Two studies released last month show that the use of electronic bill presentment and payment services has taken off during the past year, with some industry experts saying the most recent growth is connected to the threat of anthrax in the U.S. mail.
Although most research indicates that the spike stems simply from the increasing popularity of online billing, some clients of consulting firm Gartner Inc. have reported a 20 percent increase in consumer enrollment since the anthrax mailings this fall.
"Anthrax woke everyone up to say, 'Maybe we should do this stuff online,' " said Avivah Litan, an analyst at Stamford, Conn.-based Gartner, which released one of the studies.
"There are some billers who are saying there's a jump in enrollment because of that," Litan said. "It will take a few billing cycles to hash that out. All I know is, the numbers are going up pretty impressively."
Purchase, N.Y.-based MasterCard International Inc. said it has seen a steady rise in online bill payment, with September and October being peak months. Cathleen Conforti, vice president of MasterCard's remote payment and presentment service, said it's too early to tell if the most recent spikes are related to the Sept. 11 terrorist attacks and the subsequent anthrax scare.
The upward trend is forcing many financial services firms to focus on bill presentment technologies and integrating those technologies with other customer services. According to Conforti, almost all of MasterCard's member banks are in the process of installing or deploying online bill presentment software for their customers.
"That software, to date, still needs to be integrated with current home banking services," she said. "All of the institutions know it is moving from a competitive differentiator to a required service."
Electronic bill payment has increased 20 percent this year over last year, Gartner said in its study. By year's end, 32 million Americans, or 16 percent of the adult population, will view bills and manage creditor accounts online, Gartner predicted. That number will increase to 46 million next year and to 98 million by 2005, it said.
The Federal Reserve System also released results of a survey last month that suggests that check writing is giving way to electronic payments. The Fed, which received survey results from 1,300 financial services firms and 89 payment processors, found that the use of checks has declined from approximately 85 percent of noncash payments since the last study in 1979 to about 60 percent today. It estimates that about 50 billion checks are written annually in the U.S., totaling about US$48 trillion in payments.
Tom Kelly, a spokesman for Bank One Corp. in Chicago, said that although his firm has seen a steady increase in online bill payment, "we've not seen a huge surge since Sept. 11."
"For example, this summer we offered free bill payment through the rest of the year. We had some surge on demand, but it's not like the numbers doubled," he said. "We're clearly over the early-adopter stage of this. I'd say, industrywide, 15 percent to 20 percent of people who use online banking do the bill payment as part of it."
Jim Van Dyke, an analyst at New York-based Jupiter Media Metrix Inc., said the anthrax threat's boost to e-billing is an urban legend. "In the last three weeks of October at a time when the anthrax scare was at fever's pitch adoption of online billing actually went down, not up," Van Dyke said.
According to Gartner, most financial services companies have opted to outsource their online bill payment to service providers, such as CheckFree Corp. in Atlanta and Clareon Corp. in Portland, Maine.
Steven Schutze, director of e-strategies at the American Bankers Association in Washington, said those banks that have taken on in-house integration projects are seeing a return on their investments from more efficient operations.