11:48 AM
80% of Customers Won't Pay Extra For Online Bill Payments
Customers are loyal to their online banking service, and they'll use online banking as a means to pay bills. As long as it's free.
But if asked to pay a fee for it, market intelligence firm Mintel found that about eight in 10 customers would cease to use the online bill payment services offered by their bank.
"Most consumers would be loathe to pay for an online bill pay service, simply because there are other services that are offered free of charge," said Susan Wolfe, VP of financial services at Mintel Comperemedia. "So if banks start charging for online bill pay, they run the risk that customers will use another payment mechanism or go to one of the free third party services."
Even at a nominal fee, say $5, Mintel found only seven percent of consumers would continue to use their bank's online bill payment services. That percentage only dropped if customers were faced with higher rates. Simply, customers would turn to third-party services available outside of the bank.
So even though Mintel found online banking to be popular among customers - with some 79 percent using it daily or weekly - getting people to form a habit around bank-offered online bill pay is still a challenge.
Mintel found that 62 percent of customers responsible for paying their household bills are still using paper checks, with some 45 percent going through a biller's website rather than their bank.
"The wide range of payment mechanisms means customers have choices," Wolfe said. "Getting customers to sign up for online banking is the easy part—getting them to use the full online offering is much more challenging."
In a webcast last week, Wolfe suggested that one way banks can increase their market share in online bill pay - which is done by about 40 percent of customers - by taking advantage of mobile. By offering bill pay through mobile banking and apps, as well as person-to-person payments, banks are enabling something third parties can't offer.