Addicted to Online Billpay?

Addicted to Online Billpay?

If you’re anything like me, you pay the vast majority of your bills online. What’s not to love? It’s convenient, and it saves money on postage, check printing, etc.

Well, let me let you in on a little secret… Banks don’t offer these services out of the kindness of their hearts. Rather, they do it to lock down their customers. Don’t believe me? Then consider this…

According to a study commissioned by Fiserv, which develops online billpay systems, using the internet to pay bills, send electronic checks, etc. can reduce customer turnover by up to 95%. Why? Because it’s a hassle to re-create your system at another bank.

This shift to online banking has made it easier for banks to make customer-unfriendly decisions — like instituting fee increases — comfortable in the knowledge that people are largely unwilling to break their online banking ties.

According to Emmett Higdon, a consultant who managed Citibank’s online billpay system from 2004-2007, “For the consumer, it’s a double-edged sword.” Yes, it’s convenient, but industry insiders knew “that it would be a powerful retention tool. That’s why online bill paying went free in the first place. Inertia is powerful in the banking industry.”

In fact, online billpay usage has increased 38% over the past five years, and it’s expected to increase another 25% — to 55M households — by 2016. At the same time, a survey by Javelin Strategy and Research has revealed that few consumers are switching banks.

In other words, it’s working.

But guess what? It’s not actually that hard to change banks. Yes, it will take some time, but there’s relatively little effort involved. You will, of course, have to open a new account, and you’ll need to spend a few hours switching your direct deposits, ordering checks, and configuring your billpay/auto-debit options. But beyond that, it’s mostly a matter of waiting a month or two for things to settle out.

What about you? Do you use your bank’s online billpay services? If so, do you think this make you less likely to change banks? Or would you be willing to pick up and move the moment your bank steps on your toes?

As for me, I’d have to say that the convenience of our bank’s system does make it less likely that I’d switch, though it certainly wouldn’t stop me if our bank did something too egregious.

Of course, there’s nothing stopping the next bank from making customer-unfriendly moves once you get there. If we had convenient access to a good credit union, we’d probably go that route. But we don’t, so we just make the best of it.


14 Responses to “Addicted to Online Billpay?”

  1. Anonymous

    My favorite bill pay website is with ING Direct. I like the interface, which is a popular one that many others use as well. I will stick with them for as along as possible because their fees aren’t astronomical should the money for those bills not be there due to a pending deposit, etc.

    Another bill pay website I like to use is Check Free. Unfortunately, they don’t list a lot of banks and/or companies for whom I need to pay. But other than that I find it quite appealing.

  2. Anonymous

    I can’t function without bill pay! We just made the move to Chase because their ATMs are more convenient (not to mention their great mobile app). It takes all of 20 minutes to setup new bill payments and using a bank’s bill pay system makes switching easier than merchant directed bill payment. I was surprised more people aren’t using this service.

  3. Anonymous

    That’s why I use CheckFreeWeb online bill pay service – so that I do NOT have to be held hostage to a specific bank. I can use different accounts from different banks/credit unions to pay my bills.

  4. Anonymous

    Regarding online bill pay, my pet peeve is not with my bank/credit union; it’s with certain companies that charge extra for the service. Our mortgage company, for example, charges from $2 to $12 to pay online (depending on how close you are paying to the due date). I think that is a ripoff since it should save them $ for me to pay online and they have acess to the money faster.

  5. Anonymous

    We have accounts in a major bank that we’ve had since 1964. Mostly we’ve not had much problem with fees and charges, though they have “dinged ” us a couple of times when we weren’t paying attention. We can move money among our accounts easily. We also have a savings account and auto loan at a Credit Union. It’s way harder to do things online, and they only recently went online at all. If I were changing to them or just another bank, I’d back out quietly from the old account to the new one and disappear like the Cheshire Cat. Haste does make waste. If you sumarially close accounts and move to new ground, it will be traumatic.

  6. Anonymous

    I love online bill paying–that is, paying bills from my bank account. It is quick, convenient, no checks, no postage, a record of payment, what is not to like? I never give businesses access to my account, i.e. their accessing my account for payment; doing so makes settling disputes a hassle and once the arrangement begins, it can be a hassle to stop. I understand that Banks push this because it saves them money over processing a check. Well it saves me time and money as well. I do not have my bills electronically delivered to my bank account. I would have to offered an incentive to save the businesses postage money and so far, none have offered.
    I currently pay no bank fees, but would change banks if I am treated poorly.

  7. Anonymous

    I recently switched banks after 18 years and the online bill pay is the greatest casualty of the move. Setting up my accounts all over again is very frustrating. Not all my creditors have relationships with all banks to enable quick transfers. But I’m sticking with my new bank because of the free checking. A couple more minutes are worth saving more than a couple dollars.

  8. Anonymous

    I used the same bank for about 15 years, starting my first checking account with them at age 14. I stayed with them for a few reasons. It was my parents’ bank and I worked for them, making it easier for paychecks. It was a no-fee account and I had several monthly payments set up with it. Finally after I reached a point of needing a more local bank, more modern account access, and an interest bearing account, I switched. I am very happy with my new account at a local non-chain bank. It offers no-fee checking, limited ATM fee reimbursement, paper-free access, and most importantly, 3% interest so long as I meet certain requirements from month to month.

    It was a hassle to switch all of my payment accounts over, order checks and so forth, but well worth the switch. If the recent legislation causes them to discontinue the high interest rate, I’ll keep the account so long as little else changes.

  9. Anonymous

    I use billpay all the time, and have been for several years. I have about a dozen ‘PayTo Accounts’ and it was not as much of a problem changing banks. In general, I tend to stay with the bank unless they do something stupid to p*ss me off.

  10. Anonymous

    I use online bill pay through my bank as well and have for several years… didn’t stop me from switching banks about a year ago. It really wasn’t that difficult and I’m definitely a much happier customer at my new bank!

  11. Anonymous

    I agree you’re right that its not very hard to change banks and you have to wait a month or two for things to settle out.

    However there are a lot of people living paycheck to paycheck and it can be more difficult to coordinate making your payments and getting things straightened out. So for those people (reportedly 1/2 the population) getting it all straightened out in the transition period can be more difficult.

  12. Anonymous

    Yes, the convenience of online bill pay is compelling. I use it as much as possible. While it is a hassle to change banks (or other vendors), sometimes all that’s required is threatening to change. Competition is a beautiful thing. Lay out your bank’s offerings side-by-side with a competitor, then meet with a branch representative and ask: “What would you do if you were me?” I’ve tried this approach with all sorts of vendors–my cable company, most recently–and have walked away with valuable concessions. Of course you have to be prepared to follow-up and actually change vendors if you get no satisfaction. If you’re perceived as a bluffing, you won’t get much reaction. Thanks for writing.

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