Killer online banking app: Bill presentment
By Steven H. Pflaster • Bankrate.com

A development gaining momentum in Internet banking circles may soon change the way consumers pay their bills. This advancement is called bill presentment because the computer presents bills on screen for consumers to see, study and pay.

Proponents have dubbed it the online banking "killer app," and alliances are in the making industry-wide.

"Electronic bill presentment is clearly the next step in online banking," said Patrick J. Swanick, vice chairman of KeyBank after the Dec. 4 announcement that Wells Fargo and KeyBank would pilot the electronic bill presentment and payment service of e-commerce provider MSFDC. This followed the Oct. 4 announcement by Chase Manhattan Bank of plans to offer, through Checkfree Corp., electronic bill presentment to individual and commercial customers for free.

Bill presentment offers bills in detail
The key difference between electronic bill presentment and ordinary electronic bill payment is that the

customer will view the bill on a computer screen by logging online with a bank. Full billing detail will be presented.

Customers will be alerted that a bill has been issued via e-mail. Existing electronic payment services do not include bill presentment, but provide only the total amount due. To see a breakdown of charges, consumers must wait for each bill to arrive separately by mail.

With bill presentment, customers can pay the bill immediately and the money is transferred automatically from the account.

In addition, since companies like Checkfree Corp., are rapidly forming alliances with numerous large billers, it will be possible for customers to manage virtually all of their bills in one location, such as their bank's Web site.

Convenience "astounding"
"The convenience of round trip electronic payment is astounding when the service is delivered through a financial institution," says Matt Lewis of Corporate Communications at Checkfree Corp. "Basically with a few clicks, you can view and pay bills and have your bank account (which you view simultaneously on screen) automatically reconciled. So no more balancing the checkbook, wading through bill stubs, and licking that nasty gum on the back of the envelope."

Other features of electronic bill presentment that promise to simplify bill payment include tracking the status of bills and payments anytime, viewing past bills, searching for a specific charge, or establishing auto-payment according to the user criterion (e.g. any bill less than $90). And in case a customer wishes to pay a bill which is not presented online, a "pay anyone" feature will allow customers to request that a check to be sent to any biller, or even an individual.

Bill issuers will design the bills
Bill issuers will have control over the bill design, as well as the content, look and feel. Therefore, features may vary for each bill. Some will allow customers to make online requests for credits and to settle disputes.

And of course, billers see it as a chance to tack on "interactive" ads to the presented bills. Customers may find this to be a nuisance since graphics tend to delay the download process. The demo on MSFDC's Web site contains such an ad. If customers dislike the ads though, MSFDC says it is willing to censor ads upon request.

Checkfree's Matt Lewis believes as many as 30 percent of U.S. households will "quickly adopt the service much like credit cards and ATMs by say, 2001 or 2002." He even feels it is appropriate for many elderly people, who are already frequent users of telephone banking. "I don't think this is a demographic issue. It's really behaviorally driven or pyschographic," said Lewis.

Some doubt broad appeal
But many backers of electronic bill presentment doubt there will be such a wide appeal for the product, especially at the onset. According to Warren Dent, senior vice president at MSFDC, the early users will be people already comfortable with the use of the World Wide Web.

These consumers are "statistically a little younger and a little more affluent than the general public," said Dent. Over time though, usage should increase as the "infrastructure expands, enabling customers to view and pay their bills through kiosks in shopping malls, at an ATM, by cellular phone, via WebTV, and from a foreign country."

Mike Lanza, CEO and president of Just In Time Solutions, a San Francisco company that sells bill presentment servers to bill issuers, agrees.

Bill issuers must sign up first
The main users of electronic bill presentment, Lanza said, will continue to be Quicken users (now over 10 million), other home banking customers and Internet aficionados. The key to success with consumers is to "get as many billers (signed) up as possible.

"Customers will have a threshold for the number of billers who should be participating before they'll use this service," he said "For me, that number is one since I'm a real enthusiast. For others, it may be three, for others, five, and for our parents, maybe 10 or fifteen."

Before signing up, customers should find out whose bills they can get through the service. Lanza also advises that consumers ask, "Can I pay bills which I don't receive through your service?"

Another question to raise: What happens when something goes wrong? The providers of the e-commerce service, for example, will only respond to questions or problems about software. They will refer you to the biller or bank if your questions relate to bill content.

On the other hand, an easy to use bill presentment service with lots of participating billers, may be just what's needed to convince many borderline consumers to try electronic bill payment. Jeffrey Paintner, a project leader who develops computer systems for Sharp Electronics Corp. in New Jersey, uses Chase online banking with Quicken on a regular basis to keep track of his household finances. However, Paintner, who writes about 40 checks per month, does not pay his bills online.

Some reluctant to give up control
"The main reason is I don't want to give up control over paying my bills. I may try it out if they give options like partial payment, and I can schedule which date the bill gets paid. I have no problem paying some bills automatically like insurance, but I want to have the option to pay credit cards partially just in case," said Paintner.

This automatic payment with control is a key feature of electronic bill presentment and payment, according to Lanza.

"I guess in the beginning, it would be a lot of work signing up and getting all the account numbers and information together," said Paintner. "But once that's all set, I suppose it could save me time."

Security a concern for many
Security and privacy are concerns for Paintner as well. " ... I work with computer systems, and know the dangers well," he said. "Especially with all that information coming from billers to banks, somebody is likely to foul something up."

Providers are not ignoring these issues. MSFDC, in reaction to concerns that parent company Microsoft will use consumer data for sales and marketing purposes, now guarantees in writing that neither banks nor billers can use any consumer data for any purpose.

Checkfree offers an audit trail that bill issuers can utilize to reassure customers. "It is so complete that we can guarantee the payment," said Lewis. "We are able to provide information detailing where a bill is, when it was posted, when it was paid and when the funds cleared."

There are details still to be resolved with bill presentment. Can consumers use bill presentment and still get their bills via the postal service? And what happens when a customer needs to send a computer in for repair for several weeks, and cannot retrieve online bills? One solution may be to have bills mailed if the customer has not viewed it within a week after it was displayed.

Service likely to be free...at first
As banks begin to promote electronic bill presentment, the service is likely to be free to customers.

According to MSFDC's Warren Dent, the bulk of the cost is funded by billers who save on the expense of processing bills. However, some financial institutions may charge consumers fees for paying bills not part of the presentment system.

And of course, banks will still charge fees for bill payment. For example, Chase charges $2.95 a month for bill payment and $0.50 for each bill paid. Like most banks, Chase will waive this fee for certain high balance accounts. But those costs are likely to be recouped elsewhere in online banking fees. Consumers should ask about fees before signing up.

-- Posted: January 19, 1998