Once derided as a good idea weighed down by technical glitches, online payments are moving into the mainstream, according to a trade group.
NACHA (National Automated Clearing House Association), a trade group whose mission includes promoting online bill paying, said during the first quarter of 2003 consumers paid more than $48 billion worth of bills online using the association’s clearing house, the ACH Network.
The ACH (automated clearing house) is a 30 year-old bank payment clearing network that is used for services such as direct deposit, direct payment, business-to-business payments and federal tax payments, the group said. These days, it is increasingly adding e-checks and online bill payments to its services.
“Online bill payment is now a mainstream consumer activity,” said Elliott C. McEntee, president and CEO of NACHA. “Tens of millions of consumers now pay bills online, and the potential for continuing growth is substantial.”
The association reckons that, based on the number of online bills paid during the first quarter alone, online bill payments for
2003 will exceed $200 billion, compared to $96 billion in 2002.
“We estimate that, of eight to ten billion bill payments annually in the U.S., about 500 million are paid online,” said Michael Herd, spokesperson for Virginia-based NACHA.
Avivah Litan, a technology and finance analyst with tech research firm Gartner , called online payment
of bills among the fastest growing financial applications on the Web.
And consumers that do go the online route are generally choosing one of three methods to pay bills: their bank’s Web sites, biller’s Web sites, and third party sites such as CheckFree.
If done right, online payment services can help banks attract and retain their most profitable customers, according to Litan. But that can also be a pretty big if. Gartner’s research urges banks to make enrollment in line payment services automatic and provide it for for free.
According to Litan and Gartner’s research, the majority of consumers paying bills online generally prefer to view and pay bills through their biller’s Web sites.
