one major bank, Citibank, has a homepage link to earthquake relief (screenshots below). Also, we found two other top-50 banks with homepage links: Astoria Federal and Webster Bank (see screenshots below). None of the largest 10 credit unions had links up on Saturday.

Several major banks, such as Wells Fargo and Chase, have homepage references to their own donations, but no way for their customers to participate directly. 

Online bill-pay fundraising
imageAnother welcome addition to bank-enabled fundraising was launched by Online Resources just two days after the earthquake hit. The bill-pay provider created banners and splash pages for its clients to use in publicizing the availability of bank bill pay for use in donating to the Red Cross (see inset right and top of the page; link to ORCC page with examples).

As of Friday, ORCC had commitments from about 10 clients to participate in the effort.

Mobile fundraising
imageIt was also interesting to see the role mobile is taking in the current crisis. Websites and television networks have done a great job publicizing a simple way to donate $10 to the Red Cross: text "Haiti" to the shortcode 90999. Once you authorize the transaction via a return text message, $10 is automatically added to your mobile phone bill. The service is powered by mGive, a nonprofit based in Colorado. In a Friday blog post, the organization said $8.5 million had been raised so far, a number likely exceeding $10 million by now.

Banks with links: Citibank, Astoria, and Webster Bank (18 Jan. 2010)

image              image 

 Links for Haitian relief at Google, PayPal, Amazon, Craigslist, and Microsoft Bing (18 Jan. 2010, 11 AM PDT)

image  image


 image              image

Comments (2)

P2P Payments: CashEdge's POPmoney Spotted in the Wild at First Hawaiian Bank

By Jim Bruene on December 9, 2009 7:30 PM | Comments

clip_image002When CashEdge demo'd its new person-to-person (P2P) payment solution, POPmoney, at Finovate in September (video here), they said they expected four clients to be live by year-end. It looks like the first one is there, or almost there.

imageFirst Hawaiian Bank has a lengthy POPmoney FAQ posted on its website (see screenshot  below). Pertinent details on the new POPmoney service include (refer to full text below):

  • Cost is $1 per transaction
  • Users can send money via email address, mobile phone number, or directly into the recipient's bank account (if known)
  • Online banking customers will find it in the Transfers section under a tab entitled Send Money
  • P2P payments are limited to $5,000 per month subject to a daily maximum of $1,000 via email/mobile or $2,000 transferred directly to another bank account
  • Payments can be scheduled up to one year in advance

For more on the P2P payments market, see our latest Online Banking Report, published 15 minutes ago: Making the Case for Person-to-Person Payments

First Hawaiian Bank's POPmoney FAQ (link; 8 Dec. 2009)


FAQ text:

What is "POPmoney"?
"POPmoney" is a feature of the FHB Online® banking service that lets you send money to someone electronically via their email address, mobile phone number, or directly to their bank account. Payments to someone's email address or mobile phone number are accompanied with a personalized message letting them know that the funds are available for electronic deposit to wherever they choose, while payments to someone's bank account are deposited automatically.

How much does POPmoney cost?
Sending money via POPmoney costs only $1.00 per transaction.

How do I sign up for POPmoney?
POPmoney is available to customers through the FHB Online service and can be accessed via the "Send Money" tab within the "Transfers" section. If you are not currently enrolled for FHB Online, visit and click on the Online Banking "Enroll" button in the upper left-hand corner of the screen. If you are already enrolled for FHB Online, sign onto FHB Online, go to the Transfers section, and then click on the Send Money (Personal Only) link. Follow the three-step sign-up process:

  • Step 1 POPmoney Agreement - Accept the FHB Online POPmoney amendment.
  • Step 2 Contact Information - Your email address and mobile phone number are required as part of the sign-up process. You will need to verify the email address we have on file is correct. If it is incorrect, please close the window and click "Update Email Address" within the Customer Service tab to update your email address. After confirming your email address, return to the "Transfers - Send Money (Personal Only)" link and you will also be asked to provide a mobile phone number as part of the sign-up process.
  • Step 3 Email/Mobile Phone Validation - We will send verification codes to your email address and mobile phone. Please check your email and your mobile phone for these codes and enter them in the boxes shown on-screen to complete the sign-up process.

Once you've completed the steps above, you will receive a confirmation message indicating that you have successfully signed up for POPmoney. Click "Continue to POPmoney" to start using the service.

Who can I send money to?
You can send money to someone just by knowing their mobile phone number or email address. The person receiving the notification will be able to deposit the money to any personal checking, savings, money market checking, or money market savings account at FHB or nearly any other U.S. bank. You can also send money directly to someone else's bank account if you have their bank routing and account number information.

How does the recipient receive and deposit funds?
If you are sending money to a mobile phone or email address, the recipient will receive a notification with a personalized message indicating that you have sent them a payment. The recipient has two ways of depositing the funds:

  • If the recipient is a First Hawaiian Bank customer, they can deposit the funds into their account via the FHB Online service. Upon enrolling, or if the recipient is already enrolled for FHB Online, they can click on the "Send Money (Personal Only)" to access the POPmoney feature. Any payments that have been sent to them will be listed under the "Incoming Payments & Alerts" tab. They can then select an account to which to deposit the funds. They can also designate whether future payments should be automatically deposited to this account.
  • If the recipient is a not a First Hawaiian Bank customer, or would like to deposit the funds into a non-FHB account, they can visit They will be prompted to provide their mobile phone or email address along with their bank account information for the payment to be deposited.

Can I send money internationally?
No, you can only send money to individuals via their accounts within the U.S.

What is the maximum transaction amount I can make via POPmoney?
The maximum daily amount allowed for POPmoney transactions is the current available balance in the source account (plus any available credit in an associated Yes-CheckSM account if applicable) up to the daily limit mentioned below, whichever is less. This includes any single transaction or the total amount outstanding or "in process." For additional information, see below:

Sending Money to Bank Account

Maximum Amount





Sending Money to Mobile or Email

Maximum Amount





Can I set up recurring or future-dated transactions?
Yes, POPmoney transactions may be scheduled up to 365 days in advance of the date the transaction is to be made. Automatic recurring transactions may also be scheduled for substantially regular intervals (e.g., monthly) in the same amount between the same two accounts. You can schedule recurring transactions to be made weekly, every other week, twice a month, monthly, every four weeks, every other month, quarterly, twice a year, and annually.

How far in advance can I schedule a transaction?
You can schedule a POPmoney transaction up to one year in advance.

When are POPmoney transactions processed?
Transactions will be processed on the date you specify up to a year in advance. Transactions will take approximately three business days to process. Transactions scheduled to process on a weekend or holiday will be processed the previous Business Day.

What is the cut-off time to submit a transaction?
The cut-off time for submitting transactions is 7:00 p.m. HT each Business Day. Transactions submitted after 7:00 p.m. HT or on weekends or holidays will be processed the next Business Day. A Business Day is every calendar day except for Saturdays, Sundays, and bank holidays.

What is the cut-off time to change or delete upcoming transactions?
The cut-off time to change or delete an upcoming transaction is 7:00 p.m. Hawaii Standard Time the previous Business Day prior to the send date.

When does the transaction get debited from my account?
The transaction debit request is initiated on the "send date" but will not post against your account for one to two days.

What happens if I set up a transaction but do not have sufficient funds in my account on the "send date?"
If, on the "send date," there is insufficient balance in your account to make a transaction you authorized, we will delay the transaction and try again on the next Business Day. If there is still insufficient balance to make the transaction, we may either refuse to pay the item, or we may make the transaction and overdraw your account. In either event, you will be responsible for any non-sufficient funds ("NSF") or overdraft charges that may result.

How many people can I add to my list of contacts?
You may add up to a total of 50 contacts.

I used to send money to third parties via the External Transfers function. What will happen to this information?
As part of introducing POPmoney, we have migrated your third-party information and activity from External Transfers to POPmoney. This includes contacts or accounts, as well as upcoming and previous transactions. Categories for previous transactions will not be migrated and will need to be re-defined.

How do I disable POPmoney?
You may disable POPmoney by calling us at 643-4343 (1-888-643-4343 from the Continental U.S., Guam, and CNMI). Please note that disabling POPmoney will also disable your access to External Transfers.


ING Direct's Electric Orange Checking Gets Bill-Payment Facelift

By Jim Bruene on July 24, 2009 11:00 AM | Comments (1)

image ING Direct's (USA) paperless-checking account, Electric Orange, will get a new bill-pay user interface over the weekend (see first screenshot). The direct banking giant has also jazzed up the logo (inset) for its online checking option introduced in early 2007 (previous post).

The new GUI attempts to make bill payment more understandable. With paper and electronic delivery to merchants, person-to-person payments (also paper or electronic), and expedited payments thrown in the mix, it was hard for users to know exactly which option to select (see second screenshot for old user interface). 

ING Direct has reorganized payments into four functions and clearly identified the free (#1-3) vs. fee (#4):

1. Bill pay (paying merchants)
2. Person2Person (sending to an individual's bank account)
3. Send a paper check
4. Overnight a check (for $20)

The company is also adding the following features (see third screenshot):

  • Electronic bill statements (ebills)
  • Email due-date reminders
  • New sorting options
  • Expanded recurring payment options
  • Simplified navigation
  • Clearly shows estimated payment arrival date

Customers have been notified through two emails that various aspects of bill pay will not be functioning beginning over the three-day weekend as the system is converted. 

Analysis: Overall, it's a significant improvement, but there are still confusing aspects for novice users. For example, how do I decide between Person2Person and Send a Check? (see note 1) Why should I pay $20 for overnight, when the same delivery terms seem to be available in free bill pay? I'll withhold final judgment until I have a chance to use it next week.  

1. New bill-pay interface (link, begins 25 July 2009)


2. Previous user interface (22 July 2009)


3. Landing page describing the changes (link, 23 July 2009)


1. Answer: You have to have the person's bank account info to use the P2P option.
2. For more on bill payment, see our Online Banking Report on Epayments (also part 1) (published in 2005) and the Online Banking Report 2009 through 2018 Forecast (published Jan 2009). 

Comments (1)

Little Earth Day Excitement at U.S. Banking Websites

By Jim Bruene on April 22, 2009 4:22 PM | Comments (3)

image Given the financial benefits of driving paper out of the banking system, I was surprised to see little evidence of banks or credit unions using Earth Day to promote paper-saving options (eStatements, electronic bill pay, ebills) or fuel-saving approaches (online banking, remote deposit capture, bank by mail).

I looked at the 30 largest retail banks and the 10 largest credit unions and found just three green banking promos running on the homepage: Sovereign Bank (Santander), Zions Bank, and Citizens Bank (Royal Bank of Scotland).

And none of those were Earth Day specific. A Google search turned up a few credit unions sponsoring shredding days, which are nice, but not really doing much for the environment.

Sovereign Bank (Santander)
Santander's Sovereign Bank encourages users to go green by signing up for bill pay and ebills. A savings calculator on the landing page allows users to determine the environmental impact of converting bill pay activity from paper to electronic. In addition to the environmental benefits of eliminating paper, the bank promises to plant a tree for every ebill initiated.

The incentive program is conducted in partnership with the bank's bill payment provider Fiserv/CheckFree (press release).  Similar programs are also in place at BankAtlantic, Fifth Third Bank, PSCU Financial Services, SunTrust and USAAimage

Sovereign landing page (22 April 2009)



Zions Bank
Zions promotes eStatements in a small mid-page graphic. No monetary incentives are provided.


Citizens Bank

RBS's Citizens Bank is pushing its Green$ense checking rewards program that pays users $0.20 per electronic transaction for the next 12 months. Ultra-heavy users (3x per day), could bag up to $20/month in savings.  


Comments (3)

Bill Pay Needs an "Oops" Button

By Jim Bruene on March 24, 2009 5:00 PM | Comments (3)

image Gmail's new undo send option, aka the "oops button," has been well received in online circles. Gmail users that enable the feature in the Google Labs area, have 5 seconds after hitting send to recall the message by pressing "undue" at the top of the page (see screenshot below). It's a nice addition, although it would be better if you had more than 5 seconds to react.

The same concept would work nicely in online bill payment. While most bill-pay systems have several safeguards to prevent unwanted payments to go out, including a confirmation screen and an "edit pending payments" function, those functions still require some knowledge of the system to properly use.

A simple "undoue" button would make the process much faster. More importantly, it would make the bill-pay system appear more user friendly, helping increase usage. 

Gmail undo send function (24 March 2009)


Comments (3)
Categories: Bill payment, Google

Bill Me Later Lands at #6 in the Inc. 5000 Fastest Growing List

By Jim Bruene on August 29, 2007 8:03 AM | Comments

Link to Inc. mag listing for Bill Me LaterIt's isn't often you see one of the companies that we write about make it to the top of Inc. Magazine's list of fastest growing private companies (note 1). But this year, Timonium, MD-based Bill Me Later landed at number six.  

To make it to the top, it takes an amazing amount of growth over a three-year period; in Bill Me Later's case, 87-fold, usually combined with a very small number in the base year ($600,000 in 2003) to top the chart (note 2). 

The self-reported revenue figures for the company are:

2003: $610,000
2006: $53.6 million
3-Year growth: 8,650%
Number of employees: 100

The company's been on a fabulous run and it will be interesting to see how long they stay private. Depending on the credit quality of the company's receivables, it could be an attractive acquisition target for a traditional financial institution or for a certain Web-based payment giant. 

Two other companies we follow made the top 500:

#205: (Austin, TX) with an amazing $43 million revenues, up 10-fold from its $3.7 million in 2003. With 16 employees, the company does almost $3 million per.

#382: CashEdge (New York, NY) up 7.5 fold from $2.4 million in 2003, to $20.4 million last year, 315 employees. 

Congratulations to this year's high fliers.


1. The Inc. list was expanded 10-fold this year to 5,000 companies 

2. The percent-growth rankings are far more dependent on the denominator than the numerator. If Bill Me Later would have had $400,000 less revenue in 2003 they would have grown 268-fold and topped this year's list. However, even $10 million more in 2006 revenues would only push them up one spot. 

Categories: Bill payment, CashEdge

Wesabe, Billeo Add Image Capture: Is it the Next Must-Have Online Banking Feature?

By Jim Bruene on July 25, 2007 6:17 PM | Comments (1)

Link to WesabeThis past week, two Web-based personal finance firms, Wesabe and Billeo, have announced feature upgrades (Wesabe release here, Billeo here). One common thread: the ability to easily capture screen images of ecommerce transactions and file them for later reference (note 1).

Link to BilleoThe time-saving feature was added to Quicken several versions ago, but it's still not yet supported at any financial institution or credit card issuer (see Online Banking Report: Personal Finance Feature for Online Banking here). While it won't change the world, it sure eliminates one of life's little hassles, the decision each time you transact online as to whether you really should "print out this page for future reference" (and where to store the pesky printout if you do.)

How image capture works today:

  1. Pay a bill or purchase something online.
  2. At completion of the transaction, select "browser snapshot" from Wesabe's drop-down menu or "save & file" from Billeo's toolbar (see screenshots below). 
  3. The image of the transaction confirmation screen is stored within the personal finance area and is available for future reference should there be a problem with the transaction; since it's stored as an image file, it can easily be emailed to a disbelieving customer-service agent. Billeo includes a "forward" button in its vault to make it even easier.

How image capture can be enhanced in the future: 

  1. It will automate the transaction-reconciliation process, scraping data from the confirmation screen and automatically verifying that the transaction was processed against the user's bank or credit account properly. Billeo popup
  2. If not, an email/text alert will notify the end-user of the potential problem.
  3. A template could be provided for communicating with the merchant to rectify the problem.
  4. The scraped transaction data could also be run against a tagging engine to add very specific transaction tags, e.g., the purchase at Amazon could be split into x dollars for music, y dollars for housewares and z dollars for housewares.

Billeo's Screenshot Capture Feature
To save a screenshot of a payment confirmation, or anything else, users select the shopping button on the Billeo toolbar. That causes a popup to appear (see inset for closeup) where the user selects the bank/card account, enters a transaction description if desired, chooses a page type, selects the correct purchase amount from the values scraped from the screen, and edits the date paid if necessary.

Billeo popup provides users a method of capturing payment details along with the screenshot of the page

Billeo page/transaction capture

Page viewed later in the transaction records
Users can view the transaction and/or image file later in two Billeo areas: My Vault (not shown) and MyBills (below). Mousing over the paperclip launches a thumbnail of the page; clicking on it launches a full-size view of the page.

Wesabe's Screenshot Capture Feature

To save a screenshot, users click on the Wesabe button on the Firefox toolbar. A few seconds later, the screenshot loads (second screenshot below) and users choose whether to "upload to Wesabe" or "save to disk" or both. After the picture has been saved, the user closes the screen. In our test, save-to-disk worked as expected, and it was easy to retrieve the file through Windows Explorer. However, although the upload to Wesabe seemed to work, we couldn't figure out how to access the uploaded screenshots within our Wesabe account.

Closeup of Wesabe tool

Wesabe page capture tool 

Full screenshot of page after launching Wesabe screenshot uploader

Wesabe page capture


1. Billeo has supported page-capture since its 2005 launch, but it was not integrated into the payments-transaction register.

Comments (1)

Followup Friday: More on the Bank of America & Verizon Online Billing Co-promotion

By Jim Bruene on April 27, 2007 11:29 AM | Comments (1)

Little did I know when I wrote about Verizon Wireless promoting Bank of America billpay on its site (here), that the company that brokered the deal, CheckFree, along with representatives from both consumer giants, would be presenting the results of the effort at Nacha's Payments conference last week (see note 1). I wasn't there, but I was filled in on the details by CheckFree's PR director Sheryl Roehl.

First, my assumption was wrong. It was NOT a paid placement by BofA. No money changed hands. It was classic joint marketing with each company promoting the other on their websites. The exposure to each others' massive customer bases trumps any concern over who benefits most by converting Verizon customers into ebilling users (see note 2).

In the prior post, I showed you BofA's ad on Verizon's site, here's what the Verizon placement looked like on the bank's site (note 3):

Verizon banner in BofA's main online banking area

Verizon placement in BofA's online banking area

Landing page for the Verizon promo

Verizon landing page from BofA promo

Email me if you'd like the presentation slides, which also include more figures about ebilling adoption (note 4).


Penetration of U.S. online household per Harris Interactive, Feb. 2007

1. The joint presentation was by: Angeline DePauw, director electronic remittance Processing, Verizon Communications; Laurie Profilio Sass, eCommerce marketing, Bank of America; and Lori Stepp, managing executive E-bill Adoption Services, CheckFree

2. It's hard to say which company gains the most in an ebill conversion. Verizon saves money by eliminating the paper and BofA potentially converts a customer into ebilling, an important retention benefit.

3. The screenshot is from the NACHA Payments presentation; it is a mockup, note the 2004 date, but presumably is an accurate representation of what the promo looked like.

4. CheckFree presented the latest penetration numbers at the conference, as determined in their Feb. 2007 research conducted by Harris Interactive. Three-quarters of ONLINE households, or about half of all households, now pay a bill or bills online with biller direct (55%) leading pay-anyone (38%) by a measurable margin (19% do both). See inset.

Comments (1)

Bank of America's "Paid Placement" at Verizon Wireless Bill Payment

By Jim Bruene on April 21, 2007 8:37 AM | Comments

Update: It turns out that this was NOT a paid placement, but a joint marketing program. See April 27 post here.  

Here's an interesting twist on marketing bill payment services, Bank of America's  presence  on the Verizon Wireless post-login account page (see note 1). Here's how it works, according to a long-time reader and Verizon customer:

When Verizon wireless customers log in to their Verizon account online, the main page has a banner encouraging them to pay their bills at Bank of America's online billpay site (see below). Verizon also hosts a page on the benefits of paying through Bank of America and a link to the bank's login screen (see below).

I haven't seen this before, but since it all takes place behind Verizon's login, it's not visible to the outside world. I checked out the Verizon website this morning and Bank of America is not mentioned in the public areas. Has anyone seen this at other merchant sites? Leave a comment or email

Everyone assumes that merchants want the bills paid directly on their site to maintain full control of the customer relationship. But evidently, even large merchants can be convinced to share the payment relationship if given proper incentives. 

Bank of America Banner on Verizon Main Account Page

Verizon Wireless account page with BofA billpay

More-info Page Hosted by Verizon Wireless

Verizon Wireless pitch for BofA bill pay  


1. I am assuming Bank of America is paying for the linkage; but it could be a joint marketing relationship where the bank pitches Verizon Wireless services in return for the exposure. The screenshots were submitted in early April.


Wells Fargo Adds Value to Mobile Bill Payments, But Not in the Way You Are Thinking

By Jim Bruene on March 22, 2007 5:38 PM | Comments (1)

If you've been reading this blog for long, you know I'm going through a "mobile" phase. There's two reasons for that:

1. It's an interesting and important extension to online banking, our core area of expertise.

2. I am in the process of writing two extensive reports on the subject, the first was published a few weeks ago on mobile banking (link here) and the second is due out by the end of the month on mobile payments.

FRONT: Wells Fargo credit card insert touting cellphone protection So I had to laugh when I opened by Wells Fargo credit card bill today, not at the size of the bill which was not at all funny, but at the insert that fell out pitching, "cellular phone protection at no cost" (see front of insert right, back of insert below).  

This is a different type of "mobile payment" than what I've been thinking about lately. But, this Wells Fargo program is brilliant, and has a much better business case, at least in the short term.

Here's what Wells Fargo is proposing:

1. Put your mobile phone bill on automatic payment via your Wells credit card.

2. In the event your phone is damaged or stolen, you will be reimbursed for up to $100 in damages, after a $50 deductible (see note 1).

The business case for this program looks fabulous. Assuming an average mobile phone bill of $60/mo x 12 months x 1.5% ROA = about $10 per year in revenue. While the cost should be just a few pennies per year in insurance payouts, given the difficulty in filing a claim. 

Even though the bank will pay out benefits to cardholders who had their cellphone charged to Wells even without the incentive, the bank should earn 10x to 20x the cost of the program each year. BACK: Wells Fargo credit card insert on cellphone protection Maybe Wells can put some of that windfall into a new mobile access to online banking and credit card info. 


1. To keep costs down, the maximum number of claims is two per 12-month period, $200 in total. And the claim procedure is  cumbersome, especially for a maximum payout of $100. You'll need copy of receipts, statements, other insurance coverage, police reports, and so on. The full details of the fine print are online here.   

Comments (1)

Citibank's Instant-Win Billpay Sweeps

By Jim Bruene on March 20, 2007 10:39 AM | Comments

Ad on Citibank's Online Banking pageEarlier this year, we wrote about how easy it is to run an online instant prize contest using ePrize (see post here). Today, we see that Citibank is using the company to power an instant-win game and billpay usage sweepstakes. They share the same creative and both run March 1 through April 30, but otherwise have little to do with each other.

The instant-win game can be played by anyone and finishes with an ad for Citi's e-Savings account. The sweepstakes rewards Citi billpay customers with automatic sweepstakes entries tied to billpay usage. Here are the specifics:  

1. Instant win: Anyone who registers with an email address and date of birth may spin the wheel up to three times each day to win won of 300 prizes awarded randomly between March 1 and April 30, 2007. The total prize pool is $15,000 with one-hundred $100 winners and two-hundred $25 prizes. At the end of each play, Citi pitches its e-Savings account with 4.75% APY and $25 signing bonus, which is slightly different than its website promotion of 4.65% and $50 bonus (see screenshots below). 

2. Usage sweepstakes: Citibank billpay customers are also entered into a sweepstakes with a single grand prize of $25,000. Each bill payment of more than $5, after the first four during the 60-day run, receives one automatic entry into the sweeps. 

The promotion is advertised on its main Banking page with a small banner (see screenshot below). A larger promotion (see inset above) appears on the Online Banking page (see note 1).

Screenshots: Citibank signup page, "spin" the wheel to play, loser's page with cross-sell of 4.75% savings account (click to enlarge)

 Citibank's registration page for instant-win billpay game CLICK TO ENLARGE   Citibank's instant-win game CLICK TO ENLARGE  

Citibank e-Savings cross sell after losing the instant-win game 

Citibank main "banking" page with sweepstakes promo

Citibank's "Banking" page showing ad for instant-win game


1. Tested from a Seattle, WA IP address at 10 AM PDT. Cookies are enabled and will show multiple visits to Citibank, but no evidence of any Citibank accounts.


ING Direct Makes Checking (Almost) Fun Again

By Jim Bruene on February 22, 2007 4:47 PM | Comments (13)

According to, the "modern" check dates back to the early 1500s; that is, if you don't count chiseled IOUs from the Roman era 2,000 years earlier (see history here).

Five-hundred years ago, I'm sure a "user customizable" piece of paper you could trade for a goat was an exciting new way to pay for something. But there hasn't been a whole lot of innovation since then. As a matter of fact, the paper check-writing practice has all but disappeared in most countries.   

That's why it's newsworthy when someone puts a new spin on a five-centuries-old product as ING Direct is attempting with its new Electric Orange (EO) checking, currently in invitation-only trial, but soon to be released to the entire country. And they are having some early success, landing more than 60,000 accounts as we mentioned here, and creating some online buzz as Ron Shevlin points to here at Marketing ROI.  

What are the features of Electric Checking

  • Cool name
  • Great user interface for payments (see screenshots below)
  • Same-screen initiation of electric (ACH) or paper payments
  • 24-hour payment delivery for $15 fee
  • High-payment limits: $100,000 for paper, $25,000 per day on debit card, $5,000 for ACH, and $1,000 per day on ATM withdrawals
  • Good branding with the ING Direct no-nonsense design, colors, and copy
  • 100% fee-free (other than a few rare items)
  • 4% to 5.3% interest depending on balance (see note 1)
  • 30-second account setup for existing ING Direct customers
  • Easy-to-use website and online access
  • No paper checks

Electric Orange is an outstanding product, with one major exception which I'll discuss later. The online integration of electronic and paper payments on the same screen makes it intuitive to use and perhaps the best bill-pay suite on the market (see screenshot below). With 32,000 free ATMs, high interest rates, and a MasterCard debit card, this account competes fairly well with old school checking accounts that also come bundled with unlimited free access to 5,000-square-foot human-powered branches. 

But I take issue with the account's most unique feature, "no paper checks" (see note 2). While I understand the marketing advantage of this anti-paper non-benefit, it's actually somewhat limiting for account holders. Instead of not supporting paper at all, why not simply charge a hefty transaction fee for paper checks while keeping electronic items fee-free? Sell me bright orange checks for $5 per 100 and charge a quarter per cleared check. That'll keep the volume down, while allowing customers the convenience of the old-fashioned paper check. And ING Direct gets the "viral marketing" benefit of those bright orange negotiable instruments being literally flown across the country.

I'd be willing to give up preprinted paper checks if a good subsitute were available. Reading earlier descriptions of the account before its introduction, I thought the bank had invented a new in-home process for printing checks, like printing through Quicken but a whole lot easier. Unfortunately, the paper option is good old online bill pay, complete with five-day mailing delays. That won't cut it when you need to pay the lawn guys standing in your front yard with a truck full of toxic liquid (see note 3).  

The last missing piece in EO is electrification of the deposit process. Since the bank opened its doors in late 2000, it's been exceptionally easy to ACH money into the account. That's been one of its key growth drivers. But now that it offers full checking services, the bank should adopt remote deposit capture technology so EO customers could zip paper checks to them over the Net (see USAA's remote deposit service here).

ING Direct Electric Orange main payments screen
Select electric or paper checks

Electric Orange "send paper check" interface
Looks just like a "paper" check, and no need to have the payee set up prior to creating the payment (see next step)

ING Direct "add payee" interface
If the payee in the previous step is new, users simply "address" this virtual envelope to set up the payee; users also have the option of not saving the payee info.


1. In online forums and blogs, some confusion has been expressed about what happens within this account when more than six transactions are made in a single statement period. In the account disclosure, ING Direct says that each Electric Orange account is divided into a savings account and checking account, and that the bank will direct deposits into the appropriate account as it deems appropriate, but that after six transactions, all funds will be put into the checking subaccount. However, all monies EARN THE SAME RATE OF INTEREST, so there is no impact on the customer, nor does the customer even see these transfers. It's a technical manipulation that saves ING Direct from having to maintain transaction account reserves on most balances, thereby cutting costs. 

2. Actually ING Direct does offer "remote paper check" initiation via the online bill pay function where users choose from electric or paper checks (see screenshot above). The bank just doesn't allow users to have the paper in their own hands.

3. The bank does offer a quicker ACH payment function, but you need to have access to the bank account number of the recipient, which is not readily available from most people/businesses to whom occasional checks are written. And ACH usually takes 48 to 72 hours to post in the recipient's account, unless they are ING Direct customers.

Comments (13)

Digital Insight Now Officially Part of Intuit

By Jim Bruene on February 8, 2007 3:16 PM | Comments

Link to Digital Insight website Intuit's $1.3 billion acquisition of Digital Insight closed yesterday, marking the beginning of a new era of innovation in small business online banking (previous coverage here). It's a market that's been underserved for years (see Online Banking Report'sSmall- and Microbusiness Online Banking, #107/108).

Intuit, which has iPod-like domination of small business accounting and bookkeeping via Quicken and QuickBooks, can now leverage the software relationship into the banking relationship.  The bloggers at Intuit's QuickBooks team-blog expanded on that theme here, discussing their goal of integrating electronic invoicing and payments into the bank site:

Why the purchase? One reason is to try to sell functionality of our record-keeping software as a service through banks, letting small businesses create, send, and get paid for invoices, all online at a bank's site. With millions of QuickBooks customers, we think we have some insight into small business' needs.... We learned from our tax return business how quickly packaged software can move to a Web service. Last year, for the first time, more people used the online version of our Turbo Tax Web service than the desktop version.

This is not necessarily bad for financial institutions. In fact, it probably levels the playing field for the smaller banks and credit unions that are the core of the DI client base. Through integration into Intuit's accounting products, smaller banks will be able to offer sophisticated small business solutions that equal or surpass what Bank of America or Wells Fargo offers today.


billQ Uses Account-Specific RSS Feeds for Bill Payment notices

By Jim Bruene on December 11, 2006 10:29 AM | Comments

For the past few months, I've been more or less obsessed with RSS feeds (see our latest full report on the subject here). All of a sudden every information-delivery problem seems solvable with a feed.

And there is enormous potential for feeds in everyday banking which primarily involves simple information queries: What's my balance? Did my check clear? Was my mortgage paid? 

The first account-specific financial feed
I've been on the lookout for the first financial institution with account-specific feeds. That search continues, but a non-bank has been using feeds for bill-payment-status updates: previous OBR Best of the Web winner billQ <> (see previous coverage here).

The company has an "RSS Feed" option on its list of automated bill-payment-tracking mechanisms which also include an iCalendar subscription, an Apple OS X widget, or a toolbar applet (see screenshot below for billQ subscription options).

billQ bill subscription options CLICK TO ENLARGE

When using the RSS feed option, bills automatically appear in the user's newsreader software. Below is an example using the Newsgator Web-based reader:


Billeo Scores Distribution Deal with Target REDcard

By Jim Bruene on October 20, 2006 9:54 AM | Comments

Automatic bill pay description at CLICK TO ENLARGEIn a distribution deal similar to the partnership launched earlier this year, Billeo is now powering biller-direct payments for Target's REDcard (see inset). See previous coverage here.

Billeo received an Online Banking Report Best of the Web award in 2005 for its innovative toolbar-based payment services (see 15 March 2005 post).

How it works
New users start by searching for credit-card-accepting billers via zipcode and company search (see screenshot below).

To schedule a payment and use the other tools, users must first register with Billeo. While the initial biller-search screen runs under Target branding, the sign-up page and subsequent user interfaces do not maintain any Target branding.

Previous Billeo users can skip the registration process and simply sign in to their previous Billeo account.

Biller search powered by Billeo CLICK TO ENLARGE

Categories: Bill payment, Billeo, Epayments

Yodlee Announces Bill Pay Switch Kit

By Jim Bruene on September 21, 2006 3:02 PM | Comments

Yodlee_logo_1This week Yodlee announced its new Bill Pay Account Accelerator, a bill-pay-switching tool designed to help banks attract active users of competitive bill payment services. Not only does Yodlee's wizard move payee information, it also can cancel and move previously scheduled payments, including recurring ones.

The service will be piloted in fourth quarter and launched in early 2007.

If it works, it could reduce the "retention benefits" of electronic bill pay by making it easier to switch banks. The American Banker article reporting the new service hit hard on that aspect. However, we think the concern is overblown. It's not that time-consuming for most people to move their payee information, requiring 10 or 15 minutes of "cutting and pasting" or "scribbling and retyping," then a few more minutes to reschedule upcoming payments.

What's MUCH harder for the user is making sure outstanding paper checks have cleared and, more importantly, unwinding preauthorized debits such as important insurance and loan payments. Those require contacting the payee directly and hoping that your instructions to change the debit are processed in a timely fashion.

But the biggest issue is motivating users to make a checking account switch in the first place. And that's where Yodlee solution could provide a big boost, offering the perception of radically simplifying the switchover. And if Yodlee expands the tool to also transfer the entire account history, not just the bill pay history, it could become an important industry tool.

Since it doesn't ship until next year, we'll refrain from superlatives until we've had a chance to test it. But Yodlee has a good track record in hooking accounts together, and we expect the new service to be functional. However, whether banks will adopt it is another matter. It will have to be drop-dead simple to use or banks will not want the ensuing customer-service nightmare.


billQ Bill Payment Mac Widget Released

By Jim Bruene on September 14, 2006 12:47 AM | Comments

Billq_widgetOur most recent OBR Best of the Web winner (NB Sep 1), Seen Creative's billQ, has achieved another industry first, a bill payment-tracking widget for Apple Mac users (here's where you can download it from Apple's site).

The widget allows Mac users to drop a small billQ screen right onto their desktop (see NB 2 May 2005). It allows users to see what bills are due and mark them as paid without ever leaving their desktop.

The widget can also be downloaded at billQ's website <>.


WhatBills - Bill Payment Reminder Service

By Jim Bruene on July 31, 2006 2:12 PM | Comments

Whatbills_logoLaunched this month, Whatbills <> is a simple $1.95/mo Web-based service for tracking your bills and sending yourself email reminders to pay. Although the functionality is limited, iWhatbills_googlesearch_quickenonlinet's the kind of service banks should be offering. We found out about the service through its Google advertisement on the phrase "quicken online" (see screenshot right).

The interface is similar to Billeo (NB Feb. 14), but with far fewer functions. Users can do three things:

  1. Enter bill name, category, due date and amount
  2. Send themselves email reminders to pay
  3. Mark bills as paid

The entire program today is shown on the screenshot below:


Business model
At a cost of $1.95/mo, which is about what you'd pay each year for Intuit's Quicken Basic, the company doesn't seem to have a compelling selling proposition. It would make more sense to offer a limited free version, perhaps earning a few pennies per month per user by displaying advertising on the user interface. Then upgrade users to a premium plan with more features.

Whatbills_homeBut neither of those business models will yield much more than low-six figures per year. A more likely scenario for the San Diego-based company is a sale to Microsoft, Google, or a major financial institution for a few hundred thousand, a price that would be less expensive for a large company than developing the application internally.

Update: A similar Web-based service, BudgetTracker <> founded in 2003, has a free version that uses Google AdSense revenue to keep it running. For $19.99/yr users can upgrade to an ad-free version that also provides unlimited data storage and several additional features such as bank-data import. See the price plans here.



Banking Bill Payment Guarantees

By Jim Bruene on April 15, 2005 8:01 PM | Comments

Checkfree_logoWe believe a strong bill payment guarantee is crucial, not only to the credibility of your epayments program, but by implication, to your entire online banking offering. CheckFree has offered its logo up for years, but your customers want to know what YOU will do for them; most would prefer to know nothing about CheckFree.

And your guarantee needs to be visible to both online banking users and those just thinking about it. One of the best ways to increase visibility is by creating a "bill-pay guarantee" icon that users can click through to learn more about it.

Citi_billpay_logo_1 One of the better examples is at Citibank (inset) on its logon page. When you click on the logo, a small popup appears (click on the thumbnail below):


This guarantee has great copy, you can tell the marketing department was heavily involved. Rather than just reiterating the rather droll performance guarantee,* the bank also highlights several benefits:

  • No hidden charges, in other words, unlike "free checking," bill pay really is free
  • 24/7 service with "fast response"

*Citi's bill-pay guarantee states that payments will be processed within 24-hours and delivered to payees according to the schedule, or the bank will pay for any fees incurred.



Bill Payment Toolbar from Billeo

By Jim Bruene on February 16, 2005 4:09 PM | Comments

Billeo_click_to_enlarge Just when you thought the banks were gaining an upper hand in the electronic bill payment battle, up pops a newcomer with a fresh approach. Take a moment to check out Billeo. An odd name, but so is iPod, and it seems to be working pretty well.

We haven't used it yet, so these comments are preliminary, but "on paper" this company and its approach appear to be winners. (One caveat: the business model is unknown, and the privacy policy is a bit ambiguous when it comes to the issue of adware. We'll keep you posted on what we find out.)

Billeo is a free toolbar-resident application that plays "virtual assistant," enabling more convenient and controlled direct bill payment at vendor sites. The toolbar also serves as an e-wallet simplifying online point-of-sale transactions.

The toolbar contains several unique features, one of which is extremely impressive, the ability to save screen captures of transaction receipts. The application also includes payment reminders, a payment register, and a personal "bill payment" email address for users.

There are several familiar names associated with the startup. Nancy Langer, a former exec at Metavante, is the president. The advisory board includes Eric Dunn, formerly with Intuit, Shankar Srinivasan co-founder of Cyberbills, and Scott Loftesness of Glenbrook Partners.

We'll dissect the new service in Part 2 of our upcoming Electronic Payments Report in Online Banking Report.


Editor's Note: Billeo was named "OBR Best of the Web" in the second part of its series on E-Payments (OBR 119) published in June 2005. 


Pricing Online Bill Payment

By Jim Bruene on August 26, 2004 5:51 PM | Comments

We just sent our latest report, "Pricing: The Fee vs. Free Controversy" to the printer. It should arrive in your mail in a week to 10 days.

In the report we look at the widespread practice of offering of online bill payment free of charge. You can read the report for our detailed conclusions, but suffice it to say, we are not wild about this trend. Online banking and bill payment provides significant value. And without a tangible revenue stream, it's difficult to make the appropriate investments in the channel. We think bank customers will actually be better off in the long run if they shoulder at least a portion of the extra costs of a robust online banking service.

Free bill payment is particularly vexing. Here's a service that runs circles around the paper equivalent. Users can save time, save money (postage, late fees, and check printing fees), can improve bill tracking and budgeting, and make their financial life easier. And, if the electronic payment doesn't post at the biller on time, the bank and/or processor will go to bat for them to resolve the problem. Try doing that with a paper check that's "lost in the mail."

So why do banks insist on providing this beneficial and costly service free of charge? They are doing it for the "relationship" value. No doubt users love getting something for nothing. And we won't dispute the correlation between bill pay users and higher household profitability. But so what. You can correlate higher profits with any service designed for a well-heeled audience.

The bigger question is this: Is free bill payment, costing $50 to $100 per customer per year, the best way to gain more loans and deposits from your best customers? It may be, but there may also be less expensive ways to achieve similar results, such as lifetime transaction archives or more account security options.

It's a tough call.

If you'd like to learn more about the future of online bill payment, check out the Online Banking & Bill Pay Forecast: Current, future and historical usage: 1994 to 2016 from our sister publication, The Online Banking Report.

Categories: Bill payment, Epayments

Gallery of Free Bill Payment Promotions

By Jim Bruene on August 8, 2004 1:35 PM | Comments

Categories: Bill payment

Strategic Alternatives to Across-the-Board FREE

By Jim Bruene on August 5, 2004 1:33 PM | Comments

Eliminating bill payment fees is the simplest way to make customers happy. However, there may be less expensive alternatives that position you better for the long term.


First, let’s look at how consumers choose a bill payment service provider. It’s not so much about the price. What they want is to have their bills paid in a timely manner with the least amount of effort and maximum amount of control. Other factors play a role as well:

  • overall complexity of household finances
  • technological sophistication and outlook
  • financial experience and behavior
  • risk tolerance


Table 9, right, lists 43 attributes related to the consumer’s bill payment purchase decision.


So, rather than offering it fee-free, perhaps you could improve your value-proposition in other ways to provide a similar adoption lift without losing the fee income altogether.  Following are five alternative approaches.


1. Conditional (on another purchase)

·      Free if you do add something that improves revenues, such as adding an account

·      Free if you do something that lowers costs such as switch to estatements*

·      Free with minimum balance levels

·      Free as part of an overall relationship account


2. Crippled (reduced features and benefits)

·      Free with usage limited to electronic merchants only

·      Free with reduced or pay-per-incident customer service

·      Free with reduced functionality

·      Free with reduced usage


*Two top-50 banks are using this approach, First Tennessee and National Commerce Financial


Table 9

Factors Used by Consumers When Selecting a Bill Payment Provider

  • security
  • customer service availability
  • quality of customer service
  • timeliness of payments
  • turnaround time of the payment
  • payment scheduling requirements
  • guarantees in the event of late/lost payments
  • usability
  • tracking of payments in process
  • stop-payment capabilities
  • merchant list
  • process to add a merchant
  • ability to review the billing statement
  • confirmation numbers
  • confirmation messages
  • ability to schedule recurring payments
  • how long it takes to complete a bill payment session
  • how easy is to make a mistake
  • session logs
  • payment limits
  • look and feel
  • integration with other online banking activities
  • built-in credit to handle shortfalls
  • ability to pay from multiple accounts
  • archives of payment transactions
  • reporting
  • automation options
  • positive word of mouth
  • customer service wait times
  • online FAQs
  • online instant messaging support
  • telephone support
  • learning curve
  • SMS/IM confirmations
  • ability to schedule via telephone
  • integrated email to payees
  • budgeting/planning tools
  • search capabilities for prior transactions
  • expedited transactions
  • control
  • privacy
  • trust
  • perceived record keeping improvements

Source: Online Banking Report, 8/04


3. Substitute other lower-cost FREE services

·      Free paper check and statement archives

·      Free account aggregation with online bill manager (see )

·      Free 24/7 customer service

·      Free interbank transfers

·      Free credit report information

·      Free account alerts

·      Free companion air fare or other non-banking incentive



4. Provide overall relationship incentives

·      Higher rates or lower fees on checking or other deposit accounts

·      Lower rates and/or higher lines of credit

·      Higher service levels and better guarantees


5. FREE as part of plain-vanilla, reduced-benefit online banking package

·      Actively upsell advanced fee-based packages with numerous additional features and benefits (see Table 10 below)

·      Limit the life of the plain-vanilla package; enact forced conversion after several years into fee-based product


Table 10

Bill Payment Product Differentiation


Source: Online Banking Report, 8/04


Categories: Bill payment

The Bottom Line on Subsidizing Bill Payment

By Jim Bruene on August 4, 2004 1:31 PM | Comments

The real question: Does subsidizing bill payment improve profits more than spending that money in other ways, e.g., better service, better branches, better website, and so on? Only individual financial institutions can answer the question, factoring all the alternative uses of capital. However, we caution against blindly jumping on the fee-less bandwagon. Think of free bill pay as just one more strategic choice, not a mandate from the marketplace.


The simplest approach is a breakeven analysis
(see Table 8, right). In other words, will my current bill pay base, and the new customers attracted to a free offering, bring in enough extra business to cover the $50 to $75 annual subsidy?1


On the deposit side, the case is pretty weak: to offset a $60 annual subsidy, you’d need incremental balances of $3,000 at a 2% spread or $6,000 at a 1% spread. On the loan side, the numbers work better. At a 4% spread, you only need an extra $1,500 to break even. But is subsidized bill payment really the most cost effective way to increase loan balances? If so, you should probably make a more direct tie-in, such as waving bill pay fees for taking a new credit line (see “Bill Pay Credit Lines,” OBR 81


Mini Business Case

A more precise measure of the balance levels needed to cover bill payment fee waivers looks at the total cost of bill pay and the number of incremental customers attracted. For this calculation, use the following assumptions:

·      $90 annual cost for each bill pay customer, including internal servicing costs and outsourced processing

·      50% of bill pay customers would pay $5/mo

·      50% are incremental, drawn by the free offer

·      10,000 total users





So the total incremental cost is:

·      New users: 5,000 x $90 = $450,000

·      Forgone fees from existing users:
5,000 x $60 = $300,000

·      Total incremental costs: $750,000


Table 8

Breakeven Incremental Balances



Incremental Balances Needed to Breakeven



Per Bill Pay Customer


$75 million



$50 million



$38 million



$30 million



$25 million



$19 million



$15 million



$13 million



$11 million



Source: Online Banking Report, 8/04



Even with a modest base of 5,000 bill pay customers currently paying $5/mo for the service, you may need to attract $25 million or more in incremental balances to make back the $750,000 in incremental costs. Even if you think that’s possible, is that the best return on the $750,000 “investment.” Would that money provide a better return if spent on service upgrades, marketing, or employee education?


When deciding whether you can bring in enough offsetting balances, keep in mind the demographic trend is moving in the wrong direction. Bank of America may have been able to improve overall profit 30% after costs; however, that was against an affluent, early adopter crowd. Going forward into the mass market, will the same profit lift be seen in the 2005 to 2008 period? We doubt it. The newest wave of users is less affluent overall, so it will be harder for them to bring in the balances needed to offset the $50 to $100 subsidy.

1 Assumes total out-of-pocket and internal costs of bill payment are $6 to 8/mo.

Categories: Bill payment

Four Bill Payment Pricing Myths

By Jim Bruene on August 3, 2004 1:29 PM | Comments


We have no choice: to stay competitive, bill payment must be free.

There is some truth to this. Twenty-two of the fifty largest U.S. banks now offer bill payment free of charge to their entire online banking base. And the big banks, especially Bank of America, are making a lot of noise about their free bill payment services. And it does strike a chord with consumers who naturally would prefer it be free, and tend to believe it should be free, because of the incorrect assumption that it lowers the bank’s processing costs.

However, online users are not naïve. They know there is a downside to free services. It could be less privacy, inferior product quality, or distracting advertisements.


We’ll make up the lost fees
with improved retention.

There is no doubt that bill payment usage is correlated with higher retention. But that’s the case with nearly every add-on service from savings accounts, to credit cards, to safe deposit boxes, or Saturday branch hours. Assuming customers like it, every account added increases retention.

It is true that electronic bill payment creates higher exit barriers (aka “switching costs” or “customer lockin”) than a simple savings account. However, it’s entirely possible that within a few years someone will invent a wizard that automatically moves a user’s bill payment setup, merchant info, and history from one bank to another.









We’ll make up the lost fees with
 higher balances.

Again, we’ve seen the research and it points to a strong correlation between bill payment use and customer profitability. As Bank of America and others have demonstrated, the “extra” profits from the bill pay group vs. the control more than make up for the extra costs. In Bank of America’s case, they showed an overall profit lift of 30%, after netting out the 10% increase in cost to service the account due to the bill pay subsidy .

This is the best argument for free bill pay, and it may even have been true in the 2000 to 2003 period analyzed by BofA. Early adopter bill pay users were a profitable group; they may have had a tendency to add accounts at the bank that was providing them the latest and greatest services, including bill pay. Complicating the analysis, however, is the fact that the banks offering free bill pay, Citi and BofA, for example, also tended to have the best overall online banking services. Was it the free bill pay or the killer website that drove the incremental balance growth? Bank America made a billion dollar bet that it was the bill pay.1


Eventually payment processing
costs will decline.

Clearly, end-to-end electronic processing has lower transaction costs than paper. However, electronic bill payment comes with an implicit customer service component absent from paper checks. When a paper check fails to reach the payee, no one expects the bank to track down the problem and make it right.

With electronic payments, the banks, and its processor, are required to troubleshoot and fix problems, even when the error was outside their control. As quality and volume increase, these costs will decline. But it will be difficult, if not impossible, for electronic transactions to have lower marginal costs if customer service expenses are factored in.

1 Bank of America’s stake $400 million stake in CheckFree gave it extra incentive to promote free bill payment.

Categories: Bill payment

Bill Payment Pricing Research Results

By Jim Bruene on August 2, 2004 12:58 PM | Comments

In the U.S. market, the industry standard pricing model has been free online banking access combined with fee-based bill payment. However, during the past three years, the fees for bill payment have gradually gone away to the point where the most major U.S. banks advertise free bill payment, though it may not apply to all account types or balance levels.


In July, we surveyed the top 50 U.S. banks and found only two that still charged a monthly fee to all bill payment customers. Nearly half, 22 of 50, offered bill payment free to everyone. Three banks did not offer bill payment and the remaining 23 offered it free for certain accounts and/or balance levels. In total, 45 of the 47 (96%) largest banks with bill payment offered a free option . For those charging a fee, the average listed price is $5.63/mo.


Last fall, TowerGroup found 33 of the 50 (66%) largest U.S. banks providing bill payment free of charge to all or part of their customer base. Furthermore, Tower found that bill pay penetration increased from 22% of online banking customers prior to going free, to 38% after the change. This 70% lift was significantly more than what would have been expected without the price change.


History of Free Bill Payment

Although BofA is largely credited with starting the free bill pay movement, Citibank was actually the first to go free. In a major branding campaign in the summer of 1997, the bank hit the streets of Manhattan touting its no-fee electronic banking message (the fee-free policy also applied to ATM transactions and other electronic banking transactions).



But until Bank of America’s high-profile move, most major banks held to a $5 to $7 monthly charge, which not coincidentally covered their monthly bill to CheckFree. Citibank handled payment processing in-house, which may have contributed to their willingness to offer it fee-free.


Fees began to crumble in the fall of 2002 when BofA launched a multi-million dollar television advertising campaign promoting free bill payment. The campaign proved so popular with viewers that it continues to this day. At the time, BofA said it was their most-remembered campaign of all time. In the months and years since, most major U.S. banks have followed suit. The most recent major to go free was U.S. bank earlier this year (see Table 1, below).


One notable holdout is Wells Fargo, which last year said that 40% of its base still paid a monthly fee.1 Assuming 2 million bill pay accounts, with 750,000 paying monthly fees of $6.95, Wells Fargo is bringing in more than $5 million per month in bill payment fees. While it may lose a few customers to its pricing strategy, the $60 mil/yr can be reinvested into better services, more marketing, or shareholder dividends.

1 American Banker, Wednesday, June 11, 2003

Table 1

Free Bill Pay Timeline






Part of high-profile strategy to make all electronic services free-of-charge


Free-for-life promotion netted more than 100,000 signups
Charter One


Became free for all

May 2002

Became free for all
Nat City

Sep 2002

Became free for all
Fifth Third

Feb 2003

Became free for all

Sep 2003

Became free for all
Bank One

Aug 2003

Free for all but basic accounts
US Bank

Jan 2004

Web bill pay free for all consumers, MS Money/Quicken still $4.95/mo

May 2004

Also offer free to small biz

Sep 2003

Previously $4.95/mo

Source: Online Banking Report, 7/04



Table 2
Summary of Consumer Bill Pay Fees at Top 50 U.S. Banks


Source: Online Banking Report, 7/04

(1)       Free of monthly fees; in a minority of cases, fees apply for excess usage and/or account inactivity

(2)       Excludes Comerica, whose pricing is not disclosed, and MBNA which charges by the transaction

(3)       Average fixed monthly fee, excludes transaction fees for excess usage




Table 3
Consumer Bill Pay Fees at US Top-10 Banks


Source: Online Banking Report, 7/04

1In June 2003, Wells Fargo reported that 40% of its customers received it free-of-charge.

2Wachovia is the other top-10 holdout; it has said that 70% of customers get it free-of-charge.





Table 4
Consumer and Small Business Bill Pay Fees at Top-50 US Banks
ranked by deposit size, 12/31/03




Source: Online Banking Report, 7/04



Bank of America landing page from Google ad (8/25/04)

The Bank of America Story

Thanks to an unusual openness, motivated by the strategic importance1 of its free bill payment policy, Bank of America’s internal research results have been widely circulated in print. To recap, in a 2.5 year study of bill pay users compared to a control group of similar customers, the bank found a 30% profit lift (see Table 5 right). Despite conventional wisdom, little of it came from increased retention: the main driver was increased balances.


Normally, we don’t pay much attention to studies correlating bill payment with higher profits. It’s a function of the early adopter demographics and will gradually diminish as bill payment becomes a mainstream service. However, Bank of America’s results deserve a second look because they used a control group of similar non-bill payment customers to compare profit lift.


We have serious doubts that you will be able to recreate these results within your own customer base. Here’s why:

  • What really caused the profit lift? Was it the bill payment in isolation, or was it the entire online banking experience at BofA’s award-winning site.

·      Did households in the control group already have one foot out the door? Perhaps the control group didn’t adopt bill payment at Bank of America because they were already in the process of moving their balances to another financial institution. If so, the control group was predestined to have lower profits no matter what factor was evaluated.

·      Was the control group really that similar? Although, they may have been in the same demographic segment, it seems to us that a household using bill pay in 2001 was fundamentally different in their financial behavior than one that didn’t use bill pay.

·      Would the same profit lift be seen with any new product geared to affluent customers, e.g., a new diamond credit card? In other words, it may not be that bill pay causes balances to grow; it’s merely that those with growing balances tend to sign up for new upscale services regardless of what they are.

·      Finally, even if you take the results at face value, does BofA’s experience with early adopters during the past three years have any correlation with what you might expect with mainstream users during 2005 to 2008?


1 Besides the free publicity, the bank has an ulterior motive for promoting free bill payment across the entire industry. The bank took a 16% interest (10 million shares) in CheckFree in Q2 2000; the deal was valued at $400 million at the time.


Table 5

Bank of America Results

index of profitability with 100 = to profits prior to the household using electronic bill payment

Initial customer profitability 100  
 + deepened relationships (+27) 127  
 + increased retention (+3) 130  
 + reduction in servicing cost (+1) 131
 - cost of bill pay service (-9) 122  

Source: Bank of America, increase in customer profitability during a 31-month period ending in 2002, results of an analysis of 300,000 customers comparing profits from bill payment users vs. the profits of a control group of similar households not using bill pay




Results from Online Resources

Online Resources, a major bill payment processor with more than 500 financial institution clients, found that bill pay penetration was 40% for free vs. 28% for those with monthly fees of $5 or less
(see Table 6 below).


Table 6

Online Resources results
Aug 2003



Monthly Fee







% of ORCC client’s charging this fee1





Online banking adoption2





    % Bill pay conversion2





Bill pay adoption2






Source: Online Resources, 7/04

(1) January 2004 data

(2) June 2004 data



That’s a 30% lift in conversion of online banking users to bill pay; and an even more impressive 120% lift in total bill payment adoption across the bank’s checking account base. However, it’s been achieved at a hefty cost. Not only are the banks giving up the $5 to $6 monthly free from their existing bill pay customers, they’re paying several dollars per month for a whole new group of customers.


It’s also difficult to ascertain how much of the increase in online banking adoption was accounted for by the free bill pay offer. Since the first to offer free bill pay tended to be more aggressive in their overall marketing of online banking, some of the lift is from better overall marketing, regardless of the price.





Results from Compete Inc.

Ecommerce researcher Compete Inc., which has a financial services practice run by Stephen Franco, a high-profile analyst at US Bancorp Piper Jaffray during the height of the bank technology boom. He found that banks offering free bill payment had a higher share of their customer’s electronic bill payments. At major banks that charge for bill pay, 18% of their customers used biller-direct payments. In comparison, those offering it free-of-charge had a third fewer customers (13%) using biller direct services (see Table 7 below).


Table 7

Bank Bill Pay vs. Biller Direct
Feb 2004




Penetration of:



Bill pay base

Online banking base

Bank online

28.7 mil



Any pay online

11.3 mil



   Bank only

5.7 mil



   Billers only

4.6 mil




1.0 mil




Source: Compete, Inc. 5/04


LowerMyBills landing page from Google ad (8/25/04)

Categories: Bill payment

MBNA’s Bill Pay Choice

By Jim Bruene on February 4, 2004 10:10 AM | Comments

The credit card giant offers online payment of outside bills even if the merchant payee does NOT accept credit cards.



MBNA ($142 billion, 40 million cardholders) offers something we’d been expecting for years, a bill payment program that draws payments from a credit card. The company even posts the transactions as cash equivalents, offering the same 15- to 45-day float afforded regular card purchases. However, bill payments do not earn points in MBNA’s reward programs. Furthermore, payees are limited to those that can be paid electronically by CheckFree, although that’s now covers 70% of the processor’s volume.

Consumer Benefits


  •       Added float, as one message board poster said, “why worry whether you get a few days float (from your bank), when MBNA provides a whole month”
  •       Convenience of tracking more expenditures through the card-management system.
  •       Ability to repay over time.
  •       Option of charging bills to an MBNA card or debiting from any checking account.
  •       Free, so long as the cardholder initiates at least two payments per month from their card account (see fee schedule opposite)


  •       No real drawbacks, except for the confusing price schedule. Consumer advocates might argue that it encourages cardholders to take on more debt, but they could already do that by paying bills with convenience checks.

Financial Institution Business Case

We’ve long maintained that loan generation is the most important institutional benefit of online bill payment because. Why? If given the opportunity, users will likely charge several bills per year to an integrated credit line .

While you will lose money on convenience users who repay the charges each month, revolving balances should more than compensate. For example, in our back-of-the-envelope calculations, we estimate a total net profit of $60 per year per user of credit card bill-pay, or $600,000 annually across a 10,000-user customer base. 

The Most Confusing Fee Schedule in the World:
MBNA’s Bill Pay Choice may be among the most flexible online, but its fee schedule is utterly confusing. Perhaps the company should consider charging a nominal flat fee that’s waived if charging 2 or more bills.


Of course, any new credit card program must be monitored closely for abuse, both outright fraud, by setting up a phony electronic merchant, and less sinister gaming of the system where a user becomes an electronic merchant on CheckFree’s system and pays himself each month to earn the float. However, since no reward points are awarded, there is far less incentive to play games.

Card issuers could limit their exposure by setting a maximum monthly amount of bill payments, especially for new cardholders.

How it Works

MBNA cardholders must first register for online access at MBNA’s NetAccess  After that, they register for Bill Pay Choice. Users can pay bills either by charging to their MBNA card or debiting any U.S. checking account. MBNA does not offer its own checking account; however, payments can be drawn from MBNA’s money market account.

The service is free unless the user pays bills only from their checking account, in which case the fee is $0.75 per transaction. Users may qualify for unlimited free checking-account bill payments provided they charge at least two bills to their card each month.


Table 13
Mini Business Case: Card-based bill payment

monthly benefit, assuming 6 payments totaling $1000





Direct Costs  


Cost of float 30 days at 2%


Cost of transactions 6/mo to CheckFree


Cost of service/mo internal


  Total cost/mo  


Direct Revenues  


Increased outstanding balances $167 x 12 months
x 5% spread*


Fees from DDA trans  


  Total revenue/mo  


Net profit/mo  






Extra interchange from increased charge volume 1% x $300/yr


Increased retention 2% increase x $150/yr


Total per user
   per 10,000 users



Source: Online Banking Report estimates, +/- 33%, 2/04
Revenue assumptions: 1 out of every 10 bills will be revolved (10%); revolving balances will be repaid in equal installments over 12 months (6 months average life); interest rate spread = 5% (net of charge-offs)


Huntington Web Upgrade Includes Same-Day Bill Payment

By Jim Bruene on April 5, 2002 1:25 PM | Comments

Huntington Bank (Columbus, GA; $28.4 billion; 132,000 online users) greatly expanded its online service offering as part of its migration from the S1 platform to Corillian and E-Bank LLC  The most noteworthy improvements:

  •    same-day bill payment, payment requests received by 4 pm (M-F) are sent out the same day
  •    real-time information posting
  •    check images available online



Epayment & Bill-Management Products

By Jim Bruene on February 6, 2002 7:56 AM | Comments

Epayment products include any online technique for moving money from one entity to another. It includes hybrids, such as pay-anyone bill payment that boasts an online front-end but is often fulfilled with paper on the back end. In alphabetic order, the following epayment products should be considered for your product line.

Next month we’ll mix and match the products to develop recommended epayment product suites to match your strategic objectives.

ACH/Debit Helper

Description: A service that helps customers understand and enroll in preauthorized debit programs; it can also help users control, track, and make changes to established preauthorized debits. See Interbank Transfers  for ACH originations.

Functionality: Prepopulate the area with information on all the major billers in your area that support preauthorized ACH debits including your own loans. Include educational material on how it works, what the checking account statement entries look like, consumer rights under Reg. E, and how to make changes. Include links to the billers’ customer service departments for specific questions.


  • Preauthorized debits are great for the bank. You get the benefit of locking the customer in to your checking account with little cost since the originating party pays for the transaction and usually handles customer service, authentication, and problem solving.
  • Low development expenses, much of the legwork could be done by a summer intern.


  • Must be developed in house
  • More customer service calls: Because of your positioning, customers will ask you to solve problems that otherwise would have resolved directly with the biller.
  • Little opportunity for fees

Pricing/Biz Model: Free to increase customer lock-in.


Bill Aggregation


Bill aggregation from uMonitor.

Description: A subset of account aggregation, used to download and consolidate billing statements. It could be offered on its own, or within a comprehensive account aggregation program such as Yodlee.


  • Demonstrated consumer demand for ebilling and account management
  • Customers locked in to your service
  • Positive PR and marketing benefits


  • Ongoing expenses to a third-party
  • Increased customer service and tech support

Pricing/Business Model: We expect most to offer bill aggregation free of charge; but it could support monthly or annual fees. Alternatively, statement aggregation could be offered free with payment services available for a fee.

Bill Concierge/Virtual Bookkeeper

Description: An all-encompassing service that helps users with their entire bill payment situation, from managing paper flow, sending due-date reminders, identifying the lowest-cost source of funds to pay each bill, making the actual payments, and troubleshooting problems.

Functionality: Bill Concierge is similar to scan-and-pay from PayTrust or Metavante/CyberBills
. However, where those programs are high-tech, requiring considerable trust in the new technology and systems, Bill Concierge is decidedly high-touch. A human Virtual Bookkeeper would be assigned to each account to assist with setup and user education, and to help solve ongoing payment and billing problems.


Automation would still handle most of the tasks, but the end-user would be spared much of the learning curve. A bank could contract with a scan-and-pay provider to handle the back office functions.


  • Differentiates your services
  • Difficult for competitors to copy
  • Positive PR


  • Labor intensive, with tricky and potentially costly customer service issues
  • Difficult for fees to completely cover costs
  • Would require talented account reps

Pricing/Business Model: Should provide enough value to justify significant monthly and/or annual fees, as much as $25+ per month; more for the small and microbusiness segments.

Biller Lookup &
Information Clearinghouse

Description: Searchable database of major billers; optional email updates when new information is listed.

Basic Functionality: Compile a list of major billers in your area (a great summer intern project). Users could search by merchant name to determine available billing options (see mock-up below). Listings would include corporate address, payment address, phone numbers, fax number, email addresses, Web address, and whether the company accepts electronic payments through your pay-anyone service and/or its own Web site.


Advanced Functionality:

  • Allow users to save their own personal database of billers, with optional fields for users to enter account numbers and notes.
  • Integrate it with your bill-pay service, so that once users create their own biller database, they can immediately begin paying bills to those merchants electronically.
  • Integrate the biller database with account aggregation so that billing statements could automatically be downloaded and aggregated.
  • Integrate with a credit line that can be tapped specifically to pay bills.


  • Low initial investment
  • Capture email addresses of those who signup for updates
  • Differentiates your bank from the competition
  • Useful addition to your Web site
  • Positive PR


  • Database must be compiled and maintained
  • Little fee income opportunity

Pricing/Business Model: Basic lookup would be provided free of charge to generate leads. Premium versions integrated with electronic bill payment and/or account aggregation could command fees.



Mock-Up: Personalized Biller Database <>

(1) all fields can be changed and saved by the user    (2) input by user



Credit and Debit Cards

Description: With a 90%+ market share at the online point-of-sale, credit cards are an important part of the electronic payments mix. Credit cards can also be used in lieu of checking as the core transaction product for virtual banking programs.

You could add value to your card program in a number of ways

  • Fraud watch program
  • Interactive statements
  • Credit card statement aggregation (see below)
  • Online balance transfers
  • Prepaid cards with online replenishment
  • Friends-and-family debit cards, used to transfer funds to others for ATM withdrawal.

Pross: A well-understood and profitable product with high customer demand.

Cons: Intense competition, fraud and bad debt

Pricing/Business Model: Interest income and fees.


Credit Card Statement Aggregation


Description: A subset of account aggregation used to download and consolidate credit card statements; could be offered on its own, or within a comprehensive account aggregation program such as Yodlee or uMonitor.


  •          A great tool for increasing balance transfers from competitive cards.
  •          Solid consumer demand for billing information and account management.
  •          With permission, you will be able to create sales pitches knowing more about the customer’s other card balances (a real-time picture vs. several months delayed from the credit bureau).
  •          A better understanding of where you stand compared to the competition across your entire account base.


  •          Must educate customers on the benefits of aggregation and how to use it.
  •          Trust and security issues and concerns
  •          Ongoing expenses to a third-party
  •          Customer service costs to answer questions
    on aggregated statements..

Pricing/Business Model: Most, if not all, financial institutions and card issuers will offer card aggregation free of charge to have first crack at transferring balances from competitive cards. Incremental interest income should more than cover the costs.

Expedited Payments

Description: Optional expedited payments with guaranteed next day delivery.

Rationale: Other than Quicken fanatics and other ultra organized super humans, who hasn’t put off paying the bills just a bit too long? These days, missing the credit card due date by even 1 day can easily cost $50 or more counting the late fee and extra interest expense. Expedited payments, even priced at $20 to $25, would appeal to customers facing large penalties unless their payment is absolutely, positively there by 5:00 p.m. the next business day.

Functionality: Ideally, expedited payments would be integrated into your bill-payment program. Users would be able to upgrade payment delivery from the usual 5 days for a graduated price depending on how quick the payment must arrive .


  • Great PR, marketing copy
  • Increases fee income
  • Increases the value of your entire bill-
    payment program
  • Differentiates your bank; difficult to copy



  • Customer service burden dealing with frantic last-minute bill payers; you will need to build several layers of confirmation emails and tracking mechanisms to assure users you will actually make their payment on time.
  • Problems with merchants not posting the expedited payments on time.
  • Liability if the payment isn’t credited on time
  • You must build the system yourself
  • Even though it’s a lower cost alternative compared to late charges, customers may resent your fees, perceiving that you are taking advantage of their predicament.


Pricing/Business Model: Fees could cover all program costs and deliver a profit.

Financial Datebook & Reminder Service

Description: Essentially a day planner with an emphasis on bill payments and other financial activities. Can also be used for nonfinancial events such as birthdays, to-do lists, and so on.

Functionality: The service would work much like any datebook, Microsoft Outlook for instance. Users would add bills to the calendar and select one-time or recurring options. Users could choose to receive reminders to pay at various intervals before the due date. They could select whether the reminders came by email, voice message, instant messaging, or a combination of the above. While the emphasis would be on financial matters, the service could be used for personal and business appointments as well.


  • Differentiates your product offering
  • Intuitive, low-risk way to get users started monitoring, then eventually paying bills online


  • Probably requires in-house development, although there are a number of Web-based calendars available that could potentially be adapted for a reasonable cost
  • The need to provide “tech support” for calendar problems

Pricing/Business Model: It would be difficult to justify any explicit fees, so it would be yet another product justified by increased customer satisfaction.

“Friends & Family” Reloadable
Debit/ATM Cards


Description: A master account (the parents) is linked to one or more subaccounts (the kids) each with its own ATM/debit card. From a Web interface, the master account user transfers funds to the sub-accounts who can then withdraw cash at an ATM or use the debit card at the point of sale.

Functionality: Funds transfers trigger an email to the subaccount user notifying them of the transaction. Automated recurring transfers, such as allowances, can be established to maintain a constant flow of cash without having to log in every week and manually move money. Visa Buxx was pioneered the reloadable card concept, but it could be accomplished without using Visa’s system.


Visa Buxx product description



  •  Great money-management and educational tool creating awareness of the bank in schools, PTAs, and the community.
  •  Good PR and marketing opportunities; especially for gaining more business from parents when the services are cross-sold to student loan and student checking customers.

  • Good relationship enhancer and word-of-mouth publicity.                                        

  •  Saves the customer time, money, and hassle in transferring funds to family members, especially those living out-of-the-house.  



  • Initially, a bit complicated; reminiscent of programming the VCR: you know it would save time in the long run, but you just don’t want to hassle with reading the manual today.
  • Fraud, fraud and more fraud. Since few banks currently offer this service, the pioneers will be the targets of every fraudster on the planet. AAA recently had to shut down Internet and telephone reloading of its prepaid cards due to fraud. Cardholders could only reload cards in person at participating AAA offices. The vendor, Sunrise, FL-based WildCard Systems  tells us that the issues have been solved and remote reloading will be back up soon.
  • Customer service costs for lost cards, disputed charges, and all the service issues associated with credit/debit cards

    Pricing/Business Model: When positioned as a parent/child service, the product should be offered with low fees, $20 to $25 per year or less, if its primary goal is to retain the parent’s business.


    Visa Buxx has a template that makes setting up and maintaining an automatic allowance system very simple.

    Guaranteed Payments

    Description: Guaranteed “good funds” payments initiated online and converted into paper items delivered via postal mail or picked up at a branch. Includes: Money Orders, Cashier’s Checks, Gift Checks, Tax Payments, and Travelers Checks.

    Payments could also travel electronically with the recipient withdrawing the cash via ACH (PayPal system), at a branch (Western Union/MoneyGram system), or withdrawn from a participating ATM (newer Western Union system).

    Functionality: Within your bill-pay area, allow users to upgrade their payment to “guaranteed money order” for an additional fee. Money orders could be mailed via regular bill payment channels or picked up in the branch by the sender or recipient with proper ID and/or a transaction number communicated to the recipient by the sender.

    Recipients would receive an email communication explaining that good funds are on the way. As soon as the recipient received this message, they would be certain of being paid. Some bill-pay programs, such as Online Resources and iPay LLC, send all bill payments with good funds, although the recipients don’t necessarily know that.

    Other paper items could be ordered in a similar fashion. For example, Wells Fargo allows online banking customers to order cashiers checks, travelers checks, and foreign currency (see screenshot below).  

    Wells Fargo takes online orders for cashier’s checks, travelers checks, and foreign currency.

Yahoo! Finance provides three epayment products, bill pay through Checkfree, email payments via HSBC, and interbank transfers through CashEdge.


Advanced Functionality: The form used to initiate a money order could include optional fields for a personal message to the recipient. The personal message could be sent via email and/or paper enclosure with the funds. This combination of guaranteed funds and integrated messaging would allow the money order to be used for consumer bill payments, business invoice payments, payments for goods purchased online (especially from individuals in online auctions or classifieds), monetary gifts, and so on. For an additional fee, users could “gift wrap” the paper envelope and check with birthday/holiday greetings (see example below).

Example: In the mock-up below, users are able to compose a holiday greeting and add a gift as they pay the monthly lawn-care bill. Previous online money orders could be archived to make it faster for subsequent payments to the same parties.

Example Money Order Form


*optional fields


  •          Increases fee income
  •          Increases value of epayments program


  •          Limited customer demand
  •          Complicates choices for online payments
  •          Additional customer service and
    operations tasks
  •          Ideal system not currently available from existing vendors; must be developed in-house

Pricing/Business ModelModel: Fee-based premium transaction.

Interbank Connectivity /Transfer

Description: A service that allows users to easily move money between different financial institutions using ACH and/or wire transfers, depending on how fast the transfer needs to be made.

We had expected Web-based interbank transfers to be the norm by now  but only a few financial institutions have added it. Fraud concerns and lack of a solid business case have put interbank transfers on the back burner. Interestingly, Yahoo is a pioneer, having launched a funds transfer service more than a year ago .


  •          Most users need it from time to time
  •          Easy to communicate product benefits
  •          Potential for profitable fee income


  •          Fraud
  •          Customer service costs to assure new users the product works; and resolving potentially tricky problems when it doesn’t
  •          Implementation costs
  •          Customer confusion regarding time lags and authentication for ACH-based transfers

Pricing/Business ModelModel: The service could support transaction fees or a monthly subscription that allowed unlimited ACH transfers. A two-tiered program would be logical with 2- to 3-day ACH outbound transfers priced at $2 or less and next-day wires at $10 to $15.
In-bound transfers should be free-of-charge.          ð


Person-to-Person (P2P) Electronic Payments

Description: Web-based, electronic payment service designed primarily to move funds from individuals to other individuals/small businesses.

Functionality: PayPal is the leader in the field of Web-based P2P; although Western Union, a First Data company, dominates the business overall if you consider traditional person-to-person transactions requiring a trip to an office to initiate and/or receive the funds. Banks can integrate P2P service into their payments suite by creating a front-end to PayPal, Western Union, and other providers using screen-scraping/auto-login techniques or simply providing basic links to other service providers.


  •          A popular service with eBay users, it could be enhanced by a direct interface from the user’s bank account.
  •          Differentiated service offering


  •          Fraud is the biggest issue with P2P services; however, if you are merely providing a link to other service providers, your exposure shouldn’t be any greater than it already is.
  •          Customer service costs for lost cards, disputed charges, fraud, and other issues associated with electronic payments. Again if you are merely acting as a conduit, your responsibility is lessened; however, you may still be called in to solve tedious customer problems.
  •          Added costs of screen-scraping services

Pricing/Business ModelModel: Unless you are PayPal or Citicorp, there is little opportunity for fee income (even Bank America recently canceled its plans to enter the market). This is free, relationship product.

Pay-Anyone Electronic Bill Payment

Description: Initiate payments online to any biller or individual. Payments are fulfilled with paper or electronic items depending on the biller. Most volume is handled by Checkfree, Metavante, and Princeton eCom. Other providers include iPay LLC, Online Resources, NetZee, and several others (see part 3 in next month’s OBR).

The service has been available since the mid-1980s through dial-up services. Until just a few years ago, the majority of online bill payments were initiated through Quicken or Microsoft Money. Now most come from Web-based services.


  •          Customers expect it to be part of an online banking program; competitors have it.
  •          Advanced users find that it does save time, money and worry making it good for long-term customer relations.
  •          Helps users track monthly payments for budgets, taxes, and other record-keeping needs.
  •          Small businesses can especially benefit due to their more complicated financial and tax-reporting needs.


  •          Timing delays: Since many payments are still fulfilled by paper check, users must initiate payments 4 or 5 days in advance of the due date; a slower turn-time than the write-and-mail system it replaces.
  •          Cost: Direct out-of-pocket costs average $4 to $5 per month paid to service providers; also, significant, and sometimes hidden, costs exist for customer service and management time spent solving customer problems.
  •          Customer service issues: When the bank inserts itself in the monthly bill-payment process, it can become a lose-lose situation when problems arise; the customer doesn’t know who to go to resolve the issue, and the bank doesn’t know if it was user error, service provider error, or merchant error; so it must investigate all three possibilities, an expensive proposition.
  •          Customer dissatisfaction: Looking at the three previous bullet points, you can see a large opportunity for dissatisfaction. Bill payment is a premium-priced service that delivers payments slower and with lower overall quality than the service it replaces. That’s why it only has 5 to 6 million users 15 years into its adoption curve.

Pricing/Business ModelModel: In 2000, about 80% of banks charged fees to partially cover costs . But the best way to make a profit is by bundling a bill payment line of credit .


Planning, Budgeting, and
Payment Averaging Service

Description: This service encompasses any number of financial planning calculators and worksheets. It could also provide a monthly money-management service that combines and averages all bills into one monthly payment, charged to the user’s checking account, line of credit, or other source of funds.

Functionality: Utilities have long offered services that average or “smooth” the customer’s billing amount over the year to make it easier to budget and pay for seasonal spikes in energy used. A bank could apply the same concept to the sum total of all bills, calculating a single average payment amount that would be deducted from the user’s account each month. It would work much like a mortgage escrow account reconciled and recalculated annually. The account could be funded by ACH debit and/or loan advance.

To encourage systematic savings (pay yourself first), the monthly “bill” payment amount could include a set amount transferred to a personal savings account, time deposit account, or indexed mutual fund account.


  • Assists customers in creating and managing an ongoing budget; good for relationships and customer lock-in.
  • Differentiates your product offerings


  • Calculators and worksheets are readily available from suppliers such as; however, the bill-payment averaging system would require in-house development.
  • Potentially challenging customer service support for the escrow account and bill-averaging questions and problems.

Pricing/Business Model: It would be difficult to justify explicit fees, but revenue could be generated from escrow account balances and integrated credit lines.


Prepaid Cards for Travel, Gifts,
and Various Business Uses


Gift and prepaid cards are available from AAA Motor Club,  Bank of America  Marriott, and others; Wildcard Systems powers these programs.

Description: A modern day traveler’s check. In most cases, prepaid plastic cards make more sense than its more common paper counterpart.

Functionality: Users preload the cards, then withdraw funds at ATMs or use them to make purchases wherever Visa/MasterCard is accepted. The cards can  be reloadable by telephone, Web, and in-branch.

The travelers card version (e.g., Visa TravelMoney) allows users to leave their regular ATM card at home, reducing concerns over losing a card, especially when traveling abroad. Couples might want to split their funds and load it onto two cards, each carried by just one person. That way if a pickpocket makes off with one of the cards, you still have one that is active.

Gift cards would be identical except for packaging to appeal to those wishing to make monetary gifts.


The business version could be used to deliver refunds, rebates, and premiums to customers. Qwest has been offering $50 prepaid Visa card to buyers of its enhanced products. Businesses could also use prepaid cards to distribute expense account advances, bonuses, or even regular payroll (e.g., Visa PayRoll), to employees.





  •          Convenient to purchase online; reduces branch traffic
  •          Versatile payment product: Accepted at nearly 20 million locations worldwide; can be used for cash withdrawal in local currency; easier to carry and use compared to traveler’s checks.
  •          Fee income
  •          More attractive and secure than sending a check for a gift.
  •          Business users could achieve cost savings compared to paper alternatives.


  •          Fraud: Since few banks currently offer it, pioneers are the targets of every fraudster on the planet. AAAb>AAA recently shut down Internet and telephone reloading due to fraud. Cardholders could only reload in person at participating AAA offices. The vendor, Wildcard System, says the issues have been solved and remote reloading will available again soon.
  •          Customer service costs for lost cards, disputed charges, and all the service issues associated with credit/debit cards.
  •          Consumer awareness/understanding for prepaid cards is lower than traveler’s checks

Pricing/business modelmodel: Multiple revenue sources: 1%-2% origination fees, interest income from float, and abandoned funds (captured through monthly dormant account fees). Expense cards used by businesses could also command monthly/annual subscription fees.

“Scan & Pay” Total Bill Management

Description: A service that receives users’ bills, scans them into digital format, posts them to the Web for customer viewing, and pays them according to customers’ preexisting instructions. See also, Bill Concierge, and Smart Payments, next section.


  •          Available turnkey from PayTrust and Cyberbills
  •          Differentiates your service offering
  •          Good solution for customers who travel extensively or maintain multiple households.


  •          Limited demand
  •          Complicated setup diverted bills to the vendor
  •          Cost
  •          Customer support, especially for new users

Pricing/Business modelmodel: Could easily command
$10 to $20 monthly fees, but that will cover out-of-pocket vendor costs only.

Smart/Automated Payments

Description: Much like Scan & Pay (above) except without the scanning of paper bills. The goal is to eliminate the monthly bill-payment chore, automating the vast majority of bill-payment activities.

Functionality: Banks could establish a bill-payment “cockpit” that would provide a sense of control over monthly payments. Users would log in to the virtual bill-pay driver’s seat; take a quick glance at the fuel gauge (deposit account balances and available credit); review bills paid last month; and see estimated payments for the coming month (estimates would automatically be generated from payment history). Similar functionality is already built into Quicken and Microsoft Money.

Users would have an opportunity to override the estimated payment amounts, or simply allow the month’s bills to be paid on “auto-pilot” (with the bank making estimated payments on the user’s behalf). Users should be able to twist virtual dials within the cockpit to increase or decrease the size of the payments, turn autopilot on or off, and so on. The end goal is to make bill payment practically invisible for the user.


  •          Differentiates your bank
  •          Locks in customers
  •          Difficult for others to replicate


  •          Development and maintenance costs since it’s not available turnkey from a supplier
  •          Learning curve: For new users, the automation may be difficult to comprehend and set up.
  •          Customers service support costs

Pricing/Business ModelModel: Premium-priced fee product covers most out-of-pocket expenses.           

Categories: Bill payment, Epayments

Pricing Strategies For Online Bill Payment

By Jim Bruene on February 5, 2002 7:44 AM | Comments

Many financial institutions use a quasi-breakeven model for bill pay, charging $4-6 per month to cover outsourced payment-processing costs. It’s a reasonable strategy, especially if you are trying to recoup your outsourced bill payment expenses. However, if your strategy calls for increasing online bill payment penetration, you should consider more creative pricing strategies.

It’s difficult to determine the average price of online bill payment in the United States. In many cases the posted price is meaningless because fees are waived for a significant number of users based on their total relationship or other product usage.

With that caveat, the average online bill pay list price across 361 banks and credit unions surveyed in mid-2000, was $4.29. If you remove the 74 companies that provided bill payment free of charge, the average increases to $5.39. The mean price across the entire sample is $4.95.

The most popular price was $4.95 to $5.00, used by 94 financial institutions, 26% of the sample. Second most popular was $5.95 to $6 with 77 charging that fee, 21% of the sample. Third most popular was $0, with 74 financial institutions, 20% of the sample. Keep in mind this is more than 1.5 years old data. More than likely, fees have declined since then.

Yahoo’s bill pay program has two fee options: $2/mo plus $0.40 for each transaction; or $4.95/mo for the first 12 payments, then $0.40 each thereafter. Note: links to interbank funds transfer and aggregation.


U.S. Bill Payment Fees*


Source: Thomson Financial, Directory of Online Banking & Financial Services, 2001 Edition, (2000 data)

*List price; many banks waive the fees for certain customers or certain types of accounts. Excludes transaction charges often levied for very heavy usage.


Fee-Based Programs

Service fees for “plain vanilla” consumer programs top out at about $6/month. For certain niches, such as small businesses and individuals with more complicated finances, service fees could be in the $20-25 range and higher. However, if you want to get more customers hooked on the service, you may want to bundle it with other accounts so that consumers don’t see an explicit monthly fee month after month.




Flat Monthly Fees

Description: Each registered users pays the same monthly fee no matter how many bills are paid.

Rationale: On paper, it’s easy to make a case for a small monthly fee, such as $3 per month. After all, consumers save $0.33 in U.S. postage for each bill paid electronically (more if you count the cost of the paper check). At $3/month, to breakeven on postage savings, a household would have to convert 9 paper payments to electronic. That’s perceived as achievable for most households, although in reality the average number of bills paid online is substantially lower.  Checkfree, with more than three-quarters of the market, 4.3 transactions per subscriber per month during calendar year 2001.




  • Simple flat fee is understandable and promotes active participation
  • Covers most direct costs


  • Irritates users who think they are saving the bank money by participating in the program
  • Discourages light users (1 to 4 bills per month) and trial by new users
  • Very heavy users (20+ trans/mo) aren’t paying enough


Transaction Charges for All Payments

Description: The ATM pricing model with charges for each transaction. This approach is not widely used, primarily because many bill-pay service providers charge a significant monthly fee per registered user, regardless of bill payment volume. Another option is to charge a small monthly fee in addition to a charge for each transaction. Yahoo offers this option with a $2/mo fee plus $0.40 for each payment


  • Compares favorably with known postage costs
  • Low-cost option for infrequent users
  • Covers variable costs


  • Probably won’t get used much unless it’s very well integrated with your online banking program and/or constantly marketed to users; consumers just won’t think its worth the trouble to figure out
  • Cost-prohibitive if your service provider charges a flat monthly fee and/or maintenance fees for inactive users




Monthly Fee Plus
Transaction Charges

Description: A common approach with a monthly fee that covers a set number of payments each month, with a transaction charge for “excess” transactions.

Rationale: Typically, the monthly fee covers the first 15 to 25 payments. Thereafter, each additional payment costs $0.40 to $0.50 each. Since the vast majority of online households pay fewer than 20 bills per month, most consumers pay just the monthly fee, never incurring transaction fees. But business and other heavy users pay a higher fee, commensurate with the increased value received from the service.

Another variation on this theme, which we’ve only seen a few times, is to charge a very low monthly fee that covers just a handful of payments; for example, $2/month for the first five transactions, then $0.50 each thereafter. This approach would satisfy casual users paying 2-3 bills, while charging heavy users a fee commensurate with the value.


  • Vast majority of users pay fixed monthly cost
  • Covers fixed and variable costs
  • Higher fees for very heavy users


  • The potential transaction fees are confusing and make the service sound more expensive than it really is for most users
  • Discourages trial


Free Basic Services with
Fees for Premium Options

Description: Users receive a base level of service free-of-charge, then pay extra for optional upgrades such as paper check delivery, expedited payments, insurance, etc.

Rationale: This approach gives banks the best of both worlds – a no-cost entry-level program to get new users started, plus fee income from add-on premium services.


  • Encourages trial
  • Can advertise free bill pay
  • Solidifies customer relationship
  • Premium services cover at least some
    program costs
  • Differentiates your online banking program
  • Could license premium services to other banks


  • Development costs for the value-added services
  • Makes program more complex, harder to use
  • Increases customer service load/complexity


Dollar Volume-Based Fees

Description: Although we have yet to see it tried, another approach is to base bill-pay fees on the total dollar value of payments transmitted rather than the number. For example:

Dollar-Volume Pricing

Monthly Dollar
Volume Paid*

Monthly Fee

Optional Insurance**

$0 to $1,000



$1,000 to $3,000


$1 + $1/per $1k

$3,000 to $5,000


$1 + $1/per $1k

$5,000 to $10,000


$1 + $1/per $1k



$1 + $1/per $1k

*U.S. households pay an average of $2,500 in monthly bills according to The Nilson Report.

**Optional insurance functions like credit life; in the event of death or disability, users would have their bills paid for a given length of time.

Rationale: The goal is to help users think of bill payment not just as buying a transaction, but paying for convenience, peace of mind, and a better way to handle monthly payments. Dollar-volume pricing helps move users away from comparing bill payment fees to the price of stamps. Rather than thinking, “why does the bank charge me $5 to pay seven bills, I would save money buying stamps,” they would (hopefully) think, “paying $5 for the bank to guarantee $2,700 in monthly payments is a wise investment.” It would be important to provide user-friendly performance and service standards, backed by understandable guarantees.


  • More closely aligns price with value; e.g. higher fees for greater household income /spending
  • Focuses on the value of money moved vs. transaction price



  • Unusual pricing may take some getting used to, especially if converting from flat fee pricing.
  • Higher prices for heavy users may cause concern, internally as well as with customers, especially with a conversion.
  • Your pricing may not stack up well with the competition, especially Web-based competitors.


Annual Membership Fee

Description: Instead of a pesky monthly fee 12 times per year, an annual bill payment membership fee might be more palatable, especially if combined with value-added services such as e-mail confirmations and bill-payment credit lines. The annual fee could be all encompassing or it could be combined with transaction fees.


  • Only one opportunity each year for user to question the cost.
  • Creates a more “exclusive” feel to the program
  • Users are accustomed to annual fees for membership-based programs.


  • Users undecided on the value of bill payment, would be motivated to cancel when they saw the annual fee; but you could mitigate this risk by waiving the fee for a year when you get a complaint or account closure.
  • Will have fewer non-users who keeping paying monthly fees because it doesn’t seem worth the trouble to call to save $5.
  • More customer service activity with users canceling and requesting a reversal of the annual fee.


Premium Pricing for Small Businesses

Description: Take a cue from the phone companies, differentiate your business bill-pay with several value-added features, such as integrated email messaging, and then charge 3 to 4 times the consumer price. Better yet, take it to the next level by creating Virtual Bookkeeping services which could command monthly fees of $50, $100, or more depending on the size of the business and the complexity of their accounts payables and receivables. 


  • Profitable fee revenue
  • PR and marketing value of differentiated checking and deposit services


  • Development costs
  • Increased customer service
  • Potential regulatory, compliance, and
    security issues


Prepaid Blocks of Electronic Checks

Description: Just like paper checks sold in books of 200 for $10 to $20, sell prepaid blocks of electronic checks at a similar price point; for example, 40 “postage-paid” electronic checks for $20. You could even bundle paper and electronic orders together, 100 paper checks and 40 electronic ones for $25.

Rationale: Customers are used to paying for paying for paper checks in advance, it might help some users make the conversion to electronic methods.


  • A familiar pricing plan for users of paper checks
  • Simple one-time price, customer knows they won’t be locked into long-term monthly fees
  • You get the fees in advance of delivering the service
  • Helps users understand exact costs per transaction


  • Development costs
  • Low end-user demand
  • If used as a pricing option, complicates the decision process for users and your
    front-line staff
  • Customers service costs to explain the program



Bundling Strategies



Bundled with Credit Lines

Description: Pay-anyone bill payment with bundled overdraft credit line and/or credit card so users can choose to pay a bill directly with credit.

Example Pricing:

  • $0 to $50 annually, or $0 to $5 monthly fee for first 15 payments per month, then $0.50 each
  • 16.9% APR with a 3-day interest-free grace period to emulate paper-check float
  • No transaction/cash advance fees for the loan advance
Rational: Uses the credit card business model where much of the profit comes from revolving balances.


  • More profit potential
  • Even users who no longer use the bill payment feature could use the credit line for years


  • Convenience users will never use the bundled credit line
  • Some users may resent being encouraged to use credit to pay routine bills
  • Potentially increases product complexity
  • Customer service issues with delinquent loan customers


Bundled with Checking Accounts

Description: As discussed earlier, we believe the time is right to consider bundling basic online payment services with most checking accounts. With 32 million users managing billing accounts online, online payments are becoming an expected feature of all ecommerce sites.

  • Increased trial, usage, and customer lock-in
  • No customer or employee complaints about fees
  • Higher user tolerance for service shortcomings
  • Can be “buried” in overall checking account P&L


  • Increases overall checking account costs
  • No explicit fee revenue to offset the monthly charges from the bill payment vendor
  • Will increase the number of registered non-users, may require reworking vendor contracts


Bundled with Online Banking

Description: Instead of offering bill payment as fee-based option to those using online banking, bundle online banking and bill pay together at a nominal fee, e.g., no more than $1 to $2 per month.

Rationale: Even though Web users may think they are saving you money by banking online, if they haven’t reduced their branch and phone usage, they are not saving you a dime. In fact, state-of-the-art online banking is expensive to operate and delivers significant value to the end-user, why not charge for it?

Today most banks recoup online banking costs by charging only for bill payment as a stand-alone fee product. But instead of charging $5 a month to the 20% of users that elect to pay bills, and $0 for the 80% who don’t, charge $1 to everyone whether or not they use bill payment. Total revenues will be the same; however costs will likely increase as more users try bill payment.

  • Sets a precedent that online banking has value that will be charged for; the fee can be increased over time
  • $1 to $2 per month fee compares favorably to those charging $4 or $5 for bill payment
  • With no additional fee, bill payment penetration will increase
  • Online users pay their own way, subsidized less by non-users


  • Decreased usage of online banking overall, especially non-bill-pay users
  • Backlash from customers/employees used to having free online account access
  • Inconsistent with free account access via phone


Other Strategies



Free Forever

Description: A very simple and popular pricing policy, free; now and forever.

Rationale: Eventually, electronic payments will be far cheaper than paper-based transactions. It will be paper-check processing that will carry the premium not vice versa. So why not do away with pesky fees for electronic transactions sooner rather than later? Besides, your customers think you are saving a fortune by replacing paper checks, and believe they should get a piece of your “windfall.”


  • Nothing beats free for gaining trial and increasing customer satisfaction
  • Helps position you as a provider of low-cost high-tech services


  • High costs of providing pay-anyone bill payment, including substantial customer support costs
  • Fails to charge for the value received
  • Makes it difficult to charge for similar services in the future


Compensating Balances

Description: Provide discounted or free bill payment for customers that meet balance-level milestones (deposits and/or loans).

Rationale: Many banks routinely waive monthly checking account fees for customers maintaining balance thresholds. Since customers are conditioned to this pricing for checking, it may make sense to follow the same strategy with bill payment. Wells Fargo and numerous major banks use this approach.


  • Encourages customers to consolidate deposits and/or loans to meet minimum balance levels
  • Can be positioned as a “free*” service, with the asterisk mentioning the balance requirements



  • The pesky asterisk takes away much of the cache of being “free” 
  • Less explicit fee income to offset program costs
  • Those that can’t maintain high enough deposit levels may resent “subsidizing” other customers with more money (best bet is to allow loan balances to qualify for fee waivers).


Shopping Discounts

Description: Provide a monthly package of local merchant discounts/coupons that offset the monthly bill payment fee.

Rationale: As I waited for my turn in Starbucks on a recent dreary Seattle morning, the person in front of me paid $4.24 for a triple mocha. It occurred to me that her cup of coffee cost about the same as a month of electronic bill payment service. Since consumers love Starbucks and are ambivalent at best about their bank, perhaps consumers would like bill payment more if they received a coupon for a free mocha, or some other useful product, each month they used the service. That might take the pressure off your fees for a minimal cost.

It might be difficult to get Starbucks on board, but other local merchants would likely provide free or steeply discounted coupons to distribute to online banking customers. Each month a new coupon would be available in the bill payment area.


  • Lowers the perceived monthly cost of bill payment
  • Provides a useful marketing device, especially if the coupon provider is well known


  • Logistics/cost of obtaining and distributing coupons
  • Potential of “cheapening” your brand image by associating it with coupon clipping
Categories: Bill payment

Bill Payment as a Loan Acquisition Tool

By Jim Bruene on February 4, 2002 7:43 AM | Comments

Online bill payments already number nearly a half-billion per year, about 7 per online household per year. Within 5 years, that number will nearly triple to 20 per online household per year

With competitive and consumer pressure to do away with most, if not all fees, and with many bill-pay users maintaining low checking account balances, the most likely path to profits is through lending services. Every bill pay account should be tied to an integrated line of credit. Following is a pro forma product offering:

Product Profile: iPaid* Account

Description: A single account that pays interest on deposit balances and collects interest on credit balances. Alternatively, it could be a traditional checking account with an overdraft line of credit attached.

Interest Rate: Positive (debit) balances earn interest based on the national average for interest checking accounts plus a small margin (e.g., 25 basis points); negative (credit) balances pay a variable APR tied to prime plus a margin which would depend on your market and strategies; 0.50% APR discount when at least one bill payment is made from account in the month; can be secured by home equity for tax advantages (with or without an APR reduction).

Monthly/Annual Fee: No charge, provided you make at least one bill payment, otherwise $5 per month.

Transaction Fees: No charge for first 20 bill payments each month, then $0.50 each; $20 for guaranteed overnight delivery of any payment.

*Not entirely coincidentally, Online Banking Report owns the domain name It’s one of several domain names, including eBillPay, ePaid, 1fn, Bankfn, Bankfi, BillFactory, InternetBills, TheBills, MyChecking, MyATM, MyStatement, we registered several years ago for a possible business venture. Anyone interested in acquiring the rights to any of these should contact OBR publisher Jim Bruene,, (206) 517-5021. Bill pay and loans: a natural combination

One reason credit card marketers drop a preapproved solicitation in your box seemingly every day is that they know the importance of timing. It’s not enough to have a good brand name and killer offer, successful card solicitations must arrive when the prospect is feeling a need for additional credit. Even though certain times of year are more productive (tax time, year-end holidays, etc.), it’s still mostly a hit-or-miss proposition in the snail-mail world.

Virtual Financial Services, recently acquired by Digital Insight, shows a preapproved car loan ad in its demo.

But Web-based bill-pay changes that picture. Using buttons, bars, and banners financial marketers can get an unobtrusive offer in front of users at precisely the moment they are thinking about their finances – while paying bills. To maximize loan sales, offer several options:

  •          pay the bill directly from an existing credit line
  •          charge the bill to an existing credit card
  •          request a line increase to pay the bill
  •          request a new loan to pay the bill

Simplicity is vitally important

Timing isn’t everything. To generate new loans, you’ll also need to make it exceedingly simple to apply. Prime credit prospects are conditioned to expect preapproval.


If you served this banner to bill-pay customers three times per month for a year, what do you suppose your cumulative response rate would be? 5%? 10% 25%? It depends on many factors, but we’d wager it beats direct mail by a large margin for a fraction of the cost.


Back-of-the-envelope ROI

To illustrate the power of your online channel as a loan-generation engine, let’s crunch some numbers. The results are expressed at right as Net Present Values (NPV) per incremental loan for various loan balances and interest rates. For example, if you originated a single line of credit with an average loan balance of $10,000 with a net interest margin of 6%, its NPV would be $3,700. Following is an explanation of the calculations and assumptions:


1.       Incremental Loan Balance (outstandings): Assume each new bill pay customer builds up an incremental $10,000 in “bill pay” balances over time. (Note: For the sake of simplicity we’ll assume the loan balances are in place immediately.)

2.       Net Interest Margin: Since many users are relatively price insensitive to this type of credit, expect net interest margins of 5% to 10% (even after loan losses have been factored out).

3.       Annual Profit Contribution: At a 6% spread, the loan would generate $600/yr in profit contribution.

           $10,000 balance x 0.06 = $600/yr

4.       Lifetime Value: Satisfied bill-pay customers are likely to stay with you for a long time, especially as the switching costs to unwind their electronic connections grow with each new service you provide. Assume the bill-pay loans stay on your books an average of 10 years. This gives each new bill-pay credit line a lifetime value of $6,000, or $3,700 discounted at 10%.

            $600/yr x 10 years = $6,000

      Discounted at 10% (NPV) = $3,700

5.       Acquisition Costs: How much would you pay to acquire new loans each with a lifetime value of  $6,000 (NPV of $3,700)? $300? $500? $1,000? Whatever the figure, you can use it to establish a realistic budget for your online channel. Assume you want to attract 250 new accounts each month, 3,000 in a year, and are comfortable spending $500 to acquire each one. That equates to a $1.5 million budget.                                                  


Online Banking & Bill Payment at Mid-Year 2001

By Jim Bruene on July 6, 2001 9:48 PM | Comments

During the last 18 months, online banking has become a common activity among its primary targets, middle- and upper-income households. Here are the primary reasons why usage has continued to grow rapidly despite a poor climate for other ecommerce activities:

Major Milestones: 1999 to 2001





CyberBills, PayTrust, and PayMyBills (now part of PayTrust) launched scan-and-pay bill payment programs


VerticalOne (now part of Yodlee) launched the first financial statement aggregation site


First Internet P2P payment service launched by PayPal


The first major online banking/online brokerage merger approved for E*Trade and TeleBank




Compubank, Virtual Bank, and receive large capital infusions from venture firms


PayPal/ hits 1 million users


Internet company market caps decline sharply


Citibank launches, an account aggregation site built by Yodlee


Juniper Financial launches



Jan to now

Mortgage refi boom buoys the bottom line of online lenders

Feb a well-funded and well-managed small business loan marketplace ceases operation and declares bankruptcy


Yahoo launches ACH transfer engine powered by CashEdge

Mar to June

Wingspan, SFNB, and CompuBank brands are discontinued and merged into other banks


NextCard hits 1 million credit card accounts


Virtual Bank attains profitability 15-months after launch


PayPal hits 10 million users


Source: Online Banking Report, 8/01


Factors Influencing Usage
  • Continued rapid growth in email payments: Email payments were the first online banking feature to gain “gee whiz, why didn’t I think of that” status; crucial for generating buzz and word-of-mouth. Although plagued by fraud and disgruntled customers, the dark side of the payments business, the leading provider, PayPal, has been able to dramatically raise prices while continuing to grow its business. The privately held company claims to be nearing profitability.

  • Easier-to-use services: During 2000 and continuing this year, bank Web sites become far more user-friendly with easier signup procedures, prominent login buttons, good demos, well-organized FAQs, and better customer service.

  • Strong growth in bill payment at biller sites: Forrester was the first to quantify this new trend in its July 2001 report, Bill Payment Goes Mainstream. In this report, Forrester found that 7% of online consumers pay at least one bill online at a non-financial institution. That total is up from nearly zero just two years ago. And it’s already equal to the 7% of online consumers that pay bills through a bank service, a number that has been growing at only about 20% per year.

  • Word-of-mouth effects: Like the network effect important to high-tech product adoption, online banking has its “neighbor effect,” when your neighbor figures out how to bank online, you decide it’s worth checking out.

  • Negative press: The current wave of ecommerce bashing hasn’t helped bank marketing efforts. But as the down cycle plays itself out, there should be new round of more optimistic stories.

  • Less capital investment: Not only has the VC money dried up, many banks have curtailed their spending on online initiatives.


Checkfree Has New Person-to-Person Product Line

By Jim Bruene on December 3, 1999 1:02 PM | Comments


Checkfree’s added a welcome new element to the usual electronic bill payment features and benefits: tracking.

Three key benefits are touted on its demo:

  •  Pay everyone you pay now
  •  Get bills that do more
  •  Find out who got paid and when

Checkfree (Atlanta, GA) has been talking to analysts and investors in general terms about a new person-to-person product line launching next year. CTO Ravi Ganesan briefed us on the effort, which he said is conservatively slated for a mid-Q2 2000 launch (could be earlier). It will leverage Checkfree’s dominant position in payment processing, problem resolution, and customer care.

Checkfree will launch the service in phases with the basic payment engine put in place in second quarter 2000. Enhancements will rapidly be added including escrow services, gift check programs, services for larger merchants, credit card charge options, and so on.

Approach: Checkfree will try a new twist on electronic billing and payments: Appealing to small business recipients of funds, not the senders. Rationale: Small businesses and individuals will willingly go through the hassle of registering for a new payment service if it will help speed up the transfer of money INTO their accounts.

Checkfree made this discovery during focus groups assembled to figure out why small businesses, with much more to gain through electronic bill payment, lagged consumers in adoption; and why small business managers, who claim they will use electronic bill pay, often fail to follow through.

Checkfree’s hypothesis: Small businesses see electronic bill pay benefiting the other party in the transaction. Checkfree believes that if they can get small businesses signed up to electronically receive funds, the businesses will also start sending money the same way. It’s innovative thinking, and a sign that Checkfree may maintain its payment industry leadership.

How it Works:

1. Any user, consumer or business, that wishes to receive money electronically registers in a Checkfree-enabled community (Yahoo!, bank, credit union, start-up) to receive payment through a new service temporarily dubbed MoneyWeb. The size of the transaction will be capped to reduce fraud and money laundering exposure.

2. Once registered, the user can slap a unique identifier on their paper billing statements, email messages, Web site, etc.

3. Anyone wishing to electronically send money to a MoneyWeb user simply enters the recipient’s MoneyWeb identifier and the amount to be paid on a MoneyWeb-enabled site.

4. The funds are debited from the payor’s designated bank account that evening via ACH (electronic transfer) and put into a Checkfree holding account.

5. After Checkfree is assured the debit has cleared, funds are then credited to the recipient’s bank account. Total time elapsed will be two to three days. Checkfree has the option of decreasing that time as they become familiar with a participant’s buying behavior. Funds are “good” to the extent the law allows. Payors can still disallow the transaction later if they claim they were defrauded by the recipient of the funds.

6. Emails will be exchanged along the way alerting recipients that money has been sent to them.


Bank Advantages:

  •  Direct transfers: A huge advantage of this program compared to Confinity’s, is that registered users don’t have to do anything to receive money. Funds are automatically deposited to their registered bank account via the standard ACH mechanisms. This makes it easier to use, but reduces float income for the sender’s bank.
  •  Experience and reputation: Checkfree processes 14 million transactions per month. In the time it took you to read this issue, they have handled more transactions than Confinity has in its entire operating history. As Checkfree CTO Ganesan said, “It’s easy debiting and crediting accounts via ACH when (the transaction) goes well; the hard part is handling the transactions that go bad.” From customer service to tech support, Checkfree has an advantage in handling the messy service side of the payments business.
  •  Security and audit compliance: Checkfree’s systems are watched, audited, checked, and rechecked by most major banks, technology consultants, and government regulators. The likelihood of a hacker or embezzler seriously penetrating Checkfree’s armor, is remote. It’s harder to say the same about a start-up.



Ravi Ganesan, CTO

4411 East Jones Bridge Road

Norcross, Georgia 30092

Phone: 678-375-3000

Referral Tracking: One more example of Confinity’s savvy. The company make is easy to track whom you’ve sent money to and whether the person has taken the steps to qualify for a $10 referral fee. It’s smart business, PayPal gives users the tools to not only make referrals but to follow-up with their friends to make sure they use the system.

Categories: Bill payment, CheckFree

CyberBills Pioneers TOTAL Web-based Bill Management

By Jim Bruene on March 28, 1999 4:39 PM | Comments

Here’s the first company in a new category: ebilling-and- payment companies focusing on the end-user. (See also

CyberBills isn’t waiting for Transpoint and Checkfree to make electronic bill presentment a reality, they’re doing it now with a scanner, a Web site, and common sense.

We don’t envy the mountains of paper they endure today, but when the company is worth a few hundred million, all those paper cuts will have been quite worthwhile.

Note: It’s offering 1,000 ClickMiles for new accounts.



Personal Bookkeeprs for Everyone: The super rich won’t ever use your Web-based bill pay. They have accountants, bookkeepers, or private bankers
to do it for them. It might cost a few hundred or thousand dollars a year, but that’s the price of freedom from the monthly drudgery of bill payment.

What if a company offered to do the same thing, but for only a few bucks a month, and to store all the billing statements on a Web site so you could look at them anytime? What if this same company would co-brand the service with you for no cost and share revenues?

If this sounds interesting (it should), it might be time for a trip to Silicon Valley for a closer look at the latest financial services innovator.


 The Company: The start-up is the first major innovator in the “Web bill payment space.” The year-old Bay Area company has already graced the pages of the New York Times . It’s backed by ASCII Ventures, Online Ventures, and Sunrise Capital. BlueGill has been chosen to provide presentment technology.

The Product: The first, 100% electronically presented service that covers all the user’s bills. And includes a novel back office process that dramatically reduces the error rates typical in today’s pay-anyone system. Because CyberBills physically receives each paper bill, it’s able to troubleshoot problems before the user is even aware of them. And like most venture-backed companies in the Valley, prices are being kept low, enduring losses now, but banking on massive valuations down the road.


CyberBills Pricing

1Active payees only


Value-Added Services from CyberBills

Source: company, 4/99

How it Works: The company uses 120-page-per-minute scanners to turn paper statements into electronic versions. Users can then log in to a customized control panel to establish rules for automatic payment of individual bills. Here’s the entire process:

· User completes an online application.

· User is mailed a start-up kit that includes personalized change of address stickers to send to billers; future bills are then sent directly to the company with a CyberBills customer number in the header.

· When a new bill is received, it’s scanned and shredded (unless you pay for hardcopy storage), then made available for viewing (PDF format).

· User notified via email (if desired).

· User establishes automatic rules for paying each bill (e.g., if less than $100, pay automatically).

· Payment is made by ACH deduction from user and paper check to the biller.

· User notified via email (if desired).

Pricing to Banks: The company is actively seeking banks and service providers to distribute its products on a co-branded basis. The products will be sold to banks at an unspecified discount from the list price shown on Distributors would then be free to set their own retail prices, or to bundle it with other services. The company says that it can have a new partner live within 48 hours.

Contacts: Founders are John Simpson and Murali Chirala, both alums of Jim Clark’s Healtheon, 1500 Wyatt Drive, Santa Clara, CA, 95054, (408) 844-0340.


CyberBills has implemented a number of features we have been advocating for years, and then some (see “Reengineering Bill Payment,” OBR 10/96 and 11/96). We think the company is on to something big, VERY BIG. Sure, the service is barely post-beta and has some rough edges. For instance, the Web site doesn’t yet include a demo or a “How it Works” section and the online customer agreement contains a proofreader’s annotation. But these are nits. On the Internet, speed and innovation are rewarded, not proofreading.

After speaking with founder John Simpson, we were impressed with the company’s vision and business model (subscriptions, transaction fees from billers, advertising, and co-marketing opportunities). We think you should take a close look at what CyberBills has to offer. They are hungry for exposure and customers, so this could be a golden opportunity for you to jump on board. You can offer true bill presentment months or even years ahead of your competition with little up-front investment. We have only one bit of advice: GET EQUITY! If you help this company take off, you should be part of the upside.

Categories: Bill payment

A Compolation of Internet Billing Softwares

By Jim Bruene on March 27, 1999 4:28 PM | Comments

Internet Billing Company

Tim Arnel, President & CEO
5701 Pine Island Road, Suite 240
Ft. Lauderdale, FL 33321
(954) 724.0644

Status Report: iBill assists Net-based merchants in accepting payment and managing the associated back-office functions; targets small and midsize Web merchants and has an installed base of more than 16,000 worldwide; can get a new merchant up and running within 48 hours.

Just In Time Solutions

Brian Valente, Sr. Marketing Dir.
444 De Haro Street, Suite 100
San Francisco, California 94107
(415) 553-6400

Status Report:

  •  Helped Intuit develop bill presentment in Quicken 98.
  •  Working with Checkfree and International Billing Systems.
  •  Seven clients including IDS, AT&T, and two large banks.
  •  BillCast version 2 will be released during second quarter 1999.


Mitchell Gross, CEO,
Joseph J. Albracht, EVP, COO
120 Old Post Road
Rye, NY 10580
(914) 921-7200

Status Report: Mobius is trying to leverage its installed base of 1,200 document archival and retrieval clients, which include 50% of the Fortune 100. It is supporting both biller-direct and consolidator approaches.


Richard Stranger, CEO
4720 Walnut Street, Suite 100
Boulder, CO 80301
(303) 245-0071

Status Report: Received $11 million from several investors including United Parcel Service; won a
patent for its Electronic Delivery Management system; working with IBS and AMS.

Netscape Communications
Division of America Online

Marty Cagan, VP Biz-to-Biz Services
501 E. Middlefield Rd.
Mountain View, CA 94043
(650) 937-3869

Status Report:

BillerXpert being tested in Canada at Saskatchewan Tel and in Singapore by a unit of Citibank; Netscape and AOL expected to offer ebilling on their Web sites in 1999.

Vestcom International

Cynthia Ward, VP Product Dev.
1100 Valley Brook Avenue
Lynnhurst, NJ 07071
(201) 935-7666

Status Report: Using technology from BlueGill, claims to get billers Web-ready in 10 to 12 weeks.

Categories: Bill payment

Direct Billing Vendor : eDocs

By Jim Bruene on March 26, 1999 4:26 PM | Comments


Kevin Laracey, CEO
321 Commonwealth Road
Wayland, MA 01778
(508) 651-8889

Status Report: Direct billing vendor with payments processed via partnerships with CyberCash and Checkfree. Other partners include Océ, Bell & Howell, INSCI, NEPS, and Group 1.

Categories: Bill payment, eDocs

CyberCash Facilitates Biller-Controlled Enrollments

By Jim Bruene on March 25, 1999 4:25 PM | Comments


Richard K. Crone, VP/GM PayNow
480 Roland Way
Oakland, CA 94621
(510) 563-4305

Status Report:

  •  Its InstaBuy service facilitates biller-controlled enrollments to enable one-click bill payment.
  •  Its Merchant Connection Kit provides secure processing of electronic ACH checks and credit/debit cards.
  •  A long-time proponent of biller-direct bill presentment (see OBR 10/97).
  •  Major biller clients include NUI Corporation and AirTouch.
Categories: Bill payment, CyberCash

BlueGill Technologies Internet Billing Software

By Jim Bruene on March 24, 1999 4:24 PM | Comments

BlueGill Technologies

Hal Davis, CEO
339 E. Liberty, Suite 300
Ann Arbor, MI 48104
(734) 205-4100

Status Report:

  •  Targets three markets: financial services, telecom, and utilities.
  •  M&I Data Services, CyberBills, and Vestcom are using BlueGill technology.
  •  Works with four value-added resellers: IBM, M&I, LaserCom, and Check Solutions.
Categories: Bill payment

Transpoint Has New Joint Venture

By Jim Bruene on March 22, 1999 4:20 PM | Comments

(formerly MSFDC)

Ralph Young, EVP Sales
One Microsoft Way
Redmond, WA 98052-6399
(425) 705-2503

Electronic Bill Pay Volume: in pilot stage.

Claim to Fame: A formidable combination of the largest high-tech company, the largest financial-transaction processor, and the largest financial services company.

Status Report:

  •  Transpoint is a joint venture between Microsoft, First Data Corp., both of which serve approximately 150 million end-users in their respective industries. Citicorp was added as a minority investor Sep. 14, 1998 will handle payment processing.
  •  In late spring or early summer, Transpoint is expected to finally launch its ebilling service. It will be marketed directly to consumers and through other distributors. Six banks have announced pilots (see chart
    above right).

U.S. Pilot Participants

  •  Bank One
  •  Citibank
  •  First Union
  •  InterWest Bank
  •  KeyBank
  •  Mellon
  •  Wachovia
  •  Wells Fargo (project on hold)

Source: Company, 3/99

  •  Chosen as one of two service providers by e-route, an ebilling-and-payments consortium owned by six major Canadian banks.

Bill Presentment Plans: Bill presentment is the core service offering, but users will also be able to pay non-presented bills electronically. The company has scrapped plans to pay banks a commission for sending users to the Transpoint service.

Categories: Bill payment

Princeton eCom Has End-to-End System Designed To Minimize Errors

By Jim Bruene on March 21, 1999 4:13 PM | Comments

Princeton eCom
(formerly Princeton Telecom)

Don Licciardello, CEO
Ron Averett, President, COO
165 Wall St.
Princeton, NJ 08540
(609) 924-1244

Electronic Bill Pay Volume: The company processes 2.5 million payments per month initiated from various telephone, PC, and Web front-ends operated by the company and its distribution partners; payments routed to 800 biller clients.

Claim to Fame: Experience and end-to-end system designed to minimize errors.

Status Report:

  •  After 16 years in business, the company changed its name Mar. 24 to Princeton eCom and filed for an IPO on Mar. 31.
  •  Currently house more than 80 million billing statements each month.
  •  Last year Billing Concepts acquired 22% of the company for $10 million. Billing Concepts has relationships with 1,300 companies. Former Billing Concepts execs also founded .
  •  Signed a letter of intent with Intuit last fall to make bill statements available through Quicken and
  •  The core product, els Electronic Lockbox Service, validates account numbers on consumer-initiated bill payments and routes those transactions directly to the biller’s accounts receivable host systems.

Bill Presentment Plans: The company has contracts with 30 companies (15 announced) for an Internet bill presentment server including Union Electric Company, a St. Louis utility with 1.3 million customers; Lucent, Boston Gas, NUI Corp, and Ameren UE. According to its IPO filing, 11 clients are currently using Internet billing.

Categories: Bill payment

NPC Web-based Presentment Program Still Using VirtualPay

By Jim Bruene on March 19, 1999 4:09 PM | Comments


Karl Sammons, SVP
1231 Durrett Lane
Louisville, KY 40285-0001
(502) 326-7060, ext. 5060 or

Electronic Bill Pay Volume: estimated at less than 10,000 per month (plus/minus 50%).

Status Report: NPC, primarily owned by National City Corp. (Cleveland, OH; $90.4 billion), was an early pioneer, with the first Web-based presentment program at Mobil Oil in late 1996 (OBR 12/96). Mobil is still using the company’s VirtualPay system.

Categories: Bill payment

1.4 Bills Paid Per Customer Per Month by ORCC Customers

By Jim Bruene on March 18, 1999 4:07 PM | Comments

Online Resources & Communications Corp.

Matt Lawlor, CEO
Ray Crosier, Client Services
7600 Colshire Drive, Suite 600
McLean, VA 22102
(703) 394-5100

Electronic Bill Pay Volume: 73,000 payments per month across 53,000 users, for an average of 1.4 bills paid per customer per month.

Claim to Fame: Holds process patents in two areas of online banking, ATM-network-based bill pay and targeted advertising or messaging based on bill payment
and financial information.

Status Report:

  •  One of the leading online banking vendors with 315 financial institutions under contract with a combined 6.7 million retail customers; 117 FIs have launched the service, including 60 in 1998.
  •  The client base lags in consumer adoption, however. The 117 launched clients, with a combined 3.7 million retail accounts, have only 50,300 users as of Dec. 31, 1998, a 1.4% penetration.
  •  Received a $7 million infusion of venture capital in February from a group of investors led by Dominion Ventures.
  •  Filed March 19 an initial public offering (IPO) of common stock.
  •  Continues to support Web, direct-dial, screenphone, and telephone front-ends; also provides Website design services.
  •  Through its alignment with 50 ATM networks and processors, the company offers a unique bill payment process, authorizing and routing transactions through participating ATM switches. This allows banks and billers to verify “good funds” before the payment is posted by the biller.
  •  Co-markets its services through 34 marketing partners such as NYCE.
  •  Recently hired Ron Bergamesca as SVP Consumer Marketing to spearhead a campaign for financial institutions to market bill payment by offering the premium incentives.

Categories: Bill payment

Intuit's Electronic Bill Pay Volume At 3 Million per Month

By Jim Bruene on March 16, 1999 4:03 PM | Comments


Eric Dunn, CTO
Nancy Tubbs, Product Manager, Interactive Billing
2525 Garcia Avenue
Mountain View, CA94039-7850
(650) 944-3037

Electronic Bill Pay Volume:
The estimated 3 million payments per month (plus/minus 25%) from Quicken, QuickBooks, and soon users, are processed by Checkfree and included in Checkfree’s total volume; Intuit owns 19.1% of Checkfree.

Claim to Fame: The top brand in PC-based financial management, and arguably the number one personal finance brand on the Web.

Status Report: Intuit continues its industry dominance with a 60% market share of electronic tax filings (OBR 2/99); 70+% share of PFM users; 75% share of the small biz accounting software market (OBR 9/98); estimated 15% share of the U.S. bill payment market; and leading personal finance Web site,

Bill Presentment Plans:

  •  The company first put a bill presentment module in Quicken 98, but has only had one biller using it, Florida Light & Power,
  •  More importantly, was slated to begin offering ebilling in first quarter 1999. Intuit has established a price of zero for billers presenting bills via standard OFX format, provided the biller agrees not to charge the user for the service.
  •  One biller is in bill presentment trials using QuickBooks.

Categories: Bill payment, Intuit

International Billing Systems Volume Primarily via Telephone

By Jim Bruene on March 15, 1999 4:01 PM | Comments

International Billing Systems
Division of USCS International

Dawne Chandler, VP Elec. Services
Judy Cardinelli, Product Manager
5220 Robert J. Mathews Parkway
El Dorado Hills, CA 95762-5712
(916) 939-5817

Electronic Bill Pay Volume: 800,000 primarily via telephone.

Claim to Fame: The Checkfree of paper bills, with enough volume to vault themselves, or a chosen partner into a leadership position.

Status Report: IBS is the largest billing outsourcer in the country, handling 80 million paper statements each month including 50% of all cable TV subscribers, 33% of all cellular telephone subscribers, and 11% of all land-line telephone subscribers. As this volume becomes electronic, IBS is expected to have a major impact in the ebilling market. Counting customer remittances,
IBS accounts for 1.8% of the U.S. first-class mail volume.

Bill Presentment Plans:

  •  Developed The Electronic Billing Solution which provides rapid entry into the market for billers; bills can be presented directly at the biller’s site, via a third party, or emailed to the user.
  •  The company plans to present client bills at all major sites: Transpoint, Checkfree, Intuit, and others. The company is also aligned with CyberCash to use its PayNow program for direct payment on the biller’s site.
  •  Announced a contract with Potomac Electric Power Company to present bills at the company’s Web to its 1.9 million users in Washington D.C. and Maryland.


Integrion's Current Subscriber Count Passes 1 Million Mark

By Jim Bruene on March 14, 1999 3:59 PM | Comments


Rusty Potts, Mgr. of Bill Payment
1339 Chestnut Street, 17th Floor
Philadelphia, PA 19107
(215) 575-4516

Electronic Bill Pay Volume: Payments are handled by Checkfree, in which Integrion holds an equity position.

Status Report:

  •  As the current subscriber count passed the one million mark, Integrion recapitalized and pared down to three primary owners (BankAmerica, Bank One, and Washington Mutual) from the previous 15 banks. The three primary banks will provide Integrion’s next round of funding. The remaining 10 banks, IBM, and Visa will put in significantly less capital, but have access to Integrion’s products.

  •  As part of the restructure, the Visa Interactive system is being retired, and Integrion is committed to a major development effort to connect its IFS platform with Checkfree’s Genesys.
  •  In 1998, owner banks PNC, Michigan National and ABN AMRO launched Web-based electronic banking services through Integrion, joining Bank One and NationsBank (now BankAmerica) which went live with Integrion’s electronic banking platform services in 1997. Washington Mutual is live in some markets, and Mellon is in an employee pilot.

Bill Presentment Plans:

  •  Bank One will launch Integrion’s IFS platform to provide Internet-based electronic bill presentment and payment services in April. Bank One will complete the loop in the ebilling process and become the first Integrion bank to include bill presentment at its site. PNC has announced a pilot of integrated electronic bill delivery and payment through Integrion and Checkfree by midyear.

Integrion Ownership

Board of Managers

Bank One
Washington Mutual

Strategic Advisory Council

ABN AMRO North America
First Union National Bank
Fleet Financial
Mellon Bank
Michigan National Bank
PNC Bank
US Bancorp
Visa U.S.A
Wells Fargo
Source: Integrion, 3/99

Categories: Bill payment

CyberBills Sells Directly to Customers

By Jim Bruene on March 12, 1999 3:46 PM | Comments


John Simpson, CEO
2520 Mission College Blvd, Suite 102
Santa Clara, CA 95054
(408) 844-0340

Electronic Bill Pay Volume: Declines to reveal volume, but we estimate it’s less than 5,000 per month (plus/minus 50%).

Claim to Fame: Received second “OBR Best of the Web for 1999”; only company working directly with end-users to turn paper bills into electronic documents.

Status Report: This new Net player is selling directly to consumers and through distribution deals with financial institutions and service providers; one bank signed, America California Bank (San Francisco, CA; $55 million ), which is ready but has not launched yet.

Categories: Bill payment

CFI Proservices Has More Than One Million Registered Users

By Jim Bruene on March 9, 1999 3:41 PM | Comments

CFI Proservices

Greg Crandell, Online Banking
400 SW Sixth Avenue, Suite 200
Portland, OR 97204
(800) 274-7280


Electronic Bill Pay Volume: 400,000 payments per month with growth projected at 8% to 10% per month through 1999.

Status Report: CFI’s subsidiary, Vendor Payment Systems (VPS), processes bill payments for CFI’s installed base of 240 Personal Branch financial institution clients with more than one million registered users.

Bill Presentment Plans: Nothing specific announced, but working with Transpoint and Princeton eCom on initiatives.

Categories: Bill payment

Bank of America to Compete in Bill Payment Market

By Jim Bruene on March 6, 1999 3:17 PM | Comments
Bank of America

Chris Callero, Group EVP
Jane Wallace, EVP
425 First. St.
San Francisco, CA 94105
(415) 622-3456

Electronic Bill Pay Volume: 800,000 per month

Status Report: On April 13, the company announced its intention to compete in the bill payment and presentment market; with 2 million business clients including 80% of
the Fortune 1000, 30 million retail customers, and one million online banking users, the company will be
a formidable competitor to Checkfree and Transpoint/Citibank.


A Composition of Major U.S. Electronic Bill Payment Originators

By Jim Bruene on March 5, 1999 3:13 PM | Comments

Major U.S. Electronic Bill Payment Originators

Source: Online Banking Report, 3/99 and 12/97, from company reports. (e) Online Banking Report estimate, plus/minus 25%

1Payments can be originated from any front-end including: dial-up PC, MS Money, Quicken, Managing Your Money, financial institution Web, third party Web, telephone. Does not include preauthorized ACH debit. MasterCard RPS and Visa ePay volumes are not listed separately because they are included in the volumes originated at the processors above. Some Princeton eCom

2The 230 million annual run-rate is less than 1.4% of the 17 to 18 billion bills paid each year in the U.S.

Categories: Bill payment

The Money Value of Time

By Jim Bruene on March 2, 1999 1:52 PM | Comments

Every spreadsheet jockey and biz school graduate is familiar with the time value of money. It’s a fundamental in analyzing business opportunities. But what about the money value of time? In today’s wired environment, where banks compete for attention from a host of news, shopping, and entertainment options, not to mention other financial services providers, you must be extremely sensitive of your customer’s most precious asset — time.

We in the online banking industry have been somewhat callous in this regard. Did we really believe those promises in the online banking brochures? Save time, save money, pay your bills online! But what was the reality of the service offering? Bill payment was broken and data was delivered in boring, static HTML with little customization available.

R.O.I. vs. R.O.T.

For users, especially the upscale ones frequenting the Schwab, E*Trade, and Intuit Webs, the purchase decision is not so much dependent on financial payback, i.e., ROI, but the return on time, or ROT. As much as we like ebilling and payments going forward, bill pay programs to date have only appealed to a small market of Quicken users and other financial control freaks. Why has bill payment been a loser? Bad ROT, i.e., the return on the time invested has been poor. For the average consumer, it can take months or even years to earn back the time invested to get started. Let’s do the math:

Hypothetical ROT Example

Initial time invested:

5 hours The time it takes to figure out how to use bill payment well, including reading about the service, asking your neighbor about it, signing up, initiating passwords, setting up merchants, and playing with it enough to gain confidence to become an active user.


Monthly Savings:

10 minutes Assuming five bills paid each month, saving two minutes each.

Payback Time:

30 months The breakeven time to recoup your initial investment in mastering the system.


In the example above, the breakeven time to recoup the initial time investment is 2.5 years (plug in your own assumptions from the chart below). Few customers would bother if they knew the score going in. The other benefits: control, postage, tracking, and so on, just wouldn’t be compelling
for the average user.

The answer: Web-based billing and payment systems that reduce the learning time and increase monthly timesavings. But with presentment still several years away from widespread use, what can you do now? Creative interim solutions are possible. For example, Total Bill Management from CyberBills promises real ROT relief today.

Months Needed to Breakeven on Time Invested in Learning Electronic Bill Payment


<1 equals a payback of less than one month, i.e. immediate gratification

Creating a Net Banking Playground

How about a place where new users can play around with online banking and bill pay prior to using their own money? Most important: let users send a trial bill payment to themselves and/or a friend to spread the word, possibly using a $1 or $2 of the bank’s money (see “Send a Buck,” OBR 6/98).

Categories: Bill payment

Bill Payment as a Loan Acquisition Tool

By Jim Bruene on February 4, 1999 12:44 PM | Comments

During the next few years, bill presentment and bill pay will be one of the biggest draws for Web-based financial firms, with 4 to 5 billion transactions annually by 2002 in the U.S. alone (see forecast, OBR 1/99.) Competitive pressures will do away with most, if not all fees. And with many bill pay users maintaining low checking account balances, the primary path to profits will be through lending services. Every bill pay account should be tied to an integrated line of credit. Following is a pro forma product offering:

Product Profile: eBillPay* Account
(with integrated credit line)

Interest Rate: Variable APR tied to prime; margin above prime depends on your market and pricing strategies; 2% discount, provided at least one bill payment is made from the account each month.

Monthly/Annual Fee: None, provided you make at least one bill payment per month, otherwise $5 per month.

Transaction Fees: None for first 20 bill payments each month, then $0.50 each; none for online transfers to and from credit line; none for automatic overdraft advances; 2% for in-person, telephone, paper check, and mail transfers.

Enhancements (see OBR 1/99 for more):

  •  payment guarantees (see OBR 11/97 )
  •  interest-free grace period of a few days (to make up for perceived loss of float)
  •  usage incentives such as frequent flyer miles
*Not entirely coincidentally, Online Banking Report owns the domain name It’s one of several billing domain names, including and, we registered a year ago as part of a possible Web info business we have since abandoned (full list below). If anyone is interested in purchasing any of the names, please contact OBR publisher Jim Bruene,, (206) 517-5021. Subscribers will receive preference. Domain name inventory:,,,,,,,,,,, Bill pay and loans: a natural combination

One reason credit card marketers seemingly drop a preapproved solicitation in your mail box every day is that they know the importance of timing. It’s not enough to have a good brand name and killer offer, successful card solicitations must arrive when the prospect is feeling a need for additional credit. This
is hit-or-miss proposition in the snail-mail world.

Virtual Financial Services, sister company of First Internet Bank of Indiana ), shows a preapproved car loan ad in its home banking demo.

As every marketer knows, certain times of year are better than others. As a result, mail boxes fill up with solicitations before the holidays, tax season and summer vacations.


But Web-based bill pay changes that picture. Financial marketers can get an unobtrusive offer in front of users at precisely the moment they are thinking about their finances. Credit access via buttons, bars and banners can be presented to qualified customers during the bill payment process. To maximize loan sales you’ll want to offer at least the following four payment options:


  •  pay the bill directly from an existing credit line
  •  charge the bill to an existing credit card
  •  request a line increase to pay the bill
  •  request a new loan to pay the bill

Preapproval still important

Timing isn’t everything. To generate new loans, you’ll also need to make it exceedingly simple to apply. Prime credit prospects are conditioned to expect preapproval. Try showing the following banner to prequalified customers during bill payment sessions:

If you served a “Get $5,000 Now” banner to bill pay customers three times per month for a year, what do you suppose your cumulative response rate would be? 5%? 10% 25%? It depends on your customer base and pricing, but we’d wager it beats direct mail by a large margin for a fraction of the cost.

In lieu of preapproved credit, you could offer an instant credit application with approval guaranteed within a few minutes. For example, NextCard tells applicants they will be approved within 30 seconds.

Back-of-the-envelope ROI

To illustrate the power of looking at your online channel as a loan generation engine, we must make a number of assumptions. Use the chart at right to determine the NPV per incremental loan for various loan balances and interest rates. For example:

1. Incremental Loan Balances (i.e., outstandings): Assume each new bill pay customer builds up an incremental $10,000 in “bill pay” balances over time. (Note: For the sake of simplicity we’ll assume the loan balances are in place immediately.)

2. Net Interest Margin: Since many users are relatively price insensitive to this type of credit, expect net interest margins of 5% to 10%.

3. Annual Profit Contribution: At a 6% spread, the loan would generate $600/yr in profit contribution.

$10,000 balance x 0.06 = $600/yr

4. Lifetime Value: Satisfied bill pay customers are likely to stay with you for a long time, especially as the switching costs to unwind their electronic connections grow with each new service you provide. Assume the bill pay loans stay on your books an average of 10 years. This gives each new bill pay credit line a lifetime value of $6,000, or $3,700 discounted at 10%.

$600/yr x 10 years = $6,000

Discounted at 10% = $3,700*

* This is also called the Net Present Value (NPV). See chart at right for life-time NPV for other combinations of loan balance and interest margin.

5. Acquisition Costs: How much would you pay to acquire new loans each with a lifetime value of $6,000 (NPV of $3,700)? $300? $500? $1,000? Whatever the figure, you can use it to establish a realistic budget for your online channel. Assume you want to attract 250 new accounts each month, 3,000 in a year, and are comfortable spending $500 to acquire each one. That equates to a $1.5 million budget.


Bill Pay Metrics*
Loan Value per Bill Paid


*For illustration purposes only, these numbers are NOT derived from actual financial institution results, although they are within the relevant range from our experience at three superregional banks.

**Includes bill payments set up on automatic recurring payment.


Bill Payment to be the Cornerstone of Virtual Banking

By Jim Bruene on February 1, 1999 11:42 AM | Comments

Forget the notion of capturing checking accounts on the Net. It’s not going to happen, at least not fast enough to fund your Web business plan. There’s nothing in it for the user. Why would someone waste time sending money to some far-off address when there are plenty of choices within a short drive? Besides, most checking accounts are money losers anyway. What you need from Web users are their loan balances, and bill payment can help you get them .


Schwab wants you at its Web when you
make decisions about your disposable income.

So what’s a Net banker to do? Play from your strength, go after the “virtual” checking business. Concentrate first on bill payment, then add plastic (debit/credit cards) and paper (checks) later, if desired. For an analysis of the pros and cons of virtual checking, read our June/July 1998 double issue, “Creating the of Financial Services.”

Web-based Bill Pay Centers be vital to retail banking success during the next decade (OBR 1/99). It’s a place where financially savvy users will go each month to take care of major financial transactions: the mortgage payment, car payments, utility bills and so on. More important than the transaction itself, is the financial planning that occurs at this time. Whether customers are short of cash or flush with funds, you want to be there when they make either of these potentially profitable decisions:

A. There isn’t enough cash so we need to take a loan advance.

B. There’s extra cash that should be put to work in savings, investments, or extra loan principal payments.

The time is right to add bill payment to your Web, or improve what you already have. It’s clear that users expect bill pay from their financial institution. That’s the good news. The bad news is that anyone with a Web site can offer it. You are about to enter a long-ranging battle for the bill pay customer, not unlike that waged for credit card accounts during the last 10 years. This time the battleground is the Web and the competition is fueled by a potent mixture of venture capital, stock options, and frenzied investors.

Categories: Bill payment

How to Build a Winning Bill Pay Center

By Jim Bruene on January 6, 1999 11:27 AM | Comments

It will be a long time before the definitive text on how to build a Web-based bill pay center is written. For the next ten years or more dozens of approaches will be tried, refined, improved, and abandoned. We can’t tell you which approach is best, but we will outline four fundamental building blocks of a good online bill payment center.

One caution: Don’t forget to build tools and help areas for the vast majority of your Web site users who will still be paying bills by paper check for many years to come.


Segmenting the Opportunities in Interactive Payments

For banks there are two distinct targets in this nascent market: billers and bill payers. Each has distinct, perhaps competing needs. Billers want to maintain or enhance relationships with their customers using the bill as a draw into their Web sites. Consumers simply want to
get the bills paid with the least amount of work while still maintaining control. It may be difficult for financial institutions to play both sides of this debate.

Electronic Bill Payment Market Segments


Source: Online Banking Report, 1/99


Building Blocks for Your Web-based
Bill Pay Center

The four building blocks of a compelling bill pay center (payment and presentment) are shown below. You could also include a fifth area directed at small businesses or you could weave small business information into the other four areas (detailed descriptions follow):

1. Education Zone – Interactive educational area where users learn about bill presentment and which billers support it.

2. Planning Zone – Users can check their account balances, monitor household budgets, review business P & Ls, and find out if they have enough cash to meet current and future obligations; links would be provided to alternative sources of funds should checking account balances fall short. For example:

  •  pay bill from existing credit cards or credit lines
  •  apply for line increases and pay bill from expanded line (if approved)
  •  transfer funds from other financial institutions and pay the bill

3. Paying Zone – Users should be able to pay any merchant, not just those that support presentment.

4. Merchant/Biller Zone – A place for merchants to investigate alternative payment options available from your bank.

5. Small Business Zone (optional) – A place for small businesses to find electronic solutions for both their billing (accounts receivable) needs and the business’s own payment needs (accounts payable). Ideally the financial institution could provide a single solution encompassing both.

Education (or New User) Zone

The education zone may be the most important part of your bill payment efforts for the next 24 to 36 months, yet it is the area most likely to be pawned off on the lowest-level marketing officer.

The education zone has a dual purpose. On the surface, it’s a place to get customers, employees and billers up to speed on your capabilities. This is an absolutely essential part of convincing users to try online billing and payment (see below for content ideas).

Less obvious, but far more profitable, is to sell bill payment lines of credit and debt consolidation loans. This could be accomplished by “sponsoring” the area with banners that take users to your “bill payment” loan calculators.

Content Ideas:

1. Searchable Biller Database with Email Updates: Users enter their merchants in a Web-based form (see mock-up below), and the bank provides available billing options, e.g. walk-in, mail, direct (preauthorized) debit, credit card, electronic bill payment (via your Web), or bill presentment (email, Web, etc). You could also enhance the database entries with customer service info, Web site info, due dates, etc.

2. Alternative Payment Sources: Ideas for getting the bills paid when funds are running low. Contains links to your loan application and other loan areas on your Web. It could also contain ideas for those not able to borrow, such as links to local community organizations that are able to provide emergency funding.

3. FAQs (frequently asked questions): Detailed questions and answers on the features and benefits of bill pay. Include a question/suggestion box where users can submit questions for individual answers and potential posting to the FAQ (offer prizes to stimulate usage).

4. Preauthorized Debit Signup Area: Create an area on your Web where users can sign up for and change preauthorized debit payments for your loans and other major billers in your area. Include educational material on how it works, what the checking account statement entries look like, consumer rights under Reg. E, and how to make changes. Include links to the billers’ customer service departments for specific questions.

5. Check Clearing Confirmations: Users can set a minimum threshold and any check above that amount generates an email to the user when it clears their account.

6. Service/Performance Guarantees: Outline your service standards, customer service capabilities, and payment guarantees. Explain how one goes about getting help when needed. Work on building trust


Mock-Up: Personalized Biller Database

*input by user **Company, News, Stock Quotes, Edgar, Message Boards


Planning (or Power User) Zone

Whereas the education zone is the key to signing on new users, the planning zone is where you can differentiate your service offering and lock your customers in for life.

You might divide the planning zone into basic and premium services with basic services available free-of-charge to any (registered) user of your Web. The premium zone could be used only by financial institution customers, with or without explicit fees.

Content Ideas:

1. Financial Datebook: Essentially a day planner with an emphasis on bill payments and other financial activities. Can also be used for non-financial events such as birthdays, to do lists, etc. See OBR 6/98 and OBR 2/98 for a complete service description.

2. Reminder Service: Integrated with the financial datebook above, the reminder service sends emails to the user and anyone else to remind them of important dates and times. The emphasis is on financial matters, especially bill payment due dates, but the service could be used for personal and business appointments as well. See OBR 6/98 and OBR 2/98 for a complete service description.

3. E-Bill & Message Service: The bill payment function could be integrated with email so users could send optional confirmation emails to payees. Smart forms would fill in most of the information for the message, and user would simply add their comments to the message. Extensive archives would save the messages along with the payment instructions for future reference. See Online Money Orders for more detail.

4. Bill Pay Calculators/Budgeting Worksheets: Provide consumer and small business budgeting templates and financial calculators. See SmartCalc for a wealth of licensable ideas.

5. Bill “Overload” Protection Services: Provide overdraft protection targeted towards bill payment needs. Loan advances could be triggered via a link from the bill payment section of your Web site or via email requests.

6. Biller Customer Service Inquiry Form: Create a list of major billers with links to their customer service Web sites, and/or customer service email addresses. Build a fill-in-the-blanks form that will help users better formulate their questions. Use cookies to prefill the forms with user info (if desired).

7. Links to Biller Order Entry: Along with linkages to biller’s customer service, include similar linkages to the biller’s online catalogue or order-entry sites. This could be made into a profit center by selling enhanced links to billers, or better yet, offer bank clients complimentary enhanced listings to deepen business relationships.

8. Smart Payment Services: We’ve long advocated an expanded role for banks in helping users monitor and pay their bills. Banks could establish a bill payment “cockpit” that would provide a very real sense of control over their monthly payments. Users would log in to the virtual bill pay driver’s seat; take a quick glance at the fuel gauge (checking account balance); review bills paid last month; and see estimated payments for the coming month (estimates would automatically be generated from payment history).

Users would have an opportunity to override the estimated payment amounts, or simply allow the month’s bills to be paid on “auto-pilot” (with the bank making estimated payments on the user’s behalf). Users should be able to twist virtual dials within the cockpit to increase or decrease the size of the payments, turn autopilot on or off, etc. The end goal is to make bill payment practically invisible for the user.

9. Bill Payment Budgeting Services: Utilities have long offered services that average or “smooth” the customer’s billing amount over the year to make it easier to budget for and pay the seasonal spikes in the amount owed. A bank could apply the same concept to the sum total of all the bills, calculating a single average monthly bill payment that would be deducted from the user’s account once per month. It would work much like a mortgage escrow account. It could be prefunded with a customer deposit, or shortfalls could be covered with a loan advance.

10. Bill Pay Usage Incentives/Score Keeping: A few banks have tried one-time sweeps (see Bank of America, OBR 12/96 ; and SFNB, OBR 5/97 ) designed to encourage bill payment usage. But we know of no one that has incorporated ongoing usage incentives into their bill payment program.

We think financial institutions should experiment with both approaches. Users need an initial incentive to learn a new way of performing an everyday task. But ongoing incentives could change sporadic bill pay users into heavy users creating significant exit barriers for your online base. The incentives don’t have to be large, they could even be non-monetary in nature. You just need something that allows users to “keep score” and create a bit of a game around the drudgery of bill payment. Some ideas:

  •  Frequent flyer miles: Award one or two miles per $100 paid. A household paying $40,000/yr. in bills would earn only 400-800 miles, which would cost about $10 per year. You could award bonus miles for various actions like setting up a mortgage or referring a customer.
  •  Bill pay “green stamps”: Establish a point system that allows users to collect points redeemable for bank services or discounts at area merchants.
  •  Performance rewards: Track the number of paper checks written vs. electronic items (see below) and reward users with points for certain milestones. For example, award 500 frequent flyer miles whenever electronic items are more than 50% of the total.
  •  “Free bill” sweeps: Pick one bill pay transaction each month and pay it for the lucky customer. This is a proven promotion that is also good marketing and PR.
  •  Recognition: Customers could be rated on the percentage of their monthly checks written online, with t-shirts for those in the 90% club.

Whether you provide monetary incentives or not, you could provide continual feedback on electronic bill payment “performance.” Track adoption of electronic payments over time with comparisons against last month, last year, etc. Provide comparisons against other users, with top performers posted on the Web (with names disguised). Performance measures could include: highest percentage of electronic items vs. total items; biggest increase compared to previous month, year, quarter, etc.

Payment Zone

The payment zone encompasses the financial transaction area of your Web. We recommend establishing double password protection before allowing out-of-bank payments (see CompuBank, OBR 10/98 ). In the Payment Zone, users should be able to access pay-anyone bill pay, bill presentment (soon), and send money to any individual or business worldwide. Users should also have access to “control panels” to adjust payment and security preferences.

Transaction Functions:

1. Pay-Anyone Bill Pay: The most common way to offer bill payment today. Typically bills are paid through a private dial-up connection using software provided by the bank or third party, such as Quicken, Managing Your Money, or Microsoft Money. Of the estimated four million pay-anyone bill pay users in the U.S., we estimate less than one million are using the Web to initiate payments. Quicken continues to be the leading bill payment platform, claiming more than one million users for a 25+% share. But the future of bill payment and presentment lies on the Web which provides a far richer environment for control, user education, customer service, interactivity, cost savings, customer service linkages with the billers, and very soon, bill presentment.

2. Online Money Orders: We’d switch banks for this: a form on the bank Web to send paper money orders and messages to individuals or businesses. The form would allow users to enter an unlimited amount of descriptive information that would be passed on to the recipient in the form of an email and paper item with the money order. The combination of guaranteed funds and integrated messaging would allow the money order to be used for consumer bill payments, business invoice payments, payments for goods purchased online (especially from individuals in online auctions or classifieds), monetary gifts, and so on.

Transaction fees could cover the costs. As you can see in example below, users are able to compose and deliver a holiday greeting and gift at the same time the monthly lawn-care bill is paid. Other than the free-form message, all other fields would be completed using drop-down boxes on a Web-based form. Ideally, previous online money orders would be archived so that recurring payments could be quickly entered. The service could also be delivered via email assuming adequate security measures were put in place. Eventually encrypted email will become commonplace, so security concerns will disappear.

Online Money Order Mock-Up


3. Transaction Feedback Loop: To gauge customer satisfaction over time, create an email-based feedback loop for each transaction. Send an email confirming each transaction with an estimated posting date at the merchant. Consider posting cumulative responses to the survey in a public area so users can gauge how well individual merchants handle electronic bill payment. This will also help pressure merchants to improve their capabilities to receive electronic payment and remittance info (see 11/97 for more detail).

The database of user feedback could also be leveraged in other ways:

· provided free of charge to merchant clients in the Merchant Zone

· sold as market research to merchants

Source of Funds Options:

A robust bill pay program should include a number of payment options. The traditional model of limiting bill payment to a single source of funds, typically a checking account, will soon become outmoded.

Bill payment should be allowed from the user’s choice of any account at your financial institution. Progressive financial institution should also consider allowing payment from competitive accounts. After all, you want the customer locked in to your Web services. Whether the payment comes out of your checking account or someone else’s is less
important than being top of mind when the user needs additional credit to pay the bills or make an investment.

You should also allow bill payments to be directly charged to credit line or credit card accounts at your bank. You might even allow payment from competitive credit cards which gives the user additional choice and allows you to pocket credit card cash advance fees.

To further increase loan outstandings, offer an instant bill pay line increase program, where users can easily apply for additional credit to make bill payments. This program could be quite profitable, and a source of meaningful differentiation for your program. See OBR 11/98 for more ideas on increasing loan outstandings.

Control Panels:

1. User controls: Users should be able to log into an area that contains a “virtual dashboard” of dials and settings that can be adjusted to change bill payment and security preferences.
See also Smart Payment Services and Security Controls, below.

2. Security Controls: Studies show that upwards of 75% of Internet users have concerns about fraudulent transactions. Financial institutions could take a large step in alleviating these concerns by providing a suite of fraud controls that can be set and adjusted by users.

The security controls should be flexible and set by the user. If security parameters are violated, the resulting action would depend on the severity of the breach and takes into account the habits and preferences of the user. Most times, a simple email “heads up” would alert the user to the activity. For example, every time a bill payment for more than $1,000 was initiated an email would be sent to the user. Assuming it was legitimate, no further action would be necessary.

But serious breaches would be handled differently. For example, if one day 50 bill payments totaling $7,200 were initiated to a new payee with a post office address, the system would hold the payments pending contact with the user.

At a minimum, users should be able to select the maximum number of bills initiated in a certain period. For example, no more than $2,000 in bills initiated in any 7-day period. Users could be issued an override code in the event they needed to override the fraud parameters. (Use of the override would also trigger a message.). S1, the parent of pioneer SFNB, was the first to incorporate security preferences into its online banking platform
(OBR 11/97 ).

Merchant (or Biller) Zone

The Merchant Zone would primarily educate merchants and sell alternative payment programs and credit products.

Alternative Payment Programs

Merchants could learn about the features and benefits of setting up alternative payment programs for their customers such as:

  •  credit card payment options with integrated email credit card receipts
  •  direct debit with Web-based sign-up and maintenance
  •  electronic billing statement presentment with integrated electronic payments
  •  special user loan programs
  •  payment smoothing (averaging) services
  •  turn-key billing services (see EF&D, OBR 11/97)

Credit Programs

As an adjunct to online bill presentment, banks could offer credit programs for biller’s clients. Biller clients needing additional credit in order to pay their obligations could be referred to the bank for an instant credit application. This is a triple win. The customer wins because they can pay their bill, the bank wins because it picks up new customers and/or new loan balances, and the biller wins because they receive the funds with no collection expense. Depending on program pricing, billers could receive a share of the credit revenue stream as well.

Merchant Program Maintenance

The Merchant Zone could house the password-protected forms for merchants to:

  •  update the specific merchant info in the Education Zone
  •  inquire about services
  •  sign up for services
  •  find out how many bank customers have an account with the merchant
  •  sign on for service bureau-based bill presentment

Small Business Zone (optional)

Small business customers could be served with appropriate content within the other four zones, or you could develop a specific area that speaks directly to their needs. We would prefer the latter, but either could work. The Small Business Zone would include tools and service to help small businesses with their billing and payment processing needs (see Merchant Zone left and OBR 9/98 for more details).

The area would include advice on how to automate accounts payables through online bill payment and financial messaging. Small business versions of the Planning Zone and Payment Zone services could be built to provide better value to your businesses clients.

The Small Business Zone would also be a good place to sell other business-oriented payment services such as credit card merchant processing, payroll services, tax services, cash management, and so on.


Categories: Bill payment

Approaches to Bill Presentment

By Jim Bruene on January 4, 1999 11:04 AM | Comments

Most presentations and articles on bill presentment divide the possible approaches into three categories: biller direct where bills are presented directly on the biller site; and so-called thick and thin consolidators which differ primarily in the level of bill detail presented by the third-party consolidator. The thick vs. thin distinction seems arbitrary to us and we expect it to disappear from the vernacular shortly. The biller direct vs. consolidator debate will be decided in the marketplace. For the foreseeable future, most major billers will display bills and/or summary data on both their own site and on major consolidator sites. Smaller and mid-sized billers will skip both solutions and rely on packaged software (e.g. Quicken, QuickBooks) and Web-based service bureaus to generate e-bills for delivery via email (see OBR 9/98). Long-term (10+ years), we think many billers of all size will use email to handle the task themselves, but that’s pure speculation (see table below).

The Three Primary Bill Presentment Approaches


Speculation on Where Users Will Receive the E-bills*

Source: Online Banking Report, 1/99 *percent of bills received and paid by the user via the given method, a purely speculative estimate provided as an illustration of how many ways the bill presentment pie will be divided; complex and unpredictable market forces will shape the actual results

** The bill pay center may be co-branded with a bank, but the user will think of it primarily as a service of the portal (e.g. Yahoo!)

Categories: Bill payment

Micropayment Firms Seek New Ways to Cash In

By Jim Bruene on June 6, 1998 10:28 AM | Comments

Digital dollars from CyberCash, DigiCash and First Virtual have found few takers, but next-generation systems are on the horizon.

When digital cash first appeared, it was supposed to revolutionize online commerce by helping people make micropayments for inexpensive electronic goods and services that were priced too low to justify credit-card transactions. But consumers have spurned e-cash technology from pioneers such as CyberCash (Redwood City, CA), DigiCash (Palo Alto, CA), and First Virtual Holdings (San Diego, CA) as cumbersome and time-consuming. Because consumer interest is minimal, online merchants haven’t bothered to learn about selling digital goods by the bit.

Two years ago, David Herschman, President of Virtual Vegas (San Francisco, CA) tested CyberCash’s CyberCoin micropayments system in the company’s online gaming service. He gave it up because consumers just ignored it. “As a publisher, we can’t wait until micropayments become a reality,” Herschman says.

Micropayments players are working to turn things around.

  •  CyberCash is testing a refurbished CyberCoin service in England and Japan and is preparing to launch revamped micropayments technology this summer – minus the software wallet.
  •  In the past year, Dutch-owned DigiCash has hired new management and moved its U.S. base from New York to Silicon Valley to be closer to e-commerce customers. By late summer, DigiCash expects to unveil modifications of its ECash system, which is being retooled to accept every currency.
  •  Latecomer Digital is testing its Millicent micropayments service throughout the summer, giving consumers $10 in sample electronic tokens that they can spend with two dozen online merchants.
Hybrid Systems in the Works

A hybrid alternative could give credit-card users the flexibility to make micropayments. Seattle start-up Qpass, previously known as Proscenium, is developing a payment technology publishers and other content companies can build into their Web sites to sell information bit by bit and charge it to a credit card. By using the Qpass system, content companies could sell individual articles or online games for small amounts that would accrue until they totaled a sum large enough to charge to the customer’s credit card, says Cornelius Willis, Qpass Marketing VP and former director of platform marketing at Microsoft. Qpass is testing the technology at partner Andersen Consulting’s Web site and expects to have beta tests running by fall. Qpass officials claim media, publishing and entertainment companies are interested in using the service, but decline to name names.

Some observers are skeptical about Qpass. As other revenue models, such as advertising, subscriptions and sponsorships kick in there’s no need for pay-as-you-go payment systems, says Cliff Condon, Money and Technology Analyst at Forrester Research. “Plus, micropayments are a difficult concept for consumers to get around. It’s not easy to grasp,” Condon adds.

CyberCash Update

CyberCash continues to lose money, posting a $5.7 million deficit on revenue of $1.1 million in the first quarter. But the Reston, VA, company is in a stronger position than some of its rivals, with a growing revenue base from its online credit-card processing and electronic check divisions and a recent infusion of $15 million in investor funds.

Last month, CyberCash completed a $16.5 million acquisition of VeriFone rival ICVerify, a deal company execs hope will expand the number of merchants who use its online payment services – including, eventually, micropayments.


CyberCash is advertising on HotBot (7/14/98) with two banner ad sequences targeted to online merchants and billers. The top banner was shown during a search for “bill payment” and the bottom shown on search for “bill presentment.”

In December, CyberCash and a joint-venture partner in Japan began issuing CyberCoin digital cash in amounts of up to US$150, which shoppers can use at a variety of online merchants. CyberCash is running similar experiments in Germany and England.

Until now, CyberCash has focused on micropayments trials in countries where credit cards aren’t as widely used as in the United States, allowing alternatives like debit cards to catch on more quickly. But as soon as late June, CyberCash will unveil an updated micropayments platform that will let U.S. shoppers make impulse purchases at multiple CyberCoin-enabled merchants without needing to set up a wallet, says Maureen Loftus, CyberCash Merchant Services SVP.

Whatever happens, it’s too late for First Virtual. The San Diego company, which burned through at least $35 million in investor funding, quit the digital payments business earlier this year and is now promoting itself as a vendor of interactive messaging tools. Last month, Softbank Holdings, the U.S. arm of Japan’s Softbank, said it would buy a controlling stake in First Virtual for $7.5 million in cash and debt and loan the ailing company another $1.5 million. After the announcement, First Virtual said it would cut 20 of 70 employees and take a second-quarter charge as a result.

--Michele Rafter

Contacts: Maureen Loftus is SVP Merchant Services at CyberCash, (650) 413-0146; Michael Nash is CEO at DigiCash, Palo Alto, CA, (650) 321-0300; Keith Kendrick is President at First Virtual, (619) 350-3452, ; David Herschman is Pres. at Virtual Vegas, (415) 351-1374; Gary Craft is Analyst at BancAmerica Robertson Stephens, (415) 248-4202, ; Cliff Condon is Money & Technology Group Analyst at Forrester Research,
(617) 497-7090, ; Cornelius
Willis is VP Marketing at Qpass, (206) 405 3103, ; Russ Jones is Dir. Millicent Marketing at Digital Equipment, (650) 853-2145, .

Categories: Bill payment, CyberCash

Review of Countrywide's Bill Payment Program

By Jim Bruene on May 5, 1998 3:18 PM | Comments


The Countrywide Concierge greets existing customers. Hokey? Yes, but we think the metaphor works.

Countrywide (Pasadena, CA; $171 billion serviced), the nation’s second largest mortgage lender, continues to be an online pioneer. Although we feel the bill payment program announced last month is ill-conceived, we’re confident they will make it a winner eventually. The other online services offered by the Countrywide Concierge (table below and screenshot above) are right on the money


Source: company 5/20/98

Last year we reviewed Countrywide’s sales approach in detail. At that time, they were funneling users into its “Gold” program for A+ credits. The Gold program is still available but you have to search for it. Now the company is trying to pull everyone into an application, even if they just want to know how much home they can afford. We think the company is driving good prospects away in its understandable haste to get them to identify themselves on the Web. You should allow users to do some research before beginning a loan application. We like the gentler approach from E-Loan much better Focus on getting shoppers signed up for an email rate-update service rather than prematurely throwing them into the application process.

The RateWatch sign-up form is used to set up
an email alert when it’s time to refinance at

Countrywide’s RateWatch

Sign up for free email rate updates by selecting state, loan program, refinance or purchase, and target rate. Then in screen two (above), input name, email address, phone and a choice of three email frequencies:

  •  weekly
  •  when rates change by 0.125%, 0.25%, or 0.375%
  •  only when a user-set target rate is achieved

Personal Loan Watch compares existing Countrywide loans against current market rates from HSH Associates.


Highlights from Internet Billing and Microsoft’s FiNet

By Jim Bruene on April 7, 1998 11:00 AM | Comments

Two important conferences were held the third week of April. The first, sparsely attended by bankers, dealt with an issue fundamental to the future of checking accounts: Internet Billing. The second, Microsoft’s third annual Internet Banking and Brokerage conference, was attended by most major financial institutions and covered subjects crucial to the future of the banking industry itself. Here’s our notes from both.


IQPC’s Internet Billing

IQPC’s first conference on Internet bill presentment was held last November in Chicago. It attracted many of the nation’s top billers but just two bankers. The second conference, held April 14-16 in San Francisco, attracted twice as many attendees but still only a couple dozen bankers from just six banks. For better or worse, most financial institutions are apparently willing to delegate the R&D in this area to vendors, consultants, and the occasional newsletter editor.

Here are the conference highlights:

  •  Florida Power & Light is the only biller currently presenting bills in Quicken 98, but several more companies are expected to begin within the next few months.
  •  Florida Power & Light has only 2,500 online bill paying customers out of their base of
    3 million despite being the first utility to present bills on the Web beginning the summer of 1996 and being one of the first to present bills on Checkfree’s Ebill site beginning in April 1997.
  •  EF&D launched the first bank-branded bill presentment program at Suffolk County National Bank (Riverhead, NY; $843 million) The bank has two clients up on EF&D’s Billsite the water company and a major lumber yard.
  •  EF&D believes there is an excellent opportunity for banks to serve middle-sized billers with bill presentment services. The company reasons that large billers will be served by MSFDC and Checkfree; tiny billers will use their existing accounting programs such as QuickBooks that will be enabled for bill presentment in the near future. Mid-sized companies will be the only ones left without a cost effective presentment alternative.
  •  Intuit is forecasting that 60% of U.S. households will have a PC in 2002 (up from 41-42% today).
  •  Bill presentment will be available on by year-end; Checkfree, partially owned by Intuit, will process payments.
  •  According to Intuit, within Quicken software, the bill is biller branded and the payment is bank branded (for participating banks). It’s unclear if that model will hold on
  •  The best lines came from Gary Craft, EC analyst with BancAmerica Robertson Stephens: “If a bank wants (to do EBP) they can knock everyone off…but we haven’t seen that happening yet;” and “Banks already have two of the three linchpins for bill presentment: eyeballs and good funds, all they need are the bills.”
Microsoft’s FiNet

Microsoft’s invitation-only event attracted some 400 banks, brokerages and solution providers. Microsoft’s presentations were well balanced, offering pros and a few cons for doing things the Microsoft way. They didn’t put Gates on stage this year. Instead, Microsoft luminary Pete Higgins ran through the “Web lifestyle,” Microsoft’s current Powerpoint du jour.

The Key Points

  •  Microsoft is taking a software approach to its Web-based businesses, selling their underlying platforms as tool-kits and/or turnkey systems. Microsoft Investor will be made available for licensing this summer. Financial institutions will be able to use all or part of the platform to build their own stock info/trading services. Speakers hinted that other Web businesses, Expedia and the soon-to-be-released Home Advisor, would follow a similar route. (Expedia is already available on a co-branded basis, see American Express. That bodes well for banks looking to implement MSFDC’s program.
  •  Microsoft Home Advisor is coming this summer. By partnering with Realtors, multiple listing services, and lenders, they expect to be the first Web site to offer a complete home buying experience including:
    – getting started (educational)
    – finding a neighborhood
    – finding a home
    – finding a loan
    – offer and closing

    Program Manager Larry Cohen, (larryco described the business model as “similar to,” with two revenue streams: advertising and prequalified/preapproved mortgage applications delivered to lenders for a finder’s fee. He also said there is a strong likelihood that the HomeAdvisor will be licensed for private-label versions.

  •  MSFDC won’t be vaporware much longer. Co-president Chuck White said MSFDC has “more billers wanting to do this than we can handle.” He also released a revised implementation schedule that calls for launch of bill presentment in Q4 1998 and pay-anyone bill pay in early 1999.

    Mr. White promised that its pay-anyone service would be more compelling because it would address many of the “timing” issues associated with current programs. During the Q&A he predicted that 15% of U.S. households would be using online bill presentment in some form within five years and MSFDC would be processing 750 million payment transactions per year, 5% of the 15 billion bills paid each year. (Editor’s note: this is 10 times the current volume of transactions processed by industry leader Checkfree. At $0.30 per transaction, which is probably not sustainable, that would equate to $225 million per year in transactions, with $20-30 million of that going to banks for payment authorization. That doesn’t include licensing and advertising revenues.)

  •  Downloading Web transactions into Microsoft Money should still be part of your game plan. The PFM will ship on 9 million PCs this year. By simply adding ActiveStatement downloading to your Web, a free feature available from Microsoft, you become one of 150+ financial institutions listed on Microsoft’s Web site. You also have the option of distributing a co-branded version of Microsoft Money to customers, though the $15-20 per copy price has discouraged all but five financial institutions from following this strategy (see table below right).

Some Numbers




Online Credit Network Provides online Ordering

By Jim Bruene on March 31, 1998 8:34 AM | Comments

Online Credit Network

Online Credit Network uses WebCheck for online payment via checking account debit at

Online Credit Network provides online ordering for Trans Union credit reports. Cost is $8 for a single credit report or $16 for a joint report at Payment can be made by credit card or online check (see screenshot left). Online Credit Network is the credit reporting division of Merchants Association of Fresno which has been providing credit reporting services since 1911.

Online Credit Network posts their privacy policy at an important feature on a Web site where you must enter much of your personal information, including social security number, before they allow you to buy their product.

The company does a good job taking the mystery out of the online check-writing process with a well-laid-out form and down-to-earth copy. Basically they tell users, “Fill-in your checking account information, we recreate the check, deposit it, and we won’t ever do it again without your permission.”

Categories: Bill payment

Ten Content Areas to Support Your Online Strategies

By Jim Bruene on February 4, 1998 5:58 PM | Comments

With 2,700 banking and credit union Webs in the United States alone, you may be wondering what you can do to stand out from the crowd. It’s really not that hard. You can make the top 10% if your Web is up-to-date, speedy, and easy-to-navigate. After you’ve done that, then consider adding new content elements every 6-12 months to keep things interesting and provide a boost to your online sales efforts. But don’t take on too much at once. It’s better to be small and focused than big and confusing.


Everyday Essentials

Supports: branding, cross sales

Every community bank should consider an offering in this category, the virtual equivalent to the time/temperature sign hoisted in front of the branch. But on the Internet you can do it much cheaper and make it more useful. All of the items in this category can be put on autopilot. Once you make the proper links and/or licensing deals, the information is delivered by other servers, freeing you from any maintenance whatsoever. You don’t even have to change your virtual clock when daylight savings time arrives.


Evergreen Bank’s icon directing users to four pedestrian, but useful content areas .

For a time, Evergreen Bank (Seattle, WA; $138 million) had an attractive “Time, Temp, Traffic, T-bills” function on its home page, but they’ve since buried it within their site. Here are some of the features to consider:


The (Seattle) four-day outlook from Intellicast, , perhaps one of the easiest and most compelling content additions for your Web.


Credit Card Registration & Protection Services

Supports: cross sales, fee income, card sales, retention

Credit card registration services became commonplace during the card “enhancement wars” of the late ‘80s. It’s a moderately valuable touchtone-based service often given away free to the entire card base, or sold ala carte for up to $15/year.

But the value could be significantly improved with Internet-based services. How?

  •  Trusted financial institution holds the data rather a third party.

  •  Easier to update and keep current.

  •  Provides a ready reference when completing a loan application or evaluating credit options.

  •  Card information stored in an encrypted format readable only by the authorized user holding the key.

  •  The database could hold more than just card number and issuer name; users could input rates, fees, customer service contact info, teaser period, comments, etc.

  •  Email alerts could be programmed by the user to send an email at the end of the teaser period, or when the annual fee is due, etc.

To assuage privacy concerns, a clear (e.g. in laymen’s terms) and absolute privacy policy must be prominently posted explaining precisely how the data will be kept confidential.

Web-based credit card registration would be a useful home banking enhancement (i.e. FREE) or it could be sold for an annual subscription fee, or both (basic listing is free, enhanced listing costs $10-15/year). A card registration service could also be combined with a credit bureau monitoring program and sold under one subscription (see #8).


Personal Finance Book Reviews

Supports: investments, savings plans


Liberty Publishing licenses book reviews at .

Search under the subject “personal finance” and you’ll find some 1,900 current titles (not including the out-of-print ones). This is an overwhelming amount of choice for most users. You could help by providing reviews of top-rated personal finance and/or small business management titles.

To write the actual reviews, contract with a free-lance writer specializing in personal finance or use a specialized content provider such as Liberty Publishing Company /content.htm>, which licenses book reviews and other articles for financial institution Webs. Liberty’s prices start at $250 per article, which typically provides the buyer with exclusive rights to use the content for one year on their Web site and in outbound email newsletters. A benefit of working with Liberty is that they know how to write material that will be fully compliant with banking and security regulations.

Liberty got their start writing articles for insurance companies and currently authors print newsletters for four of the top 10 U.S. insurance companies. They also provide online content for Northwestern Mutual Life Insurance, New England Financial, and The Institute of Financial Planners. The company will be delivering content for two of the largest 15 banks within the next few months; one a tax-information section, the other a small-business site.

Liberty Licenses Content in Six Areas

  •  charts and graphs

  •  online newsletters

  •  articles

  •  short takes

  •  book reviews

  •  financial glossaries

Contact: Len Conway is Online Marketing Consultant at Liberty, (800) 722-7270 x142,

Northwestern Mutual Life features articles written by Liberty on its first page .

You could also become one of 30,000 associates and provide a direct link to the order-entry area of the online bookseller’s Web site to purchase the reviewed books. Your 5-15% share of the sales could be donated to local literacy programs. This would generate positive PR and temper any criticism leveled your way for competing with local bookstores .


A link to from AltaVista.

There are two simpler approaches that allow you to help users find good personal finance books without actually posting book reviews:

  • Create a simple link into’s Web site so users can find their own titles, read reviews, and make purchases. You can preload the link with the search criteria so visitors immediately see a listing of all titles on bond investing for example.

  • Post a link of the best sellers in each category at For an example, look at the bottom of the first page at <>.


Personal Reminder Services (aka Personal Secretary or Personal Banker)

Supports : home banking, branding, cross sales, retention, small business

What could be better than having your customers start their Web work on your site each day? Instead of talking to your customer 12 times each year with a statement stuffer, you now have 100, 200 or more opportunities to interact with them to improve service and increase cross-sales.

But why would anyone choose their bank’s Web as the default start page (see definition below)? The competition for user attention is fierce and a financial institution would have to spend a bundle to create compelling news or entertainment content to attract users to its Web.

Definition: Default Start Page

Default start page is the Web site your browser automatically connects to when launched. To change your default start page, go to the desired Web page, then (in Navigator 4) select Edit/ Preferences and click on “use this page,” the process is similar in IE 4.)

But there is a potentially low-cost way to improve your chances of becoming a Web starting point. Establish a Personal Reminder Service on your Web that users can log in to each time they use the Web. To get an idea of how this works, look at the free (advertiser supported) service provided by AllNotes .

AllNotes users create their own Virtual Appointment Book by inputting recurring (daily, weekly, monthly, yearly) or one-time messages that are then displayed on the Web after logging in. You can input your daily
to-do list, set-up meeting reminders, or program a heads-up 10 days before your spouse’s birthday. Though AllNotes doesn’t support the feature, users should have the option of receiving emailed reminders.

AllNotes makes it easy to set-up Web-based
reminders at .

Integrated with Bill Payment

The service could also be integrated with bill payment. The simplest integration would be for users to enter due dates of recurring bills into the program. From then on, an email would be sent when the bill was due.


Even more useful would be integrating notification options into your bill pay form (see mock-up above).
By simply checking a box, users could automatically establish recurring due-date reminders. Microsoft’s Money and Intuit’s Quicken have incorporated this feature for years.

Integrated with Web Content

Your reminder “engine” could also be integrated into other financial product areas as well. In your automobile/car loan area, add an auto maintenance service that spits out reminders to change the oil/filter, flush the coolant, etc. at the approximate correct time based on user input of annual mileage. In your homeowner area, build a service that reminds homeowners to service their furnace each year, clean the fireplace every three years, or empty the gutters every six months, etc.

We think reminder services could be a terrific enhancement to your Web offerings in 1998. Why? First, they increase the “logged in” traffic on your Web boosting cross-sales opportunities. Second, as potentially the first financial institution to launch such a service, you’re likely to get positive media coverage.

Eventually, a significant number of users will use a reminder utility, it may as well be on your Web. By integrating it with bill payment, it’s a logical ancillary service to offer. And once users go to the trouble of setting up their personal reminder database on your Web, it’s one more reason to remain a customer, even if relocating across the country. Potential service providers can be found at and_Economy/Companies/Gifts/Reminder_Services/ .

American Greetings provides a free email reminder service to entice you to buy more personalized cards and gifts at its Web site .


Using AllNotes Reminder Service


The free reminder service from Allnotes is simple to set-up and is relatively useful, though to it lacks two important features. The first missing element is an option to have reminders emailed. The second shortcoming is an option to have your password stored in a cookie on your harddrive so you don’t have enter a password each visit.

Allnotes allows you to choose daily, weekly, monthly, yearly or one-time reminders. The Web site walks you through the procedure to set Allnotes as your default start page. A useful programming trick that automatically passes you on to your usual start page if there are no new messages on the Allnotes server. This feature would be more useful if you didn’t have to enter a password before it checks for messages.

After logging in, users see a list of their new messages. Clicking on the second column brings up the full text of the message. Note the Link Exchange banners running on the top.


Electronic Postcards & Greeting Cards

Supports: branding, new business generation, home banking

For something totally off the wall, allow users to send email “postcards” from you Web site. Post a few templates that users can personalize with their own words, colors, graphic inserts, etc. To email the greeting, users simply type in their email address and the recipient’s. Program it yourself or partner with one of the greeting
card providers on the Web _and_Economy/Companies/Gifts/Greeting_Cards/ .
Your partner could also offer fax and postal mailing options for a fee.

Integrate with Bill Payment

A potentially more lucrative, and more complicated approach is to integrate electronic postcards with bill payment. A pop-up window in your bill pay module would allow users to send an e-card scheduled to arrive at the same time as the cash. The greetings could accompany money sent to individuals as gifts or to repay debts. For businesses, it could be used to send thank-you notes with payroll, bonuses, or commissions. See below for more ideas in Web-based messaging.


A free postcard from American Greetings (as viewed in Netscape email).


Common Email Templates

Supports: home banking, retention, small business

Across all industries, companies are increasingly using the Web for customer service. The most progressive have developed highly structured customer service inquiry templates that query the user for all pertinent details on their question.

A bank could expand this concept to cover both queries to the bank and to third parties outside the bank. For example, provide email templates pre-loaded with questions that should be asked of potential health

How it Works


American Greeting allows you to create and send online “postcards” from its Web . Several free designs are offered including the thank-you card shown above and left; or select from premium holiday and special occasion styles priced at $5.95 per five, payable by credit card online.

After selecting a style, users customize their card in a four-step process:

1. Type the desired message (see #1 in above)

2. Select font type, size, and color (#2 above)

3. Preview results (#3 above)

4. Send

The postcard is sent as a GIF file attached to an email. The free cards include a relatively unobtrusive reference to American Greetings. To view the image in most email programs, you simply click on the attachment and the image pops up in the browser window. (America Online 3.0 users must work harder by opening another application such as Word, finding the file in the download directory of AOL, and opening the file.)

insurance providers, tax preparers, financial planners, remodeling contractors, etc. Users should be able to modify the canned questions and add their own.

The templates could be integrated with a database of email addresses that you have compiled or that are accessed via major Web-based directories. Users could then compose their email, look up the email address, and send it, all within your Web site. You could also offer an option to print the email in standard letter format to sign znd send in the regular postal mail.


For a bank, one of the most useful templates would support bill payment. Expand the bill pay form to include optional text messages that go directly to the payee via email (see mock-up on p. 6). This would be especially useful to businesses (in a survey of one business owner, I concluded that I would pay $10/month for that feature alone), but would also be desirable for individuals especially when sending money as a gift (see also #5).


Home Inventory

Supports: home banking, insurance, retention

Home inventory features has been available in Quicken (or Quicken Companion) for years. The software includes a template that makes it simple to input typical household items into a database and assign cost and replacement values to each item. The results can be stored on a diskette and/or printout and deposited in a safe deposit box for safekeeping.

On the Web you could build “home inventory” into a useful service that would enhance your home banking program and/or help sell insurance. Users would input their household inventory at your Web, storing the results on your server. This would eliminate the weak link of current programs: the need for off-site storage of the document. You could send an email reminder every six months encouraging users to update their inventory.


Credit Report Access & Monitoring

supports: CRA, loans, PR

Even before the Internet, concerns about financial privacy were widespread. The Internet has introduced an even more frightening scenario: your personal records are available not only to big brother and talented criminals, but also to your neighbor and their adolescent prankster offspring. As a financial institution, you should take a leadership role in providing tools for users to protect their privacy and monitor public databases to make sure what’s out there is accurate.

Credit report monitoring is one of the true win-win programs available on or off-line. Your customers win by catching credit bureau inaccuracies before they become an impediment to a home purchase or mortgage refi. You win by providing valuable information not readily available elsewhere, and by booking incremental fee income and loan outstandings.




QSpace has the online credit report market to itself.

Currently there is only one source for receiving credit report information online. QSpace has been delivering Experian credit reports online since July. Its service has been relatively low profile, but several licensing deals in the works should boost their visibility considerably during the next few months (see page 11). The company is also using banner ads like the one below displayed on Wired’s HotBot (Feb. 21) when searching on credit.


QSpace’s banner on HotBot. sells the forms used to order credit reports from the three major bureaus for $9.95 at .

There are a number of ways to deliver privacy and credit information services online, ranging from simple generic info, to online ordering with postal delivery, or even online delivery. Some ideas:

  • Guided links (see #10) to sources of privacy/security information. For example, see the resources compiled by CreditComm Services

  •  Credit bureau monitoring services (see chart of service providers right).

  •  Digital certificates from VeriSign , GTE CyberTrust , or others.

  •  Advice on how to monitor what is available about you online, and how to correct or delete information (for reference books, search on “online privacy” at

  •  Zero-liability guarantees for online shopping and online banking; can be tied to a credit card such as that offered by First USA/Yahoo! (screenshot below).

  •  Email alertservices that send a notice whenever an account has been accessed online, whenever a bill payment has been initiated online, whenever an address change has been received, account withdrawals made, etc.


First USA’s banner on Yahoo’s 411 Directory, touts a “Safe Shopping Guarantee” (see p. 16 for more on the card offering).

American Express is the latest to jump on the credit monitoring bandwagon with the upcoming launch of CreditAware, the first that monitors all three major credit bureaus. Service provider is CreditComm Services which also markets their own brand on the Web .

Credit Report Monitoring

Credit monitoring is a subscription-based service costing $30 to $70/year. Total enrollment in the U.S. is about 4.5 million (see chart below). The services generally include:

  •  Free credit bureau reports.

  •  Notification by mail whenever a new credit bureau inquiry is posted.

  •  Periodic (monthly/quarterly) monitoring for any new negative info on the file.



Community Calendar (Database)

supports : branding, community service (CRA), PR


Does your community lack an up-to-date and easy-to-use Web-based source of events, meetings, and activities? With a minimum of programming and oversight, you could fill the void with a community calendar and database on your Web. This would help a financial institution:

  •  generate goodwill in the community

  •  build positive brand/image

  •  satisfy existing Web users

  •  attract new bank customers (consumer, business, and non-profit)

  • he calendar could be used to post a wide variety of events:

  •  local government meetings and hearings

  •  school events and meetings

  •  school lunch menus

  •  school closing reports

  •  garage/rummage sales

  •  entertainment events

  •  sporting events (from college football to t-ball)

  •  charity fund-raisers

  •  reunions

The key to making it work is an update process that minimizes your involvement. Many (most?) community calendars we’ve seen on the Web suffer from a host of maladies including link rot (outdated links), out-of-date-itis (events have already occurred), or terminal lack-of-attention syndrome (not enough events listed to make it useful).

Speaking from experience, it’s easy to see why calendars fail. They take a lot of time to keep current and are generally lower in priority than revenue-generating activities, resolving customer service emergencies, and keeping product material current.

Predictably, Web-based calendars go through a cycle of initial enthusiasm, followed by a period of decreasing upkeep until it finally dies.

Leveraging Volunteers to Create Your Content

You can beat this cycle by enlisting the community to keep the calendar up-to-date themselves. Create an event-input form on your Web that can be used by anyone to add an item to the calendar. A flag on the database will give you editorial control over which entries are displayed. (The flag could be set through a special password-protected backdoor to your Web.)


Minimizing Oversight

After a user has entered all the information into the form, an authorization email is triggered to the designated bank employee or contractor. A confirmation email is also sent to the submitter and their organization to guard against fraud and error.

The email to the bank contains a link to a password-protected control area of your Web. The bank officer clicks on the hyperlink, enters a password, reviews the new entry, and if appropriate, sets the database flag to “display” and hits enter. The entry is now displayed on the Web, and an automatic email is sent to the person who submitted the entry and their organization. If the event is not appropriate or is incomplete, an email can be triggered asking for the submitter to post additional information.

Advanced Functions

  • If you end up posting a large number of events, you may want to add advanced functions to make the calendar easier to navigate and even more useful:

  •  Filtering entries by subject, keyword, date, organization, etc. and/or searching by keyword. This is relatively simple to accomplish with basic Web programming. Talk to your Web developer.

  •  Email delivery of new events matching user interests.

  •  Free Web space for community organizations to post additional info about themselves and/or the event. Again, create password-protected forms that allow the organizations to do their own data entry and maintenance.

  •  To serve organizations and users lacking convenient Web access, consider fax-on-demand access.

Final Analysis

A community calendar may not be the easiest project to implement, but the benefits could be more far-reaching than other content additions you may be contemplating. Does the Web really need another place extolling the virtues of student loans?

Useful and free Web content can build quite a following over time, as other sites link to yours and the search engines assign your site higher rankings for relevance.

Plus, you’ve got the very real possibility of continual free publicity in other media. Conceivably, the newspaper would reference your site when announcing an event, “for more info go to < calendar/>”. You might get even better coverage, and more credibility, by housing the calendar in its own domain such as <>. You can still adorn the site with your bank logo and navigational icons.

Eventually, you may even be able to recoup your investment by licensing or selling the community calendar site to a private company who could sell ad space. A site getting 25,000 unique visitors each month might fetch $50,000 or more depending on the market. And you can negotiate a long-term exclusive financial institution sponsorship as part of the deal.



Guided Web Links

Supports : branding, retention

Remember your delight the first time you used the Web and “hyperlinked” to another site simply by clicking the mouse? That powerful concept is what gave the Web its name and helped ensure its commercial success. But today, simply providing a list of links in a resource section is as outdated as posting a picture of the bank president on your first page.

We call “plain vanilla,” or links with no accompanying descriptions, “lazy links.” Lazy linking shows a lack of concern for your users’ time. The concept you need to embrace for your Web is “guided links.” Guided links help users maximize their productivity by providing concise descriptions of what lays ahead should they click on the link.

Guided links include a short description of the Web site; how up-to-date it is; costs if any; brief navigational hints; even concise commentary on its content. After all, you are recommending that users spend the next five minutes of their life at the linked site, you better spend a few minutes yourself documenting the choice.

Tenets of Guided Links

  •  Provide descriptions of the content, including which areas are best.

  •  Explain why it’s a good place to go.

  •  Identify the sponsor/owner of the linked site.

  •  Keep links up-to-date.

  •  Provide business, education, info, or shopping links; avoid entertainment, their value is too subjective.

  •  Understand the ramifications of the link (will the user be hit with Java, competitive advertising, etc.).



26 Million Households Expected to be Using Online Banking and Bill Payment within Five Years

By Jim Bruene on January 4, 1998 8:41 AM | Comments

There is only one sure thing when projecting the future: that you’ll be wrong. But you still need forecasts to build business plans and sales projections. With that caveat in place, we submit our revised online banking and bill payment projections through the next decade. We have lowered our projection for 1998-2000 by about 25% compared to a year ago as Web banking programs were rolled out somewhat slower in 1997 that we had expected.

Still, our estimates run 50% to 75% higher than most others we’ve seen. But our definition of “online banking user” is more liberal than most. We include any household that accesses their bank, credit union or credit card account online; or anyone who pays a bill online (whether or not they access account information). We do not include users who only access a brokerage account online unless they pay bills from that account. “Online” covers any data connection, Web, email, direct-dial, PFM software, handheld computer, pager, screenphone, etc. The connection can occur at home, work, or from a public access terminal. The only devices we are excluding in our definition are plain old telephones and ATMs.

Online Banking and Bill Payment Users

millions of U.S. households using online banking and/or bill payment each month

*Accounts include any one or more of: checking accounts, FDIC-insured deposit accounts, installment loans (such as car, boat, home equity), line of credits, home mortgages, business loans, home mortgages, credit cards, or debit cards. Does not include brokerage, mutual fund or other security accounts. Nor does it include non-financial institution accounts such as, prepaid telephone cards, digital cash accounts held outside financial institutions. Bill payment includes any bill authorized online at the Web site of a bank, biller or third party, or authorized through direct-dial software such as Quicken or CitiBank’s Direct Access.

Categories: Bill payment

Princeton TeleCom Emphasizes Automatic Payment Options

By Jim Bruene on December 13, 1997 3:54 PM | Comments

Travelers Express

Travelers Express doesn’t yet have a demo of bill presentment, but its pay-anyone bill payment screens are worth a look.

Travelers tells users whether the payment will be paper or electronic (far right-hand column).

Travelers features an easy-to-use interface including disclosure of whether the payment is paper or electronic. Users check the box of the bills they want to pay and press the Schedule Payments button. Then, a list of payments is presented complete with the previous payment amount and account the money will be paid from. Travelers supports up to six checking accounts.

Payment scheduling screen at Travelers.


Automatic Payment Options in Princeton TeleCom Bill Presentment

By Jim Bruene on December 12, 1997 3:27 PM | Comments

Princeton TeleCom

Princeton TeleCom emphasizes automatic payment options in its bill presentment service. The bottom “Autopay” button can be toggled on or off by the user to have the bill automatically paid on the due date.


Union Electric is using Princeton TeleCom

Union Electric’s payment options page is hosted on Princeton TeleCom’s server, . It offers four payment choices:

  •  Pay-By-Web
  •  The Direct Payment Plan (pre-authorized debit)
  •  Pay-By-Phone
  •  Budget Billing (averages monthly payments over the year)


The Microsoft and First Data have a Joint Venture

By Jim Bruene on December 11, 1997 3:24 PM | Comments


The Microsoft, First Data joint venture, MSFDC,
has posted sample bills from four industries: telecom, utilities, mortgage and credit card.


Just in Time Solutions has the Best Looking Bill Presentment Demo

By Jim Bruene on December 10, 1997 3:20 PM | Comments

Just in Time Solutions

JITS demonstrates the power of the billing statement as a cross-selling device.

For what it’s worth, Just in Time Solutions has the best looking bill presentment demo at . If you want to demonstrate the power of an electronically presented bill, this is the one to show. It includes advanced functions such as:

  •  effective cross-selling for telecom services
  •  comparisons to previous bills
  •  explanations of phone services currently being used
  •  reverse number look-up on phone numbers to see who you called.

The services section of the Just in Time Solutions mock-up not only describes exactly what the user currently subscribes to, but makes adding new services as easy as checking a box. That’s how to sell on the Web.


International Billing Services (IBS) Presents Consolidated Bills on Website

By Jim Bruene on December 9, 1997 3:15 PM | Comments

International Billing Services

International Billing Services (IBS) believes that for bill presentment to work, all bills must be presented on one consolidated site. (Source: Company white paper, Electronic Billing Enters the Bit Stream ). Given the size of the company , that site may end up being theirs.

International Billing Services has a bill presentment demo and white paper posted on its Web, .

Note the Microsoft icon in the lower left hand corner. Is that meaningful?

IBS demonstrates how to post four bills on one site.


Home Financial Network Makes Easy Navigation Bill Presentment Product

By Jim Bruene on December 8, 1997 3:12 PM | Comments

Home Financial Network

Before payment: Presented bills are shown in their “envelopes” waiting for payment, just like in the physical world.

Home Financial Network, developer of the PC-based Home ATM, has developed a graphically-rich and easy-to-navigate bill presentment product. The first screenshot shows the presented bills. Users click on the “envelopes to see the detail.” Once users have elected to pay the bill, a “remittance envelope” is “clipped” to the bill. This approach should cut down on user mistakes and confusion considerably.

After payment: a payment is clipped to the bill.


eDocs Bill Presentment Demo

By Jim Bruene on December 7, 1997 3:09 PM | Comments


eDocs has a nice looking bill presentment demo at

Categories: Bill payment, eDocs

Vendor Status Reports of Payment Processors and Billing Consolidators

By Jim Bruene on December 4, 1997 2:32 PM | Comments


Payment Processors and Billing Consolidators

Originate electronic payments and/or host electronic billing statements on their Web.





CFI Proservices

Rusty Beckel, VP Electronic Banking

400 SW Sixth Avenue, Suite 200

Portland, OR 97204

Phone: 800.274.7259

Fax: 800.815.5595



Bill Payment Volume: Processed 225,000 payments month, more than double last fall’s 100,000 per month, and expected to grow 8-10% per month into 1998.

Status Report: CFI’s subsidiary, Vendor Payment Systems (VPS), processes bill payments for CFI’s installed base of 200 Personal Branch clients.

Bill Presentment Plans: Nothing specific announced. Many developments coming next year for its Web version of Personal Branch, WebPB, which could include bill presentment.





Pete Kight, CEO

Mark Phelan, EVP Business Commerce

Ken Benvenuto, EVP Retail Services

8275 North High Street

Columbus, OH 43235

Phone: 614.825.3000

Fax: 614.825.3104


Bill Payment Volume: Processed 7 million payments last month, 50% of which were electronic. The first month that Checkfree has hit the 50% electronic mark. According to its Nov. 13, 10-Q filing, Checkfree had 2 million bill pay users on Sep. 30, 1997, a 74% increase compared to 1,125,000 users on Sep. 30, 1996. Both numbers include users from Intuit Services Corp. Because of the relative newness of its subscriber base, the average number of payments per user was just 3.5 last month.

Status Report: During 1997, Checkfree acquired Intuit Service Corp. in a stock transaction. Intuit still owns 10.6 million shares of Checkfree, or 19.1% of the company according to Checkfree’s 9/26/97 proxy. Checkfree also entered into an incentive-laden 10-year deal with Integrion that included taking over the bill payment function previously performed by Visa Interactive. Checkfree now processes payments for more than 277 financial institutions, including nine of the country’s top 10 bank holding companies. The 277 financial institutions have a combined total of 150 million checking and savings accounts. What more can we say?

Bill Presentment Plans: Checkfree has emerged as the initial front runner in electronic bill presentment, inking deals with 21 of the nation’s top 100 billers. Though many of those are small-scale pilots.


With its close ties to Integrion and its 18 giant bank owners, Checkfree appears to be the de facto standard for large banks. About a dozen billers are currently presenting bills at Checkfree’s site. Four days after the bill is presented, a reminder e-mail is sent to any user who hasn’t viewed the statement.

In terms of pricing, it looks as though Checkfree and MSFDC will both pony up a few pennies per transaction to the host bank (the bank servicing the user’s checking account). The benefits of those pennies are more cerebral than financial. Even if 40% of the country’s bills (7 billion) were paid electronically, Checkfree/MSFDC would pay only $140 million per year to banks in interchange. Across 80 million bill paying households in the U.S., that only amounts to $0.15 per household per month. A drop in the virtual bucket.



Norm Bloomberg, VP Home Banking

500 W. Madison

Chicago, IL 60661

Phone: 312.627.5248


Bill Payment Volume: 1 million payments per month (OBR estimate plus or minus 25%).

Status Report: Citibank processes bill payments for its own 300,000+ Direct Access base, plus its sole licensee BankBoston (formerly BayBanks) which has around
250,000 users, 80,000 of which use bill payment.

Bill Presentment Plans: Not disclosed. One is tempted to draw conclusions from Citibank’s recent investments in Integrion, MECA, and S1 (parent of SFNB), all of which are aligned with Checkfree; but we wouldn’t bet against Citi striking out on its own, leveraging the 300 million statements mailed to its 25 million MasterCard/Visa accounts.






Electronic Funds & Data

Gary G. Glanz, President

P.O. Box 2087

Bridgehampton, NY 11932

Phone: 516.537.6300

Fax: 516.537.2487


Web: ,

Bill Payment Volume: 0

Status Report: EF&D appears to be the only vendor going after the small bank/small business portion of the market. See OBR 11/97, p. 15, for a report on their initial program with Suffolk County National Bank and the 326,000 accounts of Suffolk County Water Authority.

Bill Presentment Plans: Bill presentment is a core feature of everything the company is doing. But they also have assembled a virtual company which can handle any or all of a company’s billing needs, from reading the utility meter, collecting walk-in payments, to processing electronic payments. EF&D partners include: American Payment Systems, Online Resources & Communication Corp., Access Communication Systems, Lockheed Martin (back office data processing), BarkingFish Productions (Web development).



William Fenimore, Managing Director

George Budd, Dir Admin & Operations

600 Peachtree St. NE, Suite 3700

Atlanta, GA 30308

Phone: 404.607.4000

Fax: 404.607.4200


Bill Payment Volume: 0

Status Report: Integrion’s 18 bank owners, with relationships with 70 million North American households, are looking to Integrion to provide a full-service banking and payments platform. Electronic bill payment/presentment will be an integral part of that offering, apparently with Checkfree handling the bill pay transactions as part of their 10-year agreement (see Checkfree).

Bill Presentment Plans: Not disclosed, but expected to be closely aligned with Checkfree.

Integrion Ownership

ABN AMRO North America

Bank One

Bank of America

Barnett Bank



First Chicago NBD

First Union National Bank

Fleet Financial



Mellon Bank

Michigan National Bank



PNC Bank

Royal Bank of Canada

US Bancorp

Visa U.S.A

Washington Mutual, Inc.


International Billing Systems

Dawne Chandler, VP Elec. Services

Jorge Martin, Product Manager

5220 Robert J. Mathews Parkway

El Dorado Hills, CA 95762-5712

Phone: 916.939.5817

Fax: 916.939.4670



Bill Payment Volume: 0 (currently, remittances are handled via paper)

Status Report: International Billing Services, owned by USCS International, is the largest billing outsourcer in the country handling 70 million paper statements each month including 58% of all cable TV subscribers, 39% of all cellular telephone subscribers, and 11% of all land-line telephone subscribers.


IBS’s statement volume is ten times Checkfree’s payment volume, so they have the potential to have a major impact in the market. Counting customer remittances, IBS accounts for 1.6% of the U.S. first-class mail volume.

Bill Presentment Plans: The company just announced its first foray into interactive billing and payments; a program with AirTouch Communications Inc.’s three million units in service. At this time, IBS is not playing favorites with the major electronic billing initiatives. The company plans to present its clients
e-bills at all the major sites: MSFDC, Checkfree, Intuit. and others. The company is also aligned with CyberCash to use its PayNow program for direct payment on the biller’s site.



Eric Dunn, CTO

Nancy Tubbs, Product Manager

Mountain View, CA

Phone: 650.944.3037

Fax: 650.944.6977


Bill Payment Volume: 0 (Checkfree, 19% owned by Intuit, handles bill payments requests originating from Quicken users.)

Status Report: Intuit continues to command a staggering share of market/share of mind in the personal finance market. It’s widely reported that its 10 million Quicken users account for an estimated 70% of 14 million total PFM users. Intuit’s QuickBooks also claims 75% of the small biz accounting software market.

Intuit’s share online is also impressive. The 1 million Quicken users paying bills through Checkfree account for 50% of Checkfree’s subscriber base, and about 33% of the entire PC-based bill payers in the country. Quicken. com, Intuit’s personal finance Web, boasts 2 million users and 1 million portfolios being tracked.

Bill Presentment Plans: The company has incorporated a bill presentment module in Quicken 98 with pilots scheduled to commence at the end of Dec. 97. We also expect to see Web-based presentment appearing on the site with 12 months.



Chuck White, CEO

6200 S. Quebec St.

Englewood, CO 80111

Phone: 303.488.8833


Bill Payment Volume:

Status Report: MSFDC is a joint venture between Microsoft and credit card processing giant, First Data Corp., both of which serve approximately 150 million end-users in their respective industries. At Retail Delivery the first week of December, MSFDC announced its initial pilot involving two bank hosts, Wells Fargo (no surprise) and Keycorp, one of the owners of Integrion (interesting defection from the Integrion/Checkfree camp), and 10 billers, five of which are financial services companies (see right).

MSFDC will offer both electronic bill presentment and pay-anyone bill payment. Payments can be made at either a bank-branded site or a standalone MSFDC site. In response to critics of the latter approach, MSFDC has stated that bank-branded delivery will be the default path. In other words, if a user registers at the MSFDC site for bill pay, and it is determined that the user’s bank is offering MSFDC bill pay, the user will automatically be bounced to the bank site for services.

Of course, it’s not doing this to be nice. With Microsoft and First Data driving their existing 150 million users to the MSFDC site, it will be hard for banks, especially the Integrion owners, to pass up this customer touchpoint.

Bill Presentment Plans: Bill presentment is the core activity that everything revolves around. It is anticipated that billers will pay for the service, with banks and end-users able to pay presented bills for no charge. Though not part of its original model, MSFDC now appears to be heading in the direction of paying financial institutions 2 or 3 cents per transaction to host MSFDC bills on their site. But banks/users will have to pay for non-presented pay-anyone bill payment.

Initial Pilot Participants

Bank Presentment/Payment Hosts

  •  Keycorp
  •  Wells Fargo


  •  Advanta Corp.
  •  Chase Credit Card
  •  GE Capital
  •  The Hartford
  •  J.C. Penney
  •  New Century Energies
  •  Payment Systems for Credit Unions
  •  PECO Energy Co.
  •  Shell Oil Co.
  •  Texas Utilities


Online Resources & Communications Corp.

Matt Lawlor, CEO

7927 Jones Branch Road

McLean, VA 22046

Phone: 703.442.4649

Fax: 703.442.4610


Bill Payment Volume: Online Resources is processing 200,000 bill payment transactions per month. Expect that number to grow rapidly as new banks come online.

Status Report: Online Resources has 16 financial institutions live on the Web with account access and another 17 in pilot. The company has more than 100 additional clients in various phases of development. Online Resources is the only home banking vendor offering a choice of Web, direct-dial, screenphone, and telephone front-ends. And it processes bill payments to boot.




The company offers a unique bill payment process, authorizing and routing transactions through participating ATM switches. One advantage to this method is that “good funds” are guaranteed to the biller.




Karl Sammons, SVP

101 Bullitt Lane, Suite 450

Louisville, KY 40222

Phone: 502.326.7060

Fax: 502.326.7100


Bill Payment Volume: minimal

Status Report: National City Processing Company (NPC), 88% owned by National City Corp. (Cleveland, OH; $53.4 billion), was an Internet bill pay pioneer, placing the first operational link on the Mobil Oil Web site in late 1996. The Mobil program is still in place, but NPC’s VirtualPay has been at a standstill the past 12 months. NPC has been busy shoring up its stock price after the much-publicized loss of Wal-Mart which accounted for 4% of its credit card processing business. The company’s stock price opened the year at 16 3/8, dipped to 6 3/4 in May, before rebounding to the current 9.5 to 10 range.

NPC’s VirtualPay Web lists the following participating firms. But other than Mobil, none appear to have progressed beyond the “proof of concept” stage:

  •  Calistoga
  •  First USA
  •  Mobil
  •  Sunoco
  •  Telegroup
  •  Unocal


Princeton TeleCom

Donald Licciardello, President

165 Wall St.

Princeton, NJ 08540

Phone: 609.924.1244

Fax: 609.924.1096



Bill Payment Volume: The company is processing 500,000 payments per month across 550,000 registered users. Most are single payment, telephone-authorized utility payments.

Status Report: Privately held Princeton TeleCom has been in business for 14 years and provides numerous telephone and electronic lockbox payment services to more than 600 billers. The company has more than 60 million account receivable records on its database, though only a fraction are paid electronically.

Bill Presentment Plans: The company is now marketing an Internet bill presentment server. One of the first users is Union Electric Company, a St. Louis utility with 1.3 million customers.


Travelers Express

David Roy, VP Electronic Bill Pay

1550 Utica Ave. S.

Minneapolis, MN 55416

Phone: 612.591.3807

Fax: 612.591.3860


Bill Payment Volume: Travelers processed 38 million bill payments in 1997 for an average of 3.2 million per month. Payments were drawn on 525 financial institutions and sent to 60,000 payees. This volume includes telephone, direct-dial PC, Web and walk-in utility payments. The company does not provide a break-out by device type.

Status Report: Travelers, a division of Viad Corp., is the second largest processor of bill payments. Travelers purchased PayMate in Oct.’95 to add PC and telephone-initiated bill payments to its existing payment product lines which includes money orders, official checks, and walk-in utility payments (BuyPay).

In January, Travelers will complete a massive overhaul of its MoneyLine Express bill payment engine resulting in a system that does a better job of reporting payment status to end-users and financial institution partners performing bill pay customer service.

Travelers distributes its payment products through a network of:

  •  4,500 financial institutions using its official checks and share drafts
  •  16,000 agents that receive in-person utility and other bill payments
  •  45,000 retail outlets and convenience stores that sell money orders
  •  16 PC banking solution providers (table below)\


Bill Presentment Plans: Not disclosed, though the company does have a bare-bones bill presentment section on its Web.




Deliver payments, statements, & authorizations between financial institutions.





MasterCard RPS

Michael Tempora, SVP

Paul Mila, VP Remote Banking

2000 Purchase St.

Purchase, NY 10577

Phone: 914.249.4029


Bill Payment Volume: 2.5 million transactions per month originated at front-end providers (Checkfree, Travelers, et al).

Status Report: MasterCard’s RPS system is the leading consolidator of electronic payments. The association pulled the plug on its MasterBanking home banking initiative a year ago.

Bill Presentment Plans: Not disclosed.



Joseph Vause, VP Electronic Banking

Foster City, CA

Phone: 415.432.3366

Fax: 415.432.5723


Bill Payment Volume: Visa Interactive payment processing has been transferred to Integrion/Checkfree.

Status Report: Visa has exited the home banking/bill payment market by transferring operations to Integrion in a complicated transaction that left Visa a reported $25 million poorer, but with an equity stake in Integrion, and no more bill payment headaches.

Bill Presentment Plans: Visa’s ePay electronic bill presentment program continues, with pilots scheduled for 1998. More than 300 merchants are set up on ePay now.



Internet Billing Software

Enables interactive billing and payments.





BlueGill Technologies

Hal Davis, President

1756 Plymouth Road, Suite 299

Ann Arbor, MI 48105

Phone: 313.426.5894

Fax: 313.426.5044


Status Report: Provides software to allow billers and banks to put statements on the Internet. Targets three vertical markets: financial services, telecom, and utilities. M&I Data Services will be incorporating BlueGill’s billing technology in an upcoming release. Aligned with CyberCash for secure payment transmission.



Richard Crone, VP & GM PayNow

2100 Reston Parkway

Reston, VA 22091

Phone: 650.413.0165



Status Report: CyberCash has entered three Web-based processing businesses: credit cards, micropayments, and electronic checks/Internet billing. Cybercash targets large credit card merchant services firms, commercial bank lockbox operations, and solution providers to get them to incorporate Cybercash processing methods in their products and services.

Bill Presentment Plans: Cybercash has become the leading advocate of bill presentment directly at the biller’s site, for Richard Crone’s discourse on the advantages of the direct-to-biller model.



Kevin Laracey, CEO

Westlake Village, CA

Phone: 818.707.0330

Fax: 818.707.7891



Status Report: Specializing in turning legacy system print streams into Web-accessible statements. Aligned with CyberCash for secure payment transmission.







Just In Time Solutions

Mike Lanza, President and CEO

444 De Haro Street, Suite 100

San Francisco, California 94107

Phone: 415.553.6400

Fax: 415.553.6499



Status Report: Just in Time Solutions (JITS) helped Intuit develop the bill presentment module in Quicken 98. The company has also aligned itself with Checkfree and International Billing Systems. The company has also built Web solutions for Levi Strauss, LSI Logic, Oracle, and Robert Half International.

Bill Presentment Plans: JITS offers complete Internet billing services for billers and service bureaus including:

  •  Internet billing servers for presenting bills and facilitating payments directly on the Web, as well as all OFX consolidators
  •  Internet billing systems integration
  •  Internet billing Web site development


Categories: Bill payment

Business Models Concentrating on Tangible Revenues

By Jim Bruene on December 3, 1997 2:16 PM | Comments

Many financial institutions have gravitated towards a quasi-breakeven model for bill pay, charging $4-6 per month to cover outsourced payment processing costs. But breakeven service offerings don’t create a lot of excitement at the board meeting. Bill payment, as a core function of your Web banking services, needs to be a profit center.

As with most products, there are tangible and intangible benefits of offering electronic bill presentment and payment. But intangible benefits are by definition difficult to quantify. If you can find a business model that relies on a measurable P&L, you’ll be in a much better position to gain approval for appropriate resources to run the profit center. With that in mind we’ll concentrate on tangible revenues.

There are two primary revenue opportunities: service fees and interest revenue from bundled bill pay loans. Service fees for a “plain vanilla” consumer-oriented program top out at about $6/month. Anything more, and you’ll begin to send your customers to online forums complaining of price gouging. (Remember, your customers think they are saving you “hundreds” if not thousands of dollars servicing them online. And they are probably right in the long-term.)

But, a value-added service offering may be able to command higher fees, especially from small businesses and individuals with more complicated finances. You can also sell optional ancillary services integrated with bill payment

Revenue Opportunities

Bill Pay Service Fees
  •  Monthly Service Fees: It’s not difficult to justify a small monthly fee. Consumers save $0.32 in postage for each electronic transaction. Last year (OBR 10/96 p. 12) we found that the mean number of bills paid by computer/modem-owning households was 11.3. If all are paid electronically, that’s an easy $3.62 in postage savings. But, 37% of those surveyed paid fewer than nine bills per month. Their postage savings would be less than $2.50/mo.
  •  Transaction Fees: Many banks have a limit to the number of payments covered by the monthly fee. For example, U.S. Bancorp, which has been offering PC banking since Jan. 1994, allows 15 payments each month for $5.95. Each payment after the first 15 costs $0.40. With 88% of PC/modem owners paying 16 of fewer bills each month, most will be unaffected by this fee. Yet, it forces business users, paying dozens of bills per month, to pay a higher fee. Though your contracts with payment processors might make this approach costly, we would keep the base monthly fee low, $3 or less per month, but charge $0.60 to $0.75 per transaction after the first 12 to 15. That way the casual user paying 2-3 bills will stick with your offering, while your heavy business users won’t care about paying a few bucks more. Transaction fees are based on the unit number of bills paid regardless of whether they are paper or electronic or whether they are for $1 or $10,000. It might make sense to levy the fee only on non-electronic payments, allowing an unlimited number of electronic transactions.
  •  Volume-Based Fees: Another approach would be to charge for the total dollar value of the payments rather than the number. The theory here is that those paying higher dollar amounts would be less price sensitive. For example:
  •  Annual Fees: Instead of a pesky monthly fees that users have to justify every month, an annual bill payment membership fee might be more palatable; especially if combined with value-added services such as e-mail confirmations and bill payment credit lines.



Credit Line Revenues

  •  Higher Revolving Credit Balances: Become “first in line” when users need to tap additional credit reserves to pay bills and/or pay credit card balances in full.
  •  Higher Rates: Ultra convenient, preapproved bill payment credit can carry a hefty price tag; APRs of 15.9%, 16.9%, or more. As long as your rate undercuts the user’s standard credit card rate, you can capture the balances that would have been revolved on a card.
  •  Annual Fees: Again, the convenience and peace-of-mind benefits of a bill payment reserve can justify annual fees of $20, $30 or more depending on your market. Consider making the bill payment reserve a mandatory part of the bill payment account.
  •  Transaction Fees: In lieu of, or in addition to annual fees, users could be charged transaction fees each time the bill payment account was used.
Ancillary Services

In addition to bill pay credit reserves, we see a logical connection to other services which could be delivered via the Web, e-mail, fax, voice message, or mailed statement. Ancillary services could be priced on a per use standalone basis, through monthly/annual subscriptions, or bundled into a comprehensive checking/credit bill pay package accounts. We expect ancillary bill pay services to evolve in a similar manner as credit card enhancements. Some examples:

  •  bill pay reviews
  •  payment reports
  •  bill pay guarantees
  •  price protection
  •  customer service help
  •  bill pay audits
  •  bill pay insurance services (pays electronic bills in the event of death or disability)

Cost vs. Price Dynamics

Cost Center or Profit Center?

Looking just at variable costs and revenues (ignore fixed costs such as marketing and ignore intangible benefits such as customer retention), electronic bill payment in its current half electronic, half paper state, is definitely a cost center.

But that will change over the next five years as bills are zapped electronically to users, who zap payment back in real-time. And it appears the major presentment powerhouses, MSFDC and Checkfree, will compete with each other by offering interchange-like payments to banks of a few cents per bill who host the bills on their Web sites. So banks would get compensated indirectly from the billers for handling payment transactions and customer service queries. EBP may end up as a profit-center in its own right, or at least a break-even proposition.

Lower Fees May Increase Total Revenue

Call it the Laffer curve of bill payment. There is an interesting dynamic between price and cost at work here. As you increase monthly fees, average usage increases as infrequent users drop the service. So the higher the monthly fee, the higher the variable cost per subscriber. There may be a sweet spot in the $2 to $3/mo range where the fee is low enough to attract infrequent users to help offset the cost of heavy users. Heavy users can also pay transaction charges after a certain number of “free” transactions. The problem with transaction fees is they tend to bog down the sales process.

Possible Pricing Scenarios (Alternatives to $5/month.)


End-User Oriented Program Focused on Increasing Loan Balances

Description: Pay-anyone bill payment with bundled bill payment overdraft line of credit.


  •  no fees for payments to electronic merchants
  •  $0.35 per transactions to non-electronic merchants
  •  $15-50 annual fee for bill pay and the credit line
  •  16.9% APR on bill payments charged to credit line

Other Pricing Options:

  •  waive all bill payment fees for direct deposit
  •  provide the first 5 paper payments free-of-charge, then $0.50 per item thereafter





Bill Presentment Services for Small Business Account Acquisition and/or Fee Revenues

Description: Biller-oriented program focused on collecting fees from biller and/or acquiring new business clients.


  •  $1-3 per biller’s customer as a start-up fee
  •  $0.25 - $0.75 per transaction from merchant
  •  (optional) 2% discount fee of presented amount for immediate funds availability (with full recourse if user fails to pay within 60 days)
  •  $0.30 per transaction for non-customers (of bank)

Other Pricing Options:

  •  transaction fee waived if biller places linkages on their billing site directing users to your site, e.g., “check my balance at XYZ Bank,” “charge to XYZ Bank line of credit,” or “pay-anyone at XYZ Bank



Non-Transactional Bill Pay Services

Description: Information services triggered from information extracted from your checking account database, or that are programmed on your Web server. For example, user-defined payment reminders by e-mail; user-defined bill presentment on the Web; checking account balance alerts; e-mail confirmations of high-dollar DDA transactions, and more.


  •  $0-50/year for unlimited use of Web and e-mail based services

Other Pricing Options:

  •  services could be offered in non-Internet versions for extra fees such as $0.25/transaction for fax or voice messages



Bill Payment as a Consumer Account Acquisition Technique

Description: Internet billing/presentment used as a technique to gain new end-user relationships, especially if you are the bank providing presentment services to the biller.



Offer Internet bill presentment services to area billers at a highly subsidized rate (if not entirely free) in exchange for exclusive status as the “preferred banking provider” on the payment area of the biller’s Web. Users entering the biller’s Web directly from your site would view a cobranded billing area.

Users entering the biller’s payment area from anywhere else on the Internet would see your name when they selected a payment option:


Other Pricing Options:

Depending on your relationship with the biller, it could be a tough sell getting your bank listed as a preferred payment provider on the biller’s Web. Start with your best clients first, then as the momentum builds, you can approach other billers.

You may need to be creative in gaining prominent placement on their bill payment screens, for example:

  •  offer commissions for new accounts generated from their site
  •  offer revenue sharing from new accounts
  •  bundle with discounted credit card processing
  •  bundle with collection services

promote the biller’s presentment service through advertising, cross promotions, PR, etc.


Putting it All Together: Bill Pay Services for Any Budget

By Jim Bruene on December 2, 1997 2:14 PM | Comments

We’ll go out on our last limb of 1997 and offer up bill payment programs for various sales goals using the $500 per account acquisition cost figure developed on the preceding page. For a modest undertaking, looking to generate an incremental 10 new bill payment/loan accounts per month, we have recommend a serious of non-transactional services costing less than $60,000. On the other end of the spectrum, a bank could spend $1.5 million for a Web-based bill pay program generating 250 new accounts per month. In the chart below, solid boxes indicate recommended features. Unshaded boxes are optional.


1.) number of new bill payment/loan customers per month; dollar value assumes $1,000 value per new account generated (see p. 2 for derivation)

2.) can be offset with bill pay monthly, annual or transaction fees

3.) can run on in-house server, though development will likely be contracted to a Web shop

4.) range of fees that could be charged for the service, per month unless indicated otherwise

Categories: Bill payment, Service

Interactive Bill Payments -- Profiting from Digital Payments

By Jim Bruene on December 1, 1997 1:59 PM | Comments

Previously we looked at various interactive billing and payments strategies and detailed several dozen potential product features. Now we’ll drill down to the strategies most likely to make a positive impact to your bottom line within the next 36 months. And if you’re curious as to what an Internet bill will look like, there are a half-dozen demos posted on the Web today.

Top Profit-Making Opportunities from Interactive Billing (Roughly in order of priority)

1. Increased outstandings from loans integrated with bill payment.

2. Acquisition of new consumer accounts brought in by cobranded online billing programs used by area billers.

3. Acquisition of new business clients attracted to your money-saving billing and payment services.

4. Improved customer retention from satisfied end-users.

5. Fees paid by billers for immediate availability of the funds presented in online bills (discount fees).

6. Transaction fee income from customers paying bills through your Web.

7. Transaction fee income from non-customer bill payment “surcharges.”

8. Transaction fee income from processing payments for the biller.


Imagine seeing this message when you’re paying that monster January
heating bill. This particular message is on Edify’s bill pay demo.

Bill Payment as a Loan Acquisition Tool

We believe the best path to online profits in 1998 and 1999 is through incremental loan generation. And bill presentment/bill pay will be one of the biggest draws for Web-based financial services during the next three years. Why not integrate the two programs together? With verifiable incremental loan volume, you’ll be able to demonstrate that online banking is a money-maker, leading to more resources, which can be invested back into the Web to generate even more business.

The early adopter users of online banking programs have high incomes, assets tied up in 401(k)s, and huge appetites for things financed by loans. But these high rollers are often illiquid, with an average checking account balance so low that it barely covers the cost of your transaction processing expenses, let alone an ATM network, call center, and a 7 x 24 PC banking help line.

Edify’s Electronic Banking System demo at includes a credit line cross sale in the upper lefthand corner.

It’s every credit card marketer’s dream to have their solicitation show up in the mail box at precisely the time the recipient is thinking they might need some extra cash. By offering electronic bill pay, you know exactly when your users are thinking about their finances; at bill-paying time. It’s the perfect time to reach them with a message saying they are preapproved for a credit line. Edify recognized this opportunity when it added a loan cross sale to its bill pay demo (see screen shot above).


You’ll want to do more than just send online solicitations. Credit options should be tightly integrated into online bill payment. For example, a “click here to pay from your credit line” button on the payment screen.
To make this work, you’ll need to establish an infrastructure to handle real-time “emergency” credit line increases. Because users aren’t going to wait eight days (or even eight hours) to find out if you’ll cover their bill payment. They’ll just type and apply for a two-minute loan courtesy of Beneficial.

Back-of-the-Envelope ROI

Thinking of your online channel as a powerful loan generation engine makes the whole financial picture look much better. Assume each bill pay customer carries an incremental $5,000 in “bill pay overdraft” balances. Since many users will be relatively price insensitive to this type of credit, you could expect net interest margins of 5-10%. At a 6% spread, the loan would generate $300/yr in profit contribution.

$5,000 balance x 0.06 = $300/yr

Satisfied bill pay customers are likely to stay with you for a long time, especially as the switching costs to unwind their electronic connections grow with each new service you provide. Assume the bill pay loans stay on your books an average of 10 years. This gives each new bill pay account a lifetime value of $3,000, just from the value of the overdraft loan alone.

$300/yr x 10 years = $3,000

How much would pay to acquire new loans worth $3,000 a piece? $300? $500? $1,000? Whatever the figure, you can use it to establish a realistic budget for your online channel. And it can be substantial. Assume you want to attract 250 new accounts each month, 3,000 in a year, and are comfortable spending $500 to acquire each one. That’s a potential $1.5 million budget for your Web, which according to the above assumptions, would be paid back in less than two years.

Next comes the easy part, spending it. One area that deserves a good portion of the budget is the bill pay service itself. You will need a state-of-the-art program to attract and retain these profitable loans. Turn the page for our recommended features.

Categories: Bill payment

Your Customer is the Biller

By Jim Bruene on November 8, 1997 9:14 AM | Comments

The numbers are astounding. According to Robertson, Stephens & Company, U.S. billers will flood the mail this year with more than 27 billion bills; 15 billion to consumers and 12 billion to other businesses at a total cost of more than $100 billion. Using the Internet to link directly to customers and to automate remittance processing might cut billers’ costs in half and save the industry $50 billion or more. In other words, say good-bye to laborious paper check handling, OCR stub scanning, and all the rest of the paper chase.

But as appealing as this sounds, it’s only part of the story. The billing and payment process represents a biller’s prime marketing opportunity, and the Internet is an unequaled marketing tool. The cascade of statements produced monthly by the nation’s billers is compelling content. It’s highly individualized, dynamic and perishable. It’s interpreted and analyzed differently by each viewer. It shows up at regular intervals. And it must be acted upon quickly.

But too many billers are gravitating towards third party concentrators to handle their electronic billing and remittance processing. And by outsourcing, rather than accepting payment at their own branded Web site, they will undercut several of the financial benefits inherent in online payments, and almost all the precious marketing and customer bonding benefits.

Banks don’t have to look any further than the advent of electronic draft capture for credit card payments to see what happens when third party concentrators enter the payment equation. Compared to when banks received the physical bankcard draft, electronic draft capture made it much more difficult for banks to maintain their customer relationships. Instead, merchants could shop nationally for processing and no longer had to interact with their local bank when depositing bankcard drafts. And when banks gave up the customer contact and allowed their merchants to deposit electronically to non-bank third party concentrators, they gave up the depository relationship by default. As a result, 75 percent of all bankcard transactions are now processed by non-banks.

Using a concentrator for interactive billing and payment, the peril is even more profound. We are not talking about ancillary credit services anymore. We are talking about the life blood of the bank: demand deposit accounts. Standing by while third party concentrators inject themselves into this picture will lead not only to a strategic retreat, but also to a total rout that jeopardizes a bank’s profitable DDA customer relationships while leaving the lucrative Internet field to the non-bank victors, perhaps for good.


Suffolk County National Bank to Launch Bill Presentment in Q1 1998

Suffolk County National Bank may be the first bank
in the world to offer bill presentment services
to small and mid-sized businesses.

On the Internet, you can never tell where the innovators will crop up next. In the case of electronic bill presentment, it looks like the first program in production will be at a Long Island community bank, Suffolk County National Bank (Riverhead, NY; $843 million).

SVP Alex Duroski confirmed that the bank is about to begin alpha testing s Web-based bill presentment program with a major regional biller. Electronic Funds & Data Corp. is handling the presentment and payment logistics, and serving as a general contractor for other billing services the biller is considering outsourcing.

The bank, which currently services the test biller’s DDA, stands to gain fee income from the arrangement, and will have a unique program to offer other billers in the area. Users of the service will go to a bank-branded version of EF&D’s BillSite . Users needn’t be customers of SCNB, which is one of the attractive features of the program for the bank. Its logo will be in front of every user paying at the SCNB BillSite, and the bank can’t help but benefit from the exposure. At this time, the bank is not planning additional fees for non-customers (e.g., surcharges) but would not rule them out.
Contact: Alex Duroski is SVP at SCNB, 516.727.2855; Gary Glanz is President of EF&D, 516.537.6300, .


Billing without Paper…or without Banks?

Ironically, no organization is better prepared to address this issue with billers than banks. Bankers need only translate their own experiences with being intermediated by payment processors in the electronic draft capture market, and more recently by software companies in the online banking arena, to be able to project the impact that payment concentrators are already having on billers and their relationship with banks. Banks have fought back by purchasing their own software companies, banded together as consortiums, and have turned to the Internet to avoid being intermediated by others in the battle to retain, brand and control customer contact. Now banks hold the key to empowering billers with direct interactive billing and payment services, while extending their own stewardship over the payment process.

Just as concentrators installed electronic draft capture terminals in every merchant site in order to garner bankcard transaction fees, banks need to be placing bill payment capture devices, in the form of electronic cash register software, at their billers’ Internet sites. Only by supporting such a direct payment and deposit capability will banks be able to maintain and foster the primary banking relationship with their billers and electronic consumers. At the same time, banks will be empowering their billers to manage their own customer touchpoints and leverage the cross-sell opportunities and one-to-one interaction power of the Internet without third party intervention.

Cybercash is promoting interactive billing
on the first page of its Web.

A service such as CyberCash’s Internet payment service, likened to an armored car on the Internet, is necessary to securely move the electronic payments from the payer’s browser to the bank. Rather than delivering cash and check deposits to a physical bank branch, the CyberCash service uses the biller’s electronic cash register software and advanced encryption to securely deliver EFT requests directly to a bank’s systems for processing. At the same time it provides the electronic payment information needed to update the biller’s accounts receivable system and post the payment.

By collaborating with their billers on this direct payment scenario, and by supporting electronic cash register software, banks can accept electronic check deposits with the same bank-controlled and branded process that they follow today for paper check deposits made to a local branch. The biller gains all the cost-saving and customer service benefits, while the bank fortifies its standing with the biller and retains control of the payment flow.

Leveraging Interactive Payments to Capture New Retail Business

Banks should look at participating in interactive billing and payments as more than just a defensive measure. In fact, direct online payments can be used to extend a bank’s reach far beyond its current DDA base. By empowering a biller to accept payments directly at its own Web site, a bank is in effect establishing quasi DDA relationships with every consumer registered for online payment with the biller. It doesn’t matter if the consumers are retail customers of the bank or not. And it doesn’t matter where they live.

This is a very exciting proposition. For the first time, a wholesale bank can actually have an advantage in the retail banking arena. Suddenly the wholesale bank has relationships with consumers across the nation. Think of the possibilities. Could the bank use the accounts registered with its billers to begin expanding its services? Could it issue a digital debit card against registered accounts held by other banks and start garnering new fees? Clearly, taking an aggressive stance with interactive billing can open new doors for a bank, even as it protects and deepens a bank’s existing DDA relationships with its most prized depositors: billers and electronic consumers.

Unfortunately, this same opportunity exists for the shrewd non-bank concentrator who has seized control of the customer interface and DDA registration process by providing this service to banks and billers. It is this customer interface and registration component that adds a whole new risk element to the outsourcing decision.


Mock-up of a browser being used to aggregate bills. The frame on the left side contains links to each users’ bills housed on the biller’s Web sites.


Why Consumers Will Benefit from Direct Biller Payment

Consumers don’t owe the money to the concentrator, software supplier or the bank for that matter, they owe it to the original service provider, the phone company, electric utility, insurer and the like. It is the original service provider, for example the electronic utility, that must be paid or the lights don’t stay lit.

So the key is to enable consumers to meet their financial obligations in the most expeditious, direct and user friendly way possible without radically deviating from the logical way they make payments today. Our research shows that you can accomplish this by empowering consumers to concentrate billing obligations on their own computer or Webtop.

Fortunately, thanks to continually evolving Internet push, pull, and user interface technologies, the biller-controlled model can boast similar if not stronger conveniences than registering with a concentrator. For example, leading browser software, including Microsoft’s and Netscape’s, now include bookmark features that allow consumers to handily group their obligations in one payment folder on their own Webtop, as opposed to relying on an third party service. Using
the bookmark feature, consumers can store the location of each billing obligation. When it is time to pay the bills you simply go to the folder, select “open all” and individual frames open on your computer screen for each of your bills.

The Internet Replaces the Service Bureau

The key here is you don’t need to employ the old service bureau concentrating model to simplify navigation for the customer. That is the beauty of the Internet, you are only a click away from a direct connection to the site of your choice.

Even newer browser technology allows Web users to “subscribe” to specific Web sites. Once subscribed, specified information can be downloaded to the user’s PC at predetermined intervals, providing an “off-line” way of viewing bills.

So how does it work? It’s fairly simple. You bring up a page you want to receive in the IE 4.0 Web browser and choose to add it to your “favorites.” You then have the option of just adding the link as a bookmark or you can “subscribe” to the page. Subscriptions offer two options — one is a simple notification via a red flag on your bookmarks list when the page has changed, the other is


notification PLUS downloading the page. If you choose to download, you also have the option of receiving
e-mail notification when your subscribed pages change. You can even customize e-mail delivery schedule. It only takes a few seconds and voila, your credit card and cellular phone bills appear via e-mail every Friday morning before you have to complete your expense report. Your mortgage bill arrives on the 15th of the month and so on.

Why Billers Benefit from Direct-Pay

As utilities become more deregulated, as we have seen here in California with the landmark legislation to deregulate electric power, billers need new ways to distinguish themselves from the competition. Their statement data and how they weave it into the overall information exchange they have with their customers can be used as a distinctive competitive advantage for the biller. By farming out bill presentment, billers risk being disconnected from their customers.

Customer disconnect is an issue that banks must be sensitive to when proposing to host or concentrate remittance obligations with concentrators on their site. Can a biller really risk giving up their most prized customer data and content and touchpoint to a third party? Should billers be paying a concentrator to take their content? Or should it be the other way around, with the concentrator bidding for the rights to the biller’s content in order to draw traffic to the concentrator’s branded Web site?

Banks need to remember that the biller can provide the incentives to get customers to come to their site since they are the “original service provider” and the money is ultimately owed to them, not the concentrator. Billers can allow the consumer to participate in electronic bill payment one biller and one payment at a time, without the monumental commitment of devoting several weekends to learning how to operate a personal financial manager or committing to the ongoing cost of a pay-anyone bill payment program.

Concentration of billing obligations is naturally controlled by the consumer. You don’t receive one envelope with all your bills from all your service providers today, nor do you expect to since you are doing business with separate and distinct entities. Our market research shows that consumers don’t want their bank to know what they owe others and vice versa. Presenting a consumer’ bills on a bank’ Web site gives the customer the impression that the bank is the “Big Brother” of one’s financial matters and they consider it obtrusive.

AT&T Universal Card was one of the first card issuers to present statements online. The company recently added a payment function called
AutoPay, which according to its Web is “so convenient (your) bill practically pays itself.”

Banks Are Billers Too

As banks look at the advantages of providing direct interactive payment capabilities to their billers, they should also be looking to their own houses. After all, financial institutions constitute the third largest billing community in the United States, with banks generating monthly bills for mortgage loans, consumer loans, credit cards, brokerage services and more.

All this compelling content can help drive customers to a bank’s own Web site where a host of value-added services and one-to-one marketing opportunities can reside. A bank could offer, for example, personalized investment services or tax-planning services tied in to a customer’s accounts. Additional revenues could also be generated by displaying paid advertising or providing links to other companies’ Web sites.

In a time when banks are endeavoring to maximize the value of a customer’s lifetime relationship, interactive billing and payment represents a potent relationship-building tool, with a direct feed into a bank’s customer information files.


Richard K. Crone is Vice President and General Manager for CyberCash, Inc. He is responsible for the company’s PayNow Secure Electronic Check Service. Mr. Crone can be reached at 650.413.0165 or at

Categories: Bill payment, CyberCash

18 Enhancements for Internet Billing & Payment

By Jim Bruene on November 7, 1997 8:57 AM | Comments (1)

The Internet can be used to create a better overall bill paying experience for customers, even if they don’t use traditional electronic bill payment services.



Bill Payment Reminder Service:
Triggered by Biller/Bank

How Delivered: e-mail from bank; e-mail from biller

Description: With inexpensive (free?) digital connections to their customers, billers should be encouraged to communicate with their customers more frequently. Customer contact no longer has to be limited to a single billing statement per month. Billers could use e-mail to talk to customers 3-4 times per month using the bill and payment as the primary reason for the communication. For example, here is a standard three-part communication (with an as-needed fourth e-mail):

1. The first e-mail comes the day the statement is cut. An e-mail is sent summarizing the amount due and offering immediate payment alternatives.

2. The second e-mail is sent approximately five days before the payment is due, reminding customers to send their payment right away to avoid late payment charges.

3. (If needed) Payment reminder e-mail is sent the day after the due date.

4. Payment confirmation e-mail is sent the day payment is received/posted.

Our example uses e-mail, which is the cheapest and fastest. But reminders could also be in the form of faxes, voice mails, even postcards, or a combination.


Bill Payment Reminder Service:
Triggered by User

How Delivered: bank Web; e-mail from bank

Description: Same idea as above but far simpler. The user programs their own reminders via a form on your Web site. User can select timing, frequency and wording of the reminders. This enhancement could be implemented for just a few thousand dollars (or less) and could easily generate that much in free publicity.


Preauthorized Debit Sign-Up Area

How Delivered: bank Web

Description: Create an area on your Web where users can sign up for preauthorized debit payment to major billers in your area (don’t forget your own loan payments). Include educational material on how it works, what the checking account statement entries look like, consumer rights under Reg. E, and how to make changes. Include links to the billers’ customer service departments for specific questions.


Bill Pay Calculators/Budgeting Worksheets

How Delivered: bank Web; biller Web (private-branded)

Description: Provide household/business budgeting templates and financial calculators.


Bill “Overload” Protection Services

How Delivered: bank Web, or automatically

Description: Provide overdraft protection targeted towards bill payment needs. Loan advances could be triggered via a link from the bill payment section of your Web site or via e-mail requests.


Biller Customer Service Inquiry Form

How Delivered: bank Web

Description: Create a list of major billers with links to their customer service Web sites, and/or customer service e-mail addresses. Build a fill-in-the-blanks form that will help users better formulate their questions. Use cookies to prefill the forms with user info (if desired).



Links to Biller Order Entry

How Delivered: bank Web

Description: Along with linkages to biller’s customer service, include similar linkages to the biller’s online catalogue or order-entry sites. Bank clients could receive complimentary enhanced listings.


Smart Payment Services

How Delivered: bank Web; biller Web (private branded)

Description: We’ve long advocated an expanded role for banks in helping users monitor and pay their bills. Banks could establish a bill payment “cockpit” that would provide a very real sense of control over their monthly payments. Users would log in to the virtual bill pay driver’s seat; take a quick glance at the fuel gauge (checking account balance); review bills paid last month; and see estimated payments for the coming month (estimates would automatically be generated from payment history). Users would have an opportunity to override the estimated payment amounts, or simply allow the month’s bills to be paid on “auto-pilot” (with the bank making estimated payments on the user’s behalf).

Users should be able to twist virtual dials within the cockpit to increase or decrease the size of the payments, turn auto-pilot on or off, etc. The end goal is to make bill payment practically invisible for the user.


Bill Payment Budgeting Services

How Delivered: bank Web; biller Web (private branded)

Description: Utilities have long offered services that average the customer’s bill over the year to make it easier to budget for and pay. A bank could apply the same concept to all the bills, calculating a single monthly bill payment that covers everything; very similar to a mortgage escrow account. It could be prefunded with a customer deposit, or shortfalls could be covered with a loan advance.


Bill Payment Confirmations

How Delivered: e-mail, fax, page, or voice message from bank or biller

Description: Send confirmations when payments are posted; when payment authorizations are made online; five days before automatic payments are to be made; when high-dollar checks clear; when payments are late; when late payments are received, etc. Let the user sign up for the type and frequency of confirmations.


Online Escrow Services

How Delivered: bank Web; e-mail to/from bank

Description: If you haven’t witnessed the online auction phenomena yet, cruise to  and take a look. At any given time, the site has some 60,000 live auctions in process. Buyers can peruse specific categories, e.g., Beanie Babies, software, office equipment, etc., or search by keyword description. The auctions make their money by charging sellers a few cents to put a lot up for bid.

Other than collecting and posting feedback on buyers and sellers, the auction companies don’t get involved in the transaction once the winning bid has been declared. It’s up to the buyer and seller to agree to a method of payment and consummate the transaction. In practice, personal checks or money orders are generally used. But both are time-consuming and/or risky for one of the parties of the transaction.

Several escrow companies have surfaced to remove the risk from the transaction (see ). The buyer sends payment to the escrow company (either by check, money order or credit card). Upon receipt, the escrow company informs the seller to ship the goods. Once the goods arrive and are deemed acceptable, the escrow company releases the funds to the seller. For its role in the transaction, the escrow company pockets fees in the neighborhood of 5% of the purchase price.

Financial institution would be well-suited to provide online escrow services. They would have both credibility and the infrastructure to handle various payment types. Online escrow services could provide a new source of fee revenue and generate new transaction account and loan business from buyers and sellers.


Ebay is generating 30 million hits per week from buyers bidding on 148,000 items currently on the auction block.


Online Money Orders

How Delivered: bank Web form; e-mail to bank

Description: We’d switch banks for this: a form on the bank Web to send money orders and messages to individuals or businesses. The form would allow users to enter an unlimited amount of descriptive information that would be passed on to the recipient.

The combination of guaranteed funds provided by the money order feature and the flexibility of the user-composed message would allow the money order to be used for bill payments, invoice payments, payments for goods purchased online, gift cards, etc. Transaction fees could cover the costs.

As you can see in example (above right), the user is able to compose and deliver a holiday greeting and gift at the same time they pay their monthly lawn-care bill.

Other than the free-form message, all other fields would be completed using drop-down boxes on a Web-based form. Ideally, previous online money orders would be archived so that recurring payments could be quickly entered.

The service could also be delivered via e-mail assuming adequate security measures were put in place. The new encryption standards being implemented for e-mail should help in that regard.




Bill Payer Fraud Controls

How Delivered: bank Web form; e-mail from bank

Description: Studies show that upwards of 75% of Internet users have concerns about fraudulent transactions. Financial institutions could take a large step in alleviating these concerns by providing user fraud controls on their online banking programs, especially pay-anyone bill payment.

The controls should be flexible and set by the user. If a security parameter is violated, various actions could be taken depending on the severity of the breech, and taking into account the habits and preferences of the user. Most times, a simple e-mail “heads up” would alert the user to the activity. For example, every time a bill payment for more than $1,000 was initiated, an
e-mail would be sent to the user. Assuming it was legitimate, no further action would be taken.

But suspicious activity would be handled differently. For example, if 50 bill payments totaling $7,200 were initiated to an unknown post office box , the user would get an e-mail or voice message requesting user authorization to proceed with the payments.

At a minimum, users should be able to select the maximum number of bills initiated in a certain period For example, no more than $2,000 in bills initiated in any
7-day period. Users could be issued an override code in the event they needed to override the fraud parameters. (Use of the override would also trigger a message.).


SFNB’s bill payment user controls guard
against fraud and user error.

Security First Network Bank (screenshot above) was the first bank to implement rudimentary security controls on its Web-based bill payment program. Users establish preferences in the following three areas:

  •  maximum total dollars scheduled each day
  •  maximum dollars per payment
  •  maximum dollars to paid on a given day


Bill Pay Usage Incentives

How Delivered: bank Web; biller Web

Description: A few banks have tried sweeps designed to encourage bill payment usage. We think more financial institutions should experiment with this approach. Users need an incentive to learn a new way of performing an everyday task. We also think it’s time to take the concept one step further and incorporate ongoing incentives into bill pay programs. The incentives don’t have to be large; just something that allows users to “keep score” and creates a little game around the drudgery of bill payment.

Some ideas:

  •  Frequent flyer miles: Award one or two miles per $100 paid. A households paying $40,000/yr. in bills would earn only 400-800 miles, which would set you back something in the neighborhood of $10/yr. You could award bonus miles for various actions like setting up a mortgage or referring a customer.
  •  Bill pay “green stamps”: Establish a point system that allows users to collect points redeemable for bank services or discounts at area merchants.
  •  Performance rewards: Track the number of paper checks written vs. electronic items (see below) and reward users with points for certain milestones. For example, award 500 frequent flyer miles whenever electronic items is more than 50% of the total.
  •  “Free bill” sweeps: Pick one bill pay transaction each month and pay it for the lucky customer. This is a fun promotion that is also good marketing and PR.


Bank of America gave away $10,000 worth of free loan payments late last year as an incentive to use its electronic bill payment.


Keep Score

How Delivered: bank Web

Description: Whether you provide monetary incentives (outlined above) or not, consider helping users “keep score” with continual feedback on their electronic bill payment “performance.” Track adoption of electronic payments over time with comparisons against last month, last year, etc. Provide comparisons against others users, with top performers posted on the Web (names disguised of course). Performance measures could include: highest percentage of electronic items vs. total items; biggest increase compared to previous month, year, quarter, etc.



Create a Transaction Feedback Loop

How Delivered: e-mail from bank; e-mail from biller

Description: To gauge customer satisfaction over time, create an e-mail based feedback loop for each transaction. Send an e-mail confirming each transaction with an estimated posting date at the merchant. Why create so much extra e-mail?

1. Provides assurance to users that transaction have been executed by the bank.

2. Provides a reminder of the transaction (especially if it is an automated recurring payment).

3. Provides ongoing assurance that no unauthorized transactions have been made.

4. Educates users about the timing of payment requests and subsequent posting.

5. Provides a convenient way for customers to inquire on a payment (by replying to the e-mail).

6. Shows users are tracking each payment, and that you care about each and every payment.

7. Provides a means of tracking ongoing payment quality by measuring the ratio of e-mails sent vs. replies received.


User Initiated Bill Presentment

How Delivered: bank Web

Description: Bill presentment may be the holy grail of bill payment, but we are years away from its widespread use. Intuit’s forecast doesn’t have 50% of the bills even available electronically until sometime in the year 2003. In the meantime, you could provide a means for users to present bills to themselves. Create an applet on your Web that allows users to specify the amount and due date of recurring bills. Then present those bills using the Web, e-mail, or any of the methods discussed in this report.

Since the payment amount is merely an estimate, users would need a mechanism to change it before giving final authorization. You could also give users the option of designating any changes as permanent or temporary.



Guaranteed 100% On-Time Bill Payment

How Delivered: bank Web; biller Web

Description: Bill payments authorized online according to the terms and conditions of the service would carry a 100% guarantee of accuracy and on-time delivery. Otherwise, you will pay all late charges, fines, etc. 8

NUI promotes
Rapid Pay on its front page at . Rapid Pay includes three options: Direct Debit, Pay-By-Phone, and Pay-By-Internet


Comments (1)
Categories: Bill payment

Approaches to Electronic Bill Payment

By Jim Bruene on November 6, 1997 2:23 PM | Comments

More than seven years after online bill payment was added to Intuit’s Quicken, it’s still only used by about 10% of Quicken users. Clearly there is room in the marketplace for lower-cost, simpler bill payment programs. We expect to see dozens of varieties flourish on the Web.


Pay-Anyone Bill Pay

Pay-anyone bill pay is the most common way to offer bill payment today. Typically bills are paid through a private dial-up connection using software provided by the bank or third party, such as Quicken, Managing Your Money, or Microsoft Money. Of the estimated 3 million pay-anyone bill pay users in the U.S., we estimate less than 500,000 are using the Web to initiate payments. Quicken continues to be the leading bill payment platform, claiming more than 1 million users for a 33% share. But the future of bill payment/ presentment lies on the Web which provides a far richer environment for control, user education, customer service, interactivity, cost, linkages with the billers, etc.

Bill presentment can gradually be integrated into a pay-anyone program. As more and more bills are delivered directly from the biller, the service simply becomes that much better.

Web-Based Key-Merchant Bill Pay

Key-merchant bill pay has not been widely used in the PC banking world, though it was the typical approach back in the telephone bill pay days when users were forced to register payees in advance. On the Web, key-merchant bill pay would cater to merchants that are either customers of the bank, so that the payments can be processed in-house, or who accept payments electronically.

With this approach you are educating users on the benefits of electronic bill payment/presentment without incurring the infrastructure expense to support a pay-anyone program. As more merchants move to electronic presentment/payment, your program will become more and more valuable.

E-Mail Bill Pay

The conventional wisdom is that an e-mail system would be too cumbersome, unreliable, and insecure to be used for bill payment. We see e-mail programs as a way to serve a larger percentage of your customer base who are frequent users of e-mail at work and on the road, but are infrequent Web users. E-mail bill pay would be used in conjunction with a Web site where users registered their preferences, and occasionally returned to adjust them. You wouldn’t send any sensitive info through the e-mail, just simple messages such as, “It’s time to pay your telephone bill; if we don’t hear from you within five business days, we’ll go ahead and pay the usual $45 on Dec. 15.” Users could reply back to the e-mail with any changes or concerns.

Voice Mail Bill Pay

In the same way that e-mail bill pay relies on responses to outbound messages, voice mail bill pay simply substitutes voice messaging and touch-tone phones for the PC and e-mail. Users would receive an automated phone call whenever a bill has been presented for payment, and would then select from a brief menu to authorize payment. For example, “press 1” to pay this bill now from checking; “press 2” to charge to your credit card; “press 3” to schedule the bill for later payment; “press 4” to speak with a customer service representative now.

Pager/Screenphone/Fax Bill Pay

Same as above, except notice of bill payments are sent to alphanumeric pagers, screenphones, or fax machines. Depending on the device and user, payments could be authorized with the device itself or with a touch-tone phone or e-mail.

100% Automatic Bill Pay

We believe the task of paying bills will be entirely replaced by software agents connected to the Internet that are programmed to pay the bills on your behalf. Though it may be a decade or more before this approach wins a wide following, there will be progress made during the next several years. If your strategy is to be an interactive services pioneer, this would be a good area to place emphasis.

Categories: Bill payment

How to Profit From Bill Presentment (in your lifetime)

By Jim Bruene on November 5, 1997 11:02 AM | Comments

We think bill presentment could be a significant business development tool, both on the consumer side and with small and mid-sized business. And you don’t have to be a mega-bank to play in this market. Suffolk County National Bank, with assets of $843 million, could well be the first bank in the country to use electronic bill payment to attract new business.


Billing is still a regional opportunity. In each city and town there are certain billers, primarily utilities, that have a relationship with nearly every consumer and business. These are the so-called “marquee” billers in your market. But many won’t be big enough to register on the radar screens of MSFDC or Checkfree for another year or two.

Local financial institutions have the inside track in winning the bill presentment/payment business from these billers. But it’s not an opportunity that will last forever. As soon as an MSFDC hits stride in 1999 or 2000, you can bet they will be partnering with companies that can bring on the smaller billers, just as ISOs brought on smaller merchants in the credit card market.

We think it’s time to move bill presentment up the priority list. If you’re not talking to your clients about bill presentment within the next 12-18 months, you can bet someone else will.

Bill Presentment as a Consumer
Account-Acquisition Program

The opportunity right now isn’t the $0.25 transaction fees on the few bills that will be paid online before year 2000. It’s the new customers you can attract with an innovative program that is highly beneficial to the biller. So you might try offering it for FREE.

Why would anyone offer a unique, highly valuable program for free? To get first crack at the early adopters that will seek out the bill presentment program as soon as they hear about it on the news. As these affluent, wired users register to pay bills online at the biller’s site, they will be provided ample opportunity to sign on with your online banking services to pay the rest of their bills online. (Since you are offering the presentment program free-of-charge to the biller, you will require the biller to display your logo/link on its billing Web.)

And your selling efforts don’t have to be limited to just the first time bill presentment is used. Depending on your contract with the biller, you could cross-market your banking services every time the user logs in to pay their bill. You’ll also know where the user banks from their registered checking and/or credit card numbers, so highly customized sales pitches can be crafted.

Eventually as transaction volume picks up, and sales to new billers slows as competitors emulate your offerings, you could begin charging fees at whatever the market will bear. It might even be the other way around, with banks or others paying the biller in order to get the exclusive right to present the company’s bills and collect the payments. One can envision Web content providers such as Yahoo, paying top dollar (perhaps through comp advertising) to get a chunk of the 1.5 billion monthly bills presented on its site. There would be many synergies with Yahoo’s other content areas.

Consumer Account-Acquisition
with Surcharges

Don’t want to give it away entirely? Here’s an alternative that brings in immediate fee revenue AND attracts new accounts. Adopt the ATM surcharging model. Provide bill presentment/payment services free to your customers, but charge customers of other financial institutions a nominal fee, less than the cost of a stamp, each time they make a payment. This should keep everyone happy. The biller can offer a new service that cuts its billing and remittance processing costs; your customers get a value-added service for free; and customers of other banks can still pay their bill online for less than the cost of a postage stamp.

One caveat. This approach might not work for highly regulated utilities that have to be careful not to favor one class of customer over another. But given that ALL of its customers stand to save on the transaction, the proposal might fly.


Bill Presentment as a Small Business Acquisition Device

If you’re the first in your market to offer bill presentment/payment services, it could be a powerful method for bagging new small business clients whose billing operations may be extremely costly, especially on a per-item basis.

To create momentum in the market, concentrate on signing at least one marquee biller before soliciting other businesses. Once other billers hear that xyz is doing it, they will call you.

You may want to bundle Internet billing with other payment products. Those using your billing product might also be required to maintain a checking account for depositing payments and a line of credit to cover returned items.

Provide an Option to Pay Bills Directly
from a Special Line of Credit

Who said bill payment was all about transactions? When consumers are paying their bills, they are forced to think about their financial situation. Especially if money in the primary checking account is running low. This is the perfect time to cross-sell loan products, such as an overdraft line of credit or bill consolidation loan secured by home equity.

On your bill presentment menu, users could choose from various credit options for paying their bill. If the biller accepts credit card payments, that could be one choice. But that’s not where you want to drive customers. Card payments add costs to the merchant, and unless you are the card issuer or merchant acquirer, they don’t do anything for your bottom line.

Instead offer a special bill payment credit line. We can envision the tagline, “extra credit for paying your bills on time and online.” Or offer a cobranded line of credit in the biller’s name, for example the Con Ed Credit Line. In our fictitious example, the utility would benefit by a shortened payment cycle, reduced collection costs, and fewer calls to customer service on payment-related matters.

Credit approval will be the biggest obstacle to a successful program. You probably would need a “while you wait” approval process like Beneficial 2-Minute Loan which takes two minutes to apply for and two minutes to receive credit approval .

Provide a “Check My Balance” Function on the Biller’s Web Site

Whether users pay their bills directly at the biller’s Web, or at Checkfree’s, or yours, their likely first step will be to check their checking account balance before authorizing payment. Negotiate a hyperlink (exclusive?) within the bill payment section of the biller’s site that takes your customers directly to the balance inquiry section of your Web. Not only does this provide added utility for your customers, it would be a powerful way of advertising your online services to non-customers.

Provide Bill Payment Automation Functions

Many large billers offer numerous payment options such as pay-by-phone, preauthorized direct debit, payment-budgeting services, and credit card payments. Their Internet payment processor should be able to duplicate these options in cyberspace, and then some.

There is no reason why users would have to visit a biller’s site every month, though the biller may want them to for marketing purposes. New users registering online with the biller (or with you on behalf of the biller) could choose from a series of automated payment preferences. Then they would only need to return to change preferences or investigate a specific bill or perhaps to run some statement analytics.

Billers could still maintain the monthly contact with their customers by sending HTML-laden e-mails confirming the automatic payment and cross-selling additional services.

Move Up the Billing Value Chain

Gary Glanz, President of Electronic Funds & Data Corporation , has created a virtual billing company which companies can use to outsource their entire billing process, or just pieces, such as Internet billing. Glanz figures it costs billers $5 or more per month per customer to operate their billing function. This includes metering the bill, calculating the payment amount, processing/printing the statements, delivering the bills, handling customer service on billing questions, processing remittances and exception items, and finally trying to collect late payments.

A financial institution such as Suffolk County National Bank (see p. 15) can essentially resell EF&D’s full menu of billing services to meet a broader array of billing needs than simply Internet bill presentment.

Categories: Bill payment, Prosper

Segmenting the Market for Bill Payment Services

By Jim Bruene on November 4, 1997 10:53 AM | Comments

If you read the trade press, you might think there is only one way to offer online bill payment services; sign a long-term deal with Checkfree and hope for the best. Not so. There are dozens of ways to use the Web and e-mail to ease the bill payment chore for consumers and businesses.

The next time you brainstorm new services and product enhancements, try thinking of yourself not as provider of checking accounts, but rather delivering payment simplification or payment assurance services. For a moment forget the regulatory constraints and operational realities you face and think like an Internet start-up. What could you do, on- or off-line to ease the hassles of paying the bills each month?

Consumer Bill Payment Needs

  •  Same day posting so consumers can pay on the last possible day
  •  Confirmation of payment received/posted (from biller and/or financial institution)
  •  Guaranteed no-bounce checks (e.g., overdraft protection)
  •  Guaranteed payment delivery, especially on obligations that have serious consequences when late (mortgages, loans, credit cards, insurance premiums)
  •  Choice of payment options (multiple checking accounts, credit cards)
  •  Simple to set up and change automatic payment options
  •  Convenient bill delivery (pushed to the desktop rather than requiring a trip to the Web)
  •  Anytime, anywhere access to the bill and payment mechanism
  •  Absolute control over the timing and amount of payment
  •  Privacy protection so no one has access to my payment records
  •  Security/fraud protection so that no one vandalizes my good standing with billers or steals from my bank account
  •  Cost savings (less than a stamp makes it easier to sell)
  •  Integration with personal finance record-keeping systems or small business accounting programs
  •  Ability to perform statement analytics, for example comparing current bill with historical bills
  •  Reduce time spent paying bills
  •  Reduce the anxiety surrounding the billing cycle; e.g., Did I pay it? Did the post office deliver it? Where is that bill anyway? Did my spouse pay it?
  •  Assurance that the biller has billed the correct amount
  •  Responsive customer service

As you prioritize payment services to offer over the Internet, don’t lose sight of the fact that it will take time before users take to electronic bill presentment. At IQPC’s Internet Billing conference on Nov. 19, Intuit talked about converting 40% of bills to electronic versions by the year 2007. Intuit’s short-term forecast (per Eric Dunn, Intuit CTO) is just 1 million Internet bill presentment users within the next three to four years.

But financial institutions can use the Web and e-mail to serve even those users who prefer to write paper checks for most billing obligations. For example, send e-mail confirmations to users when large checks clear (those were probably bill payments); or provide links on your Web to customer service support areas at major billers in your market. See pages 7-12 for more ideas.

Segmenting the Opportunities in Interactive Payments

For banks there are two distinct targets in this nascent market: billers and bill payers. Each has distinct, perhaps competing needs. Billers want to maintain or enhance relationships with their consumers using the bill as a draw into their Web sites. Consumers simply want to get the bills paid with the least amount of work and maximum amount of control. It may be difficult for financial institutions to play both sides of this debate.



Opportunities in Internet Billing and Payments

By Jim Bruene on November 2, 1997 10:36 AM | Comments

Electronic bill payment has been a mixed blessing to date. Compared to paying with a paper check and remittance stub, so-called “electronic” payments often take longer to post; result in far more errors; involve bank staff in hairy customer service problems; and drive up billers’ processing costs. But that was a jury-rigged system funded by end-users and subsidized by financial institutions . New systems on the drawing board are built for and will be funded by billers. Financial institutions can still maintain an important role if they act quickly.

Which is more important, electronic bill payment or electronic bill presentment? If you are offering bill payment, how do you migrate to bill presentment? Will you be able to use a single vendor? Could you do it in-house?

If these questions are being raised within your company, you were probably hoping to glean some answers at this year’s Retail Delivery confab in New Orleans. Though we are writing this before the conference, we’ll go out on a limb and predict you are more confused then ever after hearing the presentations and buzz at BAI’s glorious gathering.

Our opinion is that retail bankers should do whatever it takes to help users pay their bills in the most efficient, cost-effective, and anxiety-free manner as possible. This could include high-tech approaches such as distributing custom browsers preloaded with a bill presentment applet; low-tech approaches such as selling stamps in the branch/ATM; or something in the middle like an easy-to-use online money-order function on your Web.

As Home Financial Network’s research shows (p. 4-5), consumers are looking to financial institutions to provide these services. Of 300 primary bill payers in modem-equipped households, 75% preferred bill presentment from a bank or credit union vs. 21% favoring bill presentment via a technology company/software company. But those preferences don’t take into account the new breed of Internet transaction companies that are being funded right now to steal this business from you. Nor does it account for the new generation of browser that can be set up by the user to automatically retrieve bills and deliver them to the desktop with no effort by the user.

You may need to act quickly, though; the venture capitalists in Silicon Valley, who wouldn’t dream of capitalizing a bank, are eyeing this market. They would like to establish a toe-hold with the early adopter segment which could be leveraged into a mass-market program a few years down the road.

Net Benefits: Paying the Bills

The bill payment process includes the following seven steps. The Internet impacts each and every one.

1. Billing statement sent to user.
Net Improvement: Electronic delivery eliminates postage, paper, and mail time.

2. User opens their statement and verifies it’s correct.
Net Improvement: Intelligent software agent analyzes the statement and informs the user of any abnormalities.

3. User consults their bank balance and calendar to see if/when funds will be available to cover the bill payment.
Net Improvement: A banking agent identifies the lowest-cost source of available funds. For example, non-interest DDA, then savings, then credit card.

4. User writes a check authorizing funds transfer from user’s bank to biller’s bank.
Net Improvement: Agent automatically authorizes payment, assuming the amount falls within acceptable user-defined boundaries.

5. Biller receives payment, updates customer records and cashes the check completing the funds transfer from user to biller.
Net Improvement: Biller receives payment and remittance information electronically for virtually instantaneous posting and processing.

6. Bank provides confirmation of payment (typically on the monthly statement).
Net Improvement: Bank provides payment confirmation electronically via Web site and/or e-mail/fax/voice message.

7. Biller provides confirmation of payment (typically on next statement).
Net Improvement: Biller provides payment confirmation electronically via Web site and/or e-mail/fax/voice message.

Categories: Bill payment

Next generation of Electronic Bill Payment

By Jim Bruene on November 1, 1997 9:46 AM | Comments

Last year we made the case for reengineering bill payment. We reasoned that the $800 annual tab each US bill-paying household incurred to pay bills the old-fashioned way would provide an attractive target for the major payment players. Indeed a number of vendors have surfaced in the past 12 months devoted to transforming the paper billing process into a completely electronic version delivered over the Internet.

But what also has become clearer is that the banking industry has neglected one of the primary participants in the electronic bill payment process — the biller. We don’t see signs of that changing any time soon. IQPC’s Internet Billing Conference (Nov. 18-19 in Chicago), billed as the first conference on electronic bill payments from the biller’s perspective, drew some of the largest billers in the country but only two bankers. That spells opportunity for those quick to develop programs that cater not only to the online consumer, but to the biller as well.

It’s Biller Time

The next generation of electronic bill payment won’t be driven by Checkfree, Integrion, or Microsoft. The billers are calling the shots. And they should since they’ll be paying the freight.


For Internet payments to reach its full potential, the billers must be committed to the three P’s of electronic bill payment: presentment, payment and posting. Otherwise, the industry will never progress beyond its present half-baked state.

To help understand the impact of Internet billing from the perspective of the biller, read the insightful essay Your Customer is the Biller, by Richard Crone . Mr. Crone has worked all sides of this equation as a nationally-known consultant at KPMG, and stints at Unisys and Home Savings. Mr. Crone is now VP and General Manager of CyberCash’s PayNow electronic check service, which can be used to help billers collect payments directly from their Web sites in competition with the programs in development at Checkfree, MSFDC and many retail banks.

Approaches to Bill Payment

Industry analyst Gary Craft of Robertson, Stephens & Company (415.248.4202, has aptly coined the alternatives the Tale of Two Camps. One camp, made of banks and third parties such as Checkfree, favors a concentrator model. Billers would send their statements to a central consolidation point where they could be viewed by consumers logging in via a trusted agent such as a bank or credit union. The other camp favors a more direct approach, enabling payment and presentment from the biller’s Web site with no third party involvement. Banks that currently excel in lockbox, cash management, or merchant processing, and their vendors make up this camp.

What Do Billers Want?

What’s not so clear is which camp the billers favor. In our discussions last week with a dozen major billers, we got the sense they haven’t decided yet. They want the control provided by the direct camp, but like the turnkey solutions promised by the consolidators. And most are of the opinion that the customer will demand a central point of bill payment, likely at their financial institution.

We expect billers to take the classic approach of deep-pocketed companies: hedge. Expect to see major billers signing on with every major payment scheme that comes down the pike in 1998 while working diligently to create compelling billing offerings on their own Web sites. This essentially mirrors the approach taken by major banks two years ago. Wells Fargo and others made data available through Prodigy, direct-dial, Microsoft Money, Quicken, AOL and the Web.

Within the next 18-24 months, we expect to see bills being presented and paid in the following ways:

Where the Bills Are: circa 1999

  •  on the user’s desktop (a.k.a. Webtop) pushed there by the biller or third party
  •  at the biller’a Web site
  •  at other biller’s Web sites (e.g. bill consolidation at a biller’s Web)
  •  at financial institution Web sites linked directly to billers
  •  at financial institution Web sites linked to concentrators
  •  in Microsoft Money, Quicken and MYM
  •  at bill concentrator Web sites (MSFDC, Checkfree,, etc.)
  •  at third-party financial services Web sites (, CNNfn, Money Magazine, etc.)
  •  at content aggregator Web sites (Yahoo, Excite, etc.)
  •  at independent billing sites hyperlinked directly to billers

We don’t know which model will eventually take hold, but with $80 billion in annual revenues at stake, a single approach won’t become evident for years or even decades. Luckily you don’t have to wait that long. There are a number of you can help your customers pay the bills today.

This month we focus on service design and strategic issues. Next month we take a look at the innovators in interactive billing, both financial institutions and billers. We’ll look at the business model, and review vendor offerings.

Categories: Bill payment

Forty Tactics for a State-of-the-Art Loan Web

By Jim Bruene on October 11, 1997 12:02 PM | Comments

Before you reach beyond your customer base with the marketing techniques described on the previous seven pages, make sure you are maximizing the loan business among your existing customers. Here are 40 tactics to help you defend your current portfolio from the online poachers.



New Loan Originations

1. Rate Search/Rate Watch: Users select the loan type(s) they are interested in and you provide a comparison table with rates, points, monthly payments, and other loan details. Offer an option to be kept up to date via e-mail.

2. urrent Loan Analysis for Refinance/ Trade-in: Users input the details of their current loan (amount, month it closed, current home value, APR, variable rate info), then choose from a list of attributes they are seeking from a new loan (lower rate, fixed rate, cash-out, etc.). Then your server returns a list of loan programs that fit their needs. Provide a “trade this loan in” button for users to act on the advice. Offer an option for continued e-mail updates to the analysis.

3. Loan Recommendations for Existing Homeowners: Same as above but for users interested in a new loan, rather than a refinance.

4. Loan Recommendations for First-Time Buyers: Same as above but with an emphasis on rent vs. buy analysis.

5. About Your Company: Provide as much information about your company as you can find, especially if you are originating mortgages. These are complicated, risky deals, and users want to know they are dealing with an established/successful firm. On the Web there is no such thing as too much information, only poorly organized info. Organize the details into a pyramid, with a single page of key facts on top (such as licenses, affiliations, FDIC insurance, etc.) and allow users to drill down for more. Hire an intern to spend a month digging up information and transferring it to HTML.

6. Use a Two-Step Loan Approval Process: For most loans, concentrate on prequalifying the applicants as fast as possible, ideally while they are still on your Web. Make the approvals conditional on verifications of collateral value, employment, etc.

7. Make the Loan/Prequal Application Interactive: On the Web you will no longer have such a thing as a “standard” loan application. It will be dynamic, changing as each user fills it out, so that only the key questions are presented. A simple example: If the applicant doesn’t own a home, skip the mortgage payment questions. A more advanced application: Do a credit score during the first part of the application, if the result is marginal, ask more detailed questions about other credit references and household income sources.

8. Lock-in a Rate: Offer a rate lock-in button for both new and existing applicants. Pressing the button would take existing applicants to a summary of their loan application and the choice to lock in now or continue to monitor the market. For new applicants, the button would link to a prequalification application that included the option to lock in today’s rate.

9. Lead-Generation Devices: Put something on your Web of value that requires loan shoppers to identify themselves. For example, Salem Five’s online coupon for $100 off closing costs (see previous page).

10. Provide an Instant Prequalification Letter Online: After an application is approved online, offer users the option of printing a prequalification letter for use in home/car shopping. The letter should be on your letterhead with a digitized signature. Also send an e-mail for further proof of the applicant’s prequalified status.



Cross Sales to Existing Customers

For your line of credit and credit card products (i.e., revolving credit), the road to a profitable customer is two-fold. First, you must book the new account, then get the line activated. Your Web site provides a number of cost-effective ways to increase usage/outstandings from your existing portfolio.

11. Balance Transfer Form/Special Offers: Allow revolving credit customers to transfer balances online with a few keystrokes. Incorporate an
e-mail confirmation so users know the balance transfer was properly executed. Test balance-transfer rate specials delivered online (via Web/e-mail).

12. Online Bill Payment/Credit Card Checks: Allow revolving credit customers to write online checks directly from their credit accounts. Incorporate an e-mail confirmation as above.

13. Skip Payment Application: Allow users to apply online for permission to skip a payment. If possible, give the user an instant answer based on past account performance. At least, provide an answer by
e-mail within 24 hours.

14. Line Increase Application (emergency and permanent): Same as above except for temporary and/or permanent line increases. Use e-mail to confirm.

15. Line Increase Notification/Usage: Whenever you increase a credit line, whether the user applied for it or not, post a message of congratulations on the Web and offer options for accessing the new credit amount. You might also consider an “opt out” option so users could click on a button if they don’t want the line increase.

16. Installment Loan Increase Application: To increase outstandings and profitability, it may be useful to think of your installment loans more like revolving credit than fixed obligations. Let loan customers apply online to access the paid-down portion of an installment loan and/or increase the size of the loan. The additional loan amount could be accessed online.

17. Installment Loan Rollover Application: Along the same lines as number 16, think of your installment loans as portable. For example, if the user is thinking about trading in the car you’ve financed, allow them to simply roll over the existing loan balance while applying online for any additional amount needed to cover the new car. Naturally, you would reserve the right to reset interest rates to current market rates.

18. Ancillary Loan Services Sign-up/Offers: Sell your fee-based services online (credit insurance, card registration, credit bureau monitoring, etc.) with a simple “one click” sign up. Consider offering a new kind of credit insurance that provides better value to the more financially savvy individuals likely to interact with you online.

19. Annual Insurance Check-up: Each year, remind loan customers to login to your Web for an insurance check-up. Users would compare their existing coverage vs. recommended levels, and purchase additional insurance if needed.

Customer Service

Don’t skimp on the customer service portion of your loan origination Web. Make sure it does a good job of highlighting the services you provide on- and off-line. Many loan shoppers will check out the customer service area before proceeding with the loan application.

20. Twenty-Four Hour Online Loan Service Center: Even if it’s just being staffed by your regular loan center group, we think it’s important to give prospects the sense of your commitment to online customer service. Include simple check-box forms to handle routine customer service queries. Confirm every e-mail received with an immediate “we’re working on it” e-mail response. A few days after a question is resolved, at least from your end, you might consider sending a follow-up message asking whether the matter had been resolved to the user’s satisfaction.

21. Online Service Guarantees: Back up your marketing hyperbole by putting your service standards in writing. For example, “e-mails answered within four hours,” or “or line increase applications approved within 15 minutes.” In a world where no one wants to commit to anything in writing, this alone could make your loan services stand out from the competition.

22. Loan Status Reports: For loans in process, post loan status reports on the Web and send daily e-mails until the loan is closed or the user opts out.

23. Account Access: Allow users to login to see current balance, available credit, loan disbursements, payments credited, next payment due date, previous year and YTD interest paid (for tax returns), escrow account balances/transactions, and any other loan transactions.
24. Online Payment: Allow users to make loan payments online. Include a checkbox to indicate whether the user is paying only the minimum due, or the entire balance, or something in between. A link to a calculator would be helpful here. Users could also be given the option to set up autopay (preauthorized debit) by checking a box on the payment form. Finally, a link to the skip-pay application would be appropriate.

25. Payment-Due Reminder: Post payment-due reminders on the Web, and more importantly, send reminders via e-mail. Consider allowing payment to be authorized by replying back to the e-mail.

26. Payment Confirmations: Post payment-received confirmations on the Web and send via e-mail.

27. Collection Reminders: Use the Web/e-mail to gently remind users when payments are overdue. Provide one-click payment options including charge to a credit card.

28. Balance/Overlimit Alerts: Post alerts on the Web when the loan balance reaches a preset maximum dollar amount or line utilization percentage. Also send via e-mail.

29. Activity Alerts: Post alerts on the Web when loan transaction activity is more than a preset maximum level. For example, more than three charges received on a credit/debit card during a 24-hour period. Also send via e-mail.

30. Extra Principal Payment Option: Allow users to make extra principal payments online. Send an e-mail to confirm the extra payment amount.

31. Personalized Amortization Table: Allow users to generate a complete amortization table for their loans. Integrate the table with a payment calculator to run “what-if” calculations on additional principal payments, lower interest rate, higher loan amount, etc.

32. Refi Watch: Allow users to set a rate and points target for refinancing. Then send an e-mail when prices hit the target. Though you may be cannibalizing your higher-rate loans, you’ll have saved a customer.

33. PMI Insurance No Longer Needed Notice: Post a notice on the Web when mortgage insurance is no longer required. Also send
an e-mail.

34. Searchable Loan Agreements/ Disclosures: Post the actual loan agreement and any additional forms signed by the customer when the loan was originated.

35. Credit Bureau Monitoring: Include information/links to the major credit bureaus to assist users in monitoring/evaluating their own credit history.

36. Credit Counseling Services: Post information and links to legitimate credit counseling services available on- and off-line.

37. Home Value Reports: Provide links to Web-based services that provide home values based on a search of public records.

38. Real-Time “Chat” Customer Service: Offer real-time customer service via “private chat mode.” For example, users could enter a virtual service booth, type in a question (or click on a form), and receive answers immediately on-screen from a real person.

39. Personal E-Loan Reps: Private banking customers have someone on call to attend to their every borrowing need. Online customers could have the same type of service, provided it was highly automated. Set up new customers with a real rep they can reach online via e-mail or Web form. This real person would provide individualized answers using a large database of prepared e-mail responses. This level of personal service could be made available in the VIP center described below.

40. VIP Online Service Center: Create a “VIP lounge” on your Web for your best customers. The lounge could be hidden from other customers via a special URL only provided to VIP members. Or it could be highly visible on your regular Web to encourage whatever behavior is necessary to join the club. Services could include: real-time customer service via online chat; discounts on ancillary services; loan rate discounts; higher line sizes; more payment flexibility; etc. Delivering premium services online has the potential to be far more cost effective than through traditional direct mail. Essentially you can clone your regular Web, add some new graphics, drop-in a couple VIP services, and you’re in business.


Checkfree's Full-scale Billing Implementation

By Jim Bruene on August 16, 1997 7:01 PM | Comments


Checkfree (Atlanta, GA) launched its first full-scale bill presentment program at the Web of Florida Power & Light Company (FPL) which

Checkfree’s first full-scale bill presentment implementation at Florida Power & Light.

provides power to half of Florida (approximately 7 million customers). FPL customers are transferred to Checkfree’s GetBills  site to review and pay their bills. Checkfree also signed International Billing Services (IBS) to a bill presentment deal. IBS is the predominant biller for cable TV and telephone companies mailing 67 million bills each month. In other Web site developments, Block’s Web card is featured in a “special offers” section of Checkfree’s Web bill payment site

Contacts: Bill Hamilton is VP Customer Service at FPL. Hugh Fraser is VP Retail Financial Services at Checkfree in Columbus, OH, 614.825.3000.

Categories: Bill payment, CheckFree

NACHA’s Internet Payments Conference

By Jim Bruene on August 10, 1997 10:08 AM | Comments

Don’t hold your breath, but the Secured Electronic Transfer (SET) standard for Internet credit card purchases is almost here. MasterCard, Visa and their partners expect to issue the first SET mark — think of it as the SET seal of approval — by Aug. 31, according to industry execs speaking at a recent Internet payments conference in Berkeley, CA.

SET specs were published in June and in late July, MasterCard and Visa formed a body called SetCo to test, certify and police SET-compliant applications. “But it’s not (happening) nearly as fast as vendors would have you believe, and it’ll be up to you to make sure the pieces work together,” Nick DiGiacomo warned bankers attending a meeting sponsored by the National Automated Clearing House Association (NACHA) and Citation Internet Consulting Group.

DiGiacomo is CEO of Tenth Mountain Systems Inc., which will handle testing with SetCo. Companies that pass will sign a trademark licensing agreement to display the SET logo on their Web site.

Meanwhile, SET pilots continue. Beginning this month, Mellon Bank and MasterCard will issue SET credit cards to Mellon and federal employees to purchase U.S. Savings Bonds and federal surplus merchandise online. Bank of America is slated to conduct a live trial by September.

DiGiacomo urged retail banks to get in on the action by issuing SET-compliant wallets to customers — but don't be surprised when they call with questions, he said. “We recommend setting up informational Web sites to take the offensive,” he said. DiGiacomo’s 10-step SET plan for banks:

1. Learn about it. Give responsibility for setting up a SET program to a staffer, not consultant. “You have to have an internal advocate.”

2. Create plans for marketing, security, roll out, and customer service, and establish criteria for choosing platforms and vendors.

3. Choose a certification authority and get SET software certified through SetCo.

4. Choose a SET server that connects to the Internet, existing banking systems, payment networks.

5. Integrate SET with merchant account balances, statements, payment networks.

6. Select customer electronic-commerce software.

7. Have your SET service tested, preferably by an outside party “so you don’t run into blind spots.”

8. Establish support services such as operations, maintenance and customer service, and make sure systems are in place to meet regulatory, compliance and audit requirements.

9. Participate in a pilot with explicitly stated entrance and exit criteria. Pick “friendly” partners, not Net-heads, as testers. Use results to measure acceptance or resistance to e-commerce in and outside your organization.

10. Keep your SET service updated.

SET was among several Internet payments issues discussed at the first of a series of seminars to be held around the country through October by NACHA and Citation, a Texas-based consulting group.

Other Conference Highlights

Online Bill Pay: Do consumers want to pay their phone bill at the phone company Web site, their gas bill at the gas company site, and so on, or visit one place to pay everything? Checkfree, MECA, Microsoft and BillSite are betting on the latter and building mega-Web sites they’re marketing to telephone companies, utilities and others. But CyberCash VP Richard Crone believes consumers will want to hop from site to site, and utilities will want to stick bills on their own sites so they can sell ad banners. Meanwhile, Internet bill trials continue, and a few pioneers such as National Utility Investors and Brooklyn Union Gas are already online. Predicted for the future: PointCast type systems that broadcast bills to consumer’s e-mail boxes.

Other Net-Based Debit Transactions: EFunds Corp., a Tustin, CA, online payments company, has outfitted 150 to 200 merchant clients to accept debit payments via the net. Of 100,000 to 150,000 payments processed so far, only 10 haven’t cleared, “so small it’s probably bank error,” said Neil Godfrey, EFunds CEO. According to Godfrey is EFunds is unique in providing merchants with a turnkey system — hardware, software and gateways to banks.

By the Numbers

  • 90% of top 50 U.S. banks will offer full-service Internet banking by 1999.
  • By 2000, 1,100 banks will offer full-service Internet banking.
  • By 2000, 85% of Internet-capable banks will offer DDA accounts.
  • Consumers made $1 billion in purchases on the Web in 1996.
  • Women now constitute 42% of the Internet population.
  • By 2000, consumer and biz-to-biz e-commerce transactions will hit $150 billion.
  • Commercial “.com” Web sites jumped to 623,002 in May 1997 from 123,372 the previous year.
  • 69% of all billers with five million or more customers will begin building BPM by the end of 1997.

Source: Various speakers at CICG/NACHA Internet Payments Conf.

Micropayments: Digital Equipment Corp.’s Millicent micropayment system should be available to consumers by year’s end, offering script in increments of a tenth of a cent to $5. Companies offering content during a trial phase: Reuters, Music411, Songline Studios and Investors Daily. Digital expects Millicent micropayments to grow to $4 billion in revenue by 2000. That’s counting on 25% of the net population spending 50 cents a day, said Stan Hayami, Digital’s Micro-Commerce Business Mgr.

Net-Based EDI: Lawrence Livermore National Laboratory, a $1 billion government research lab in Livermore, CA, spent 10 months and $60,000 moving its electronic data interchange (EDI) operations to the Internet, working with banking partner Bank of America. Two years later, the lab uses the system to make $15 million in monthly payments to vendors, and 96.3% of payables go out on time. So far, Lawrence Livermore is Bank of America’s only EDI customer using the Net, but the bank’s working to line up new customers, according to BofA EDI Specialist Rett Summerville.

Electronic Postal Service: Add the U.S. Postal Service to the list of players wanting into the e-commerce arena. The USPS is looking for partners for test of a time and date-stamped electronic postmark to begin this fall, with commercial availability in summer 1998. Proposed price: 22 cents per message of 50K or less. Law firms and financial services companies are two top prospects for the services, said Leo Campbell, USPS e-commerce manager. The USPS is also looking into offering electronic P.O. boxes, and hasn’t decided whether it will become a certification authority for digital certificates.

More on Digital Certificates: Market leader VeriSign will issue Class I, II and III digital certificates, to be used in SET transactions. Free Class I certificates verify an e-mail address; Class II cost $19.95 and include name, address, e-mail address authenticated against Equifax or other consumer credit database and verified via snail mail (see also QSpace p. 5). Class III aren’t being issued yet, but will involve some type of in-person identity check, said Bob Pratt, VeriSign Product Line Manager. VeriSign plans to roll out a digital certificate corporate outsourcing service this fall.

NACHA: To help speed up development of Internet payments, NACHA’s Internet Council is participating in a project with Mellon Bank, Bank of America, ABN AMRO, and others to test issuing and honoring digital certificates. A NACHA Internet Council working group is analyzing whether consumers could use the Internet to make direct ACH payments, with or without a signature. “If a consumer could transact with a bank to pay a merchant, it could be more practical and useful than making a payment directly to a merchant they don’t know,” said Leilani W. Doyle, a NACHA Internet Council member and Division Manager, Citation Internet Consulting Group.

Coming Attractions

NACHA and Citation Internet Consulting Group will hold Internet payments conferences in Denver, Chicago, Atlanta and Boston between August and October. Find more information on the NACHA Web site  or call 703.742.9190.

Contacts: Rett Summerville is EDI Specialist at BofA, 415.436.5488. Leilani W. Doyle is Division Manager at Citation Internet Consulting Group, 713.461.1592, . Richard Crone is VP at CyberCash, 415.413.0165 or . Stan Hayami is Micro-Commerce Business Manager at Digital, . Neil Godfrey is CEO at Efunds, 714.259.5266, . Nick DiGiacomo is CEO at Tenth Mountain Systems, 619.458.2655, . At the U.S. Postal Service, Leo Campbell is E-Commerce Manager; Kim Parks is New Business Sales Manager 703.526.2655. Bob Pratt is Product Line Manager at VeriSign, 415.429.3427.

Michelle V. Rafter

Michelle V. Rafter covers the Internet for Reuters, WebWeek, the Los Angeles Times and others. Reach her at .


Thirteen Differentiating Strategies for 1998

By Jim Bruene on August 3, 1997 8:25 AM | Comments

Most online banking programs feature the same features and benefits. Add some pizzazz to your offerings and distance yourself from the encroaching herds.

Last month we looked at fee-based revenue opportunities for online banking, an important medium-to long-term aspect (3-5 years out). But in 1998, it’s not about fee income but differentiating your financial institution (below); serving your wired customers online; and getting noticed.

First, we’ll assume that you’ve already implemented or are working on the five basic Web banking functions. If not, these are first priority:


Where do you go from here? We think the best ways to make a name for yourself online in 1998 and 1999 are in three areas:

  • Push services, also know as alerts, e-mail, Webcasting, Netcasting, or outbound messaging.
  • Bill presentment and automated payment processing services.
  • Privacy-protection and fraud-prevention services.
Outbound “Push” Messaging

We’ve written about this so much during the past four months our word processor practically refuses to type these buzzwords any longer. But there is a reason we are harping on this subject. Not since the invention of the ATM has there been such a promising new way to differentiate banking services. Following are five push tactics designed to bring you fame, fortune and new customers next year:

1. Send “event” reminders by e-mail, fax, or voice message a few days in advance of any due-date such as CD renewal, IRA funding, loan payment due, etc.

2. Offer free rate watch services sending a message when loan or investment rates hit user-preset values. Can be used on mortgages, CDs, bonds, and other loans. Alternatively, users could signify a target loan amount/payment.

3. Send balance alerts when checking, savings, money market, or overdraft protection accounts reach prespecified high and low limits. Since not everyone checks e-mail every day, consider fax and/or voice message options.

4. Offer “deposit assurance with confirmation messages whenever certain types of transactions occur such as checking account deposits, out-of-state POS purchases, telephone transfers, etc.

5. Provide activity-based messaging services that give account holders a heads-up whenever account activity surpasses the preset trigger points. Citibank highlighted this tactic in a recent credit card direct mail piece calling it Fraud Early Warning (Brochure copy reads: “If we notice any unusual spending on your account we may alert you to confirm that is was you who incurred those charges.”)


Digital Bill Payments

We have long advocated a go-slow approach to offering so-called electronic bill payment. The customer service headaches have made electronic bill payment less than optimal both for consumers and financial institutions.

It’s time to end that cautionary thinking. Web-based bill presentment is just around the corner and with it will come the critical mass of billers ready and able to receive payments and accounts receivable information completely electronically. You can start now to position your company as a player in this area. When the Microsoft/First Data venture gets off the ground in 1998, there will be a flurry of consumer interest. Take advantage of the hype by being the first bank on your block to put bill presentment on its Web. You could end up being the local expert source on the subject for years to come.

There are several ways to go about positioning yourself as a digital payments pioneer:

6. Develop your own in-house bill presentment program with just one or two local billers. You get a head start on the field, while differentiating yourself and the biller as highly innovative.

7. Enthusiastically embrace the Microsoft/First Data joint venture, MSFDC. Get in the press now as the first financial institution to publicly commit to offering the service. Work with MSFDC to put a customized version of the bill presentment demo onto your Web this fall.

8. Become the first bank to offer “100% Pure Electronic Bill Payment,” by limiting bill pay merchants to just those that offer end-to-end electronic payment.

9. Become the first bank to offer “100% Guaranteed Bill Payment.” Back up your marketing claims with a bullet-proof guarantee that takes full responsibility that all payments are made on time.

10. Help users put their payments on autopilot by automating repetitive payments, setting up preauthorized debits, having bills automatically charged to credit cards, establishing automatic average payments, and consolidating redundant accounts (e.g. roll those three $50 credit card payments into one home equity account/payment).

Privacy and Fraud Prevention

In August’s FutureBanker (published by American Banker), cyberpundit John Perry Barlow, founder of the Electronic Frontier Foundation, advocates an unusual role for banks. Become the “Swiss Banks” of the Internet, providing total confidentiality for buyers. Banks would issue Internet aliases that consumers would use to conduct transactions on the Internet. Merchants would know only that the bank guaranteed good funds. The consumer’s identity would be confidential, only divulged under court order. An infrastructure would be needed to handle delivery of physical goods. Shippers such as Federal Express could contract with the bank to divert shipments to the proper party.

This is probably more privacy protection than the average law-abiding citizen needs, but it’s worth pondering. There might be a happy medium that banks could fulfill. The whole area of financial privacy and fraud protection has been a source of discomfort for consumers for several years. And the Internet has only exacerbated the situation. Financial institutions, which rate high in consumer trust, could step in and take on the role of privacy fiduciary.

This month MasterCard and Visa have done their part to boost consumer confidence in card products. First, MasterCard formally extended the $50 maximum liability to debit cards. Visa one-upped them by declaring a new “zero liability” policy on all its card products (if the stolen card is reported within two days, $50 otherwise).

Here are some of the things you can do in 1998 to become a financial privacy advocate:

11. Offer branded e-wallets, such as that from CyberCash. The wallet allows consumers to pay by credit card without revealing their number to the merchant. This will boost consumer confidence in purchasing goods and services from unknown Web merchants. It will also prevent the kind of screw-ups experienced by ESPN SportsZone which had an unauthorized user access an order processing file that contained credit card numbers. (The security breach was not malicious…no accounts were compromised.)

12. Provide credit report information, either through a relationship with the major marketers of merged credit reports, Credco’s Confidential Credit, or CUC’s Privacy Guard. For an easy solution, simply provide a link to the online credit reports at QSpace or Experian when its service goes back online (see opposite page for details).

13. Develop a fraud protection icon such as “100% Fraud Free” or “protected by yourbank.” The intent of the label would be to ensure users that whenever they use your checking/ATM/credit card, they needn’t worry about being on the hook for fraudulent activity. You already absorb these costs anyway, why not get some credit for it.


Pennsylvania State Employees CU Has Free Online Access

By Jim Bruene on June 22, 1997 12:38 PM | Comments

Pennsylvania State Employees CU

With free online account access and bill payment, Pennsylvania State Employees Credit Union (Harrisburg, PA; $1.1 billion; 230,000 members) has 15,000 users of its dial-up services, 6.5% of its total membership base.
Greg Smith is CEO, 717.234.8484.

Categories: Bill payment

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