Consumers' love affair with electronic forms of payment is stronger than ever, according to a recent report by Boston-based Dove Consulting, a division of Hitachi Consulting, and the American Bankers Association (ABA; Washington, D.C.). The 2005/2006 Study of Consumer Payment Preferences reports that consumers choose electronic payments for the majority of their payments -- whether in stores, online or for bills. Cash and checks account for 45 percent of consumers' monthly payments, down from 57 percent in the 2001 study.

"Bill payment is the last bastion of paper-based payments," says Melissa Fox, a Dove senior analyst involved with the study. But, she notes, electronic bill pay is gaining momentum. Indeed, Fox relates, consumers' new favorite forms of e-payments appear to be online bill pay and gift cards.

According to the report, checks account for 49 percent of consumers' monthly bill payments, down from 72 percent in 2001. "More people have access to e-payments mechanisms and are more likely to use them," Fox says.

The uptick in online bill pay reported by the Dove/ABA study may appear to contradict other studies that show a dip in consumer confidence in the channel as a result of fraud fears. In fact, Fox acknowledges the increase in consumer fears of identity theft. "Between 2003 and 2005, the percentage of people somewhat concerned by [ID theft] increased while those not concerned decreased," she says. But, Fox explains, fears of online fraud have not overtaken the convenience of online bill pay.

Further, Fox suggests, while consumers may be less likely to make online purchases from unfamiliar merchants, online bill pay typically involves an established relationship. "People tend to trust their financial institution," she asserts. And, "For biller-direct online bill pay, it's your utility company and you have an ongoing relationship with it."

Despite the growing popularity of e-payments, however, checks aren't going away, Fox points out. "We'll see a continued decline [in check use]," she says. But, "There are situations where checks are still the appropriate form of payment."