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September 06, 2005
What Exactly is Wrong Here?
The New York Times had a great article the other day on consumer reluctance to pay bills online. The story cited a woman who did all of her shopping online, but steadfastly refused to pay her bills the same way. This really struck a chord with me because I am the same way. I purchase virtually everything online that I can, but my family continues to like the solidity of writing checks for personal payments.
Why is this?
I can think of several possibilities.
My initial thought was that a paper trail has real value. If a payment isn't received or an amount is disputed, I am not forced to rely solely on the good intentions of the payee to rectify the problem. The paper trail gives me real, tangible proof that the money was transferred.
However, the more I think about it, the less I'm convinced. After all, I use my credit card online all the time without creating a paper trail. I'm transferring money and counting on the fact that Amazon will correctly (and honestly) charge the right amount to my credit card.
Maybe it's because I know that, when it comes to buying things online, the credit card company gives me a channel to address and deal with disputes. I suspect online bill pay offers the same thing, but the tangible nature of my monthly credit card statement and the decades-old Visa, Mastercard and Amex brands give me confidence that my grievances will be addressed.
Here's one more idea: maybe consumer concern stems from the fact that bill paying is one of the few instances online when someone reaches out to the consumer to instigate a transaction--every other kind of transaction is instigated by the consumer. For example, on Amazon, the consumer instigates the purchase. However, when the billing alert comes to you, it feels somehow less tangible. It seems like an opportunity for something to go wrong. And, of course, that's exactly what happens with phishing.
The problem in the online world is that email is the only mechanism that lets businesses reach out to consumers. For bill payments, this is far too easily abused and thwarted. Maybe the ultimate solution to online bill payments will come from some future generation of email that is more reliable and trustworthy than what is available today. Anyone have any ideas?
Posted by Bill Nussey at September 6, 2005 08:49 AM
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Comments
It's simple for me, online bill paying usually has a fee. I'm not going to pay more to pay a bill online. If anything I'll be saving them processing costs so they shouldn't charge a fee. A paper trail through the mail is less secure and passes more hands, so it's simply an issue of cost.
Posted by: Anonymous at September 6, 2005 02:48 PM
Great job Bill. I think this is just as effective with small business as it is with the larger ones. I'd love to have you on my radio show in Los Angeles some time so we can talk more about this. Wanted to give you some positive press also. See my website for a review of your book.- Mark Deo
Posted by: Mark Deo at September 11, 2005 01:20 PM
Bill! The reality is that online bill paying is more reliable than check writing, in addition to saving a huge amount of time. As a Bank of America employee, you might think I'm bias. But I've been paying bills online since the mid 90s - way before I joined BOFA. Online bill paying demands product trial because it is a big leap for the consumer, but once tried you never go back. Ask anyone who uses it and 9 out 10 will tell you the same thing. It's amazing. And if you want, you can keep the paper bills coming. Then when you get more comfortable, you can move to electronic bill presentment. Try paying 1 or 2 bills a month and I guarantee you will be a believer.
Posted by: Greg Flewelling at October 15, 2005 07:27 AM