The Wall Street Journal
September 4,2002

By MICHELLE HIGGINS
Staff Reporter of THE WALL STREET JOURNAL

The race to get consumers to pay bills electronically is clicking into
high gear.

Bank of America recently did away with its monthly $5.95 fee for online
bill payments, and this month, National City Bank is following suit. U.S.
Bancorp has stationed "e-experts" in all 2,147 branches to walk customers
through online bill payment. And in a just-finished promotion,
FleetBoston paid $25 cash to customers who paid bills online for the
first time.

It's not just banks. Earlier this summer, phone company Verizon gave
customers the option to go completely paperless, viewing and paying their
bills only over the Internet. Discover has been running a sweepstakes
called "Click, Pay, Win," in which customers paying their credit-card
bills online can win a grand prize of $10,000. On top of that, businesses
from gyms to student-loan companies are encouraging their customers to
have their payments debited automatically from their bank account.

COMPARING THE BANKS

Banks are making an all-out push to get people to pay  bills online.
They're doing everything from getting rid of fees to
allowing consumers to actually see their bills online before they pay
them. See a chart.

Why is electronic bill payment becoming a mantra for so many businesses?
Some of course hope to save on postage and other administrative costs.
But it also reflects how badly companies want to hang onto customers
right now. They know that once a customer has gone through all the
trouble of setting up electronic bill payment, he or she is less likely
to switch loyalties -- 80% less likely in the banking industry, according
to Bank of America. "It drives profitability," says John Rosenfeld,
e-commerce executive there.

Even those who don't want to bother with online banking are finding ways
to dispense with checks and paper bills. Ed Hamilton, a retired scientist
from Durango, Colo., set up as many bills as he could, from the electric
bill to the local gym, to be automatically paid each month via his credit
card. His credit-card bill is then automatically deducted from his bank
account. "It's very convenient," he says.

In all, nearly 17 million households will pay bills online this year, up
41% from 2001, according to Forrester Research. Still, that represents
only a tenth of U.S. households. And each of the electronic-payment
methods being pushed these days has some drawbacks.

Online banking: Despite the many recent deals, most banks still charge $5
to $7 a month for the privilege of paying bills online. Often, customers
must initially pull out their paper bills and key in a slew of data like
account numbers and addresses into their computer before paying a bill
online. "It's a big hassle to set up," says Jeanne Capachin of Meridien
Research.

In response to such complaints, some firms are tweaking their online
options to make them easier to use. For a fee, some banks will turn all
your paper bills into electronic bills. Consumers must arrange for their
bills to be sent to a processing facility run by Metavante Corp., a
technology subsidiary of financial-services company Marshall & Ilsley
Corp. There, the bills are opened and scanned into a computer so they can
be viewed and paid by the customer over the Internet.

One problem with this set-up: Items like new credit cards may be sent to
the processing facility instead of your home, and there will be a delay
before they are forwarded to your real address. Even bankers admit it's
not that convenient. "It's still bit a kludgy," says Arlen Gelbard of
E*Trade Group, which charges $4.95 per month for the service plus 50
cents per bill.

E*Trade customers can now download bill-payment information into
personal-finance software like Quicken and Microsoft Money so they can
track their bills in a computerized checkbook. And Wells Fargo just
signed a multiyear contract with software firm CheckFree Corp. so that
its customers can view bills from more merchants online.

Direct billing: A growing number of companies allow you to pay your bills
on the company Web site. Customers enter their bank-account information
or credit card online the first time they pay. After that, they just
click a "pay" button on the biller's Web site and the money is instantly
withdrawn from their bank account. The downside: You have to go to a
different Web site to pay each one of your bills.

Citibank credit-card customers can get an e-mail alert when they have
reached their credit limit, when their payment is due or when their
statement has been posted. Sprint allows local phone customers to see
whom they called, dispute charges and download their bills.

Automatic Withdrawal: This is still the most common electronic option by
some measures; consumers had about 1.4 billion payments to various
companies automatically deducted in the first six months of the year.

The drawback? Customers forfeit control over making the payments. And
it's more difficult to dispute a charge if the company already has your
money.

Comparing the Banks

Banks are making an all-out push to get people to pay bills online.
They're doing everything from getting rid of fees to allowing consumers
to actually see their bills online before they pay them.

Table with 5 columns and 8 rows

Company
Cost for online bill pay*
No. of companies whose bills you can  view online
Cost for both viewing and paying bills
Comments

Bank of America
Free
202
Free
Did away with monthly $5.95 fee recently  and now e-mails customers when
online bill arrives.

Chase
Free
Unlimited, through Chase Bill Management Center
$9.95 per  month for 20 bills
Upgraded site earlier this year and is aggressively  promoting online
bill paying. In order to see bills online consumers must
have bills sent to a processing facility where they are opened and
scanned into a computer.

Citibank
Free
Unlimited.
For credit-card customers only through Citibank
Bill Manager
$4.95 for 10 bills; $9.95 for 24 bills
New users get $1 for  each bill they pay online (up to 10 bills per
month) for one year. Offer
ends Sept. 30.

E*Trade
$6.95 per month
Unlimited
$4.95 per month and 50 cents per bill  or $12.95 per month for 30 bills
Added the option of downloading  bill-payment information into
personal-finance software like Quicken.

Fleet
$4.50 per month
None
Not applicable

Just finished a promotion in  which it paid $25 in cash to customers for
paying their first bill
online.

US Bank
$4.95 per month
222
Free
Stationed e-experts in all of its  branches to teach customers about
bill-pay service.

Wells Fargo
$6.95 per month
Three
Free
Customers will be able to access  their bills online for up to 100
companies in the next six months.

table  end

*May be free for customers with higher balances or preferred accounts

Source: the banks

Write to Michelle Higgins at
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