Online bill viewing and payment will be among the fastest growing consumer applications in the US over the next three years, according to a new report published by Jupiter Research.
According to the report, Payments & Transactions: Online Bill Viewing & Payment Forecast, 2001-2006, by 2006, more than 50 million households will view bills online, and 52 million households will pay at least one bill online. This represents a compound annual growth rate (CAGR) of 23%, compared to the 2001 figure of 18 million households who viewed at least one bill online.
Jupiter says that, in 2001, consumers in the US viewed a total of 643 million bills online, representing 6% of all consumer bills. This figure is set to grow at a CAGR of 41% to some 3.5 billion in 2006, accounting for 32% of consumer bills.
"Firms that issue simple bills should discard the notion of attracting consumers to their web sites for marketing opportunities. Instead, they should invest based on the cost savings they will derive from working with bill aggregators and, over time, eliminating paper statements," said Jupiter Research senior analyst, Rob Leathern. "As banks become the natural hubs for consumers' future aggregated bill viewing, they must build out their online servicing capabilities and create value-added applications to cement customer loyalty."
Existing financial relationships
Existing financial relationships with other companies and institutions can be used to consolidate bill viewing and payment to make life easier for the consumer. The report shows that, while direct billers' web sites currently account for 83% of bills viewed online, this will fall to 60% by 2006, with 40% of bills being viewed at consolidators' web sites by 2006.
Consumers who are interested in viewing and paying their bills on a single site say they would prefer to do so at their primary banking provider's site. This tendency increases among more experienced online users, with 32% of users who have five or more years of online experience preferring a bank's site (compared to only 23% of users who have been online for a year or less).
As consumers spend more time online, they tend to replicate many of their offline relationships, and they often use the online offerings of their existing banks and brokerage houses.
Boom in online billing
In general, billers interviewed by Jupiter had found that customers who use online billing are more satisfied and have a greater affinity for the company's brand. The report also suggests that online billing customers are more profitable and loyal than traditional consumers.
"Early consumer adopters of online billing are most likely to already be among a company's best customers," says Leathern. "As more customers become experienced at using the internet, the growing demand for the convenience of online billing will make a robust online billing offering an everyday cost of doing business."
Some of the highlights and key findings of the report include:
- Merchants with complex bills (such as credit card issuers, and wireless and long-distance telephone service providers) have seen strong growth in the number of customers viewing bills through their web sites over the past 18 months. However, in many cases, they are still sending paper statements to the majority of their online customers.
- Many users, although they are ready to view their bills online, are not yet willing to make their payments through the biller's site. Data from a recent Jupiter consumer survey highlighted this phenomenon: While 36% of online consumers regularly view their credit card statement online, only 23% pay it online regularly, and many of those do so via their bank's bill payment engine, not at the biller's site.
- Consumer interest in ISP (internet service provider) and portal bill payment offerings remains weak. Less than 6% of online users prefer to use a portal's aggregated bill viewing and payment offering.