The Do's and Don'ts of Online Bill Pay

Bill pay means so many things to so many people.  My parents set up their mortgage payment (online) to draft from their account on a monthly basis, and as a result, they now feel they have entered the world of “online payments.”  Based on my 12 years of experience in online payments, I may slightly disagree with that, but to be honest, even I think it counts. 

The world of payments has evolved so much.  We’ve seen the evolution from paying your bills in person to sending a check, paying over the phone, paying over the phone through IVR, and now paying by touching the information into your phone.  That doesn’t even include the online evolution of paying everything on the Internet.  Mobile Payments Today reported 71% of all bills are paid electronically.  That number continues to grow and will grow as our addiction to “on demand” and “mobile functionality” grows.  I have written previous posts about buying mobile in the past, so this won’t focus on mobile payments or mobile banking; instead, I would like a take the opportunity to focus on your financial institution’s bill pay service, what your bill pay product should and shouldn’t do, and how that affects your process of your evaluation. 

Of the previously mentioned 71% of all bills that are paid electronically, 46.5% of those are paid on a bank or credit union bill pay product.  Therefore, you as a financial institution are responsible for almost half of all payments being made on a monthly basis.  Congratulations! 

I can tell you from experience that these statistics are part of an ever-growing trend.  But don’t get too excited ... depending on who you are using for bill pay, a lot of those “electronic” payments are being sent on a paper check.  That’s right: electronic payments via paper check.  That doesn’t sound too innovative, does it?  That is just one example of my thoughts around what you need to know about online bill pay.  Let’s discuss the rest below:

Do: for online bill pay

• Have a bill pay provider that wants to integrate the look and feel of your online banking product.  That look and feel approach means a lot to your customers and alleviates any concerns they may have of moving to a foreign website to enter their bill pay data.
• Mobile integration is a must. You need to have a bill pay partner that has a mobile banking product or offers mobile banking integration to your product.  While adoption is still low (2%), you can’t give up that service to your important customers.
• Ask your bill pay provider to give you their electronic versus paper ratio.  If you are paying per transaction, that number could mean a lot of money in savings to your institution.  There are bill pay providers that range from a 50/50 ratio to 80/20 ratio (80% electronic).
• Work with a bill pay provider that provides complimentary user adoption programs.  Higher adoption rates cost more money, but it also means a more loyal customer base and more valuable customer to your institution.  This should be a service your bill pay provider offers at no cost and can be embraced by you.
• Use a bill pay provider that has a track record of excellent customer service.  Your bill pay provider should have a history of helping financial institutions and their bill pay subscribers.  Those phone calls are extremely valuable to customer loyalty and continued bill pay usage.
• Look for a provider that sees you as a partner, not a customer.  Feedback on functionality, customer service, and usage are all important aspects of a relationship between you and your provider.  If they aren’t listening, then chances are something is wrong.
• Ask your bill pay provider what is coming next. If they are looking ahead with you and your customers, you have a solid partner.

Don’t: for online bill pay

• Don't sacrifice service for price.  The second phone call is always worse than the first.  If your vendor isn’t properly solving the problem for your bill pay subscriber, you have a much bigger problem when they call you.
• Don't be forced into a bill pay product based on your Internet banking provider.  Most good Internet banking products have integrations to all bill pay providers.  Make sure you evaluate all options independently to get the best overall experience.
• Don't allow your current provider to hold you hostage with high de-conversion fees.  Most bill pay providers offer options to offset that cost and allow you to still upgrade to a new service.
• Don't fall into the “status quo” trap.  Many times, it is easy for us to just keep things as they are.  But, to grow your customer base, usage, loyalty, and retention rates, you might have to go out there and upgrade services and offerings.  That investment could save your customers/members from going down the street to open an account for an incentive.

This is a small list compared to your average RFP or evaluation process, but it is important to know.  Your online bill pay solution isn’t the reason a customer will open an account at your bank or credit union, but it very well could be the reason they stay or leave.  BAI reported that consumers who use electronic bill pay and electronic bills (e-bills) are more satisfied with their financial management processes and feel a greater sense of financial control. Also, there is a proven correlation between bill pay use and deeper customer relationships; bill pay users have higher balances, lower attrition and purchase more revenue-generating products than non-users.  Simply stated - these customers are normally more valuable and are the type you want to keep. 

I will be the first to admit that I don’t have all the answers.  But I have listened to financial institutions, bill pay subscribers, bill pay companies, and many industry experts.  The recurring theme is that bill pay is growing and will continue to grow.  Regardless of the mechanism, your customers want access and want a quality product with quality service.  I hope this provides you with enough information to ask the right questions when reviewing a product.  And here is my one company plug, I hope you will consider iPay Solutions as a part of your evaluation.