The Big Payoff

Clicking through an electronic bill-payment site is as exciting as an afternoon at the Laundromat. But like your local wash-o-teria, e-payers rinse the drudgery from a hateful modern chore by providing convenience. At least that's the theory.

In practice, online bill-payment services are often like Laundromats that feature washing machines but no dryers, operation instructions written in Hungarian, and no refunds for defective equipment. Fines for leaving your clothes unattended are steep.

It's no wonder that only about 6 million of the estimated 127 million U.S. Net users pay their bills online, according to Gartner. Industry watchers blame this lack of enthusiasm on cost: Consumers don't want to pay for the convenience, though costs range from nothing to $12.95 a month. Most people would save as much in postage and bank processing fees—not to mention time—by paying their bills online.

Perceived cost isn't the only problem consumers have with e-payers. Usability is less than perfect. But bill-payment services are only partially to blame. A lack of industry standards has hobbled the technology. Until the whole process is digitized—including bill presentation—you can expect to enjoy about half the advertised convenience of paying your bills online.

Is it worth it to sign up for e-payment service? To give you an idea, Ziff Davis Smart Business took a close look at 10 of the leading payment services, including those offered by banks, and tested them for cost, convenience, and overall ease of use.

Halfway Home

Whether you pay bills electronically through a bank or through third-party bill-pay services, you're stuck with a piecemeal system: With bill-pay services from most banks, for example, you must still collect and sort through paper bills and enter the information online to make the payment. With third-party services like Paytrust or CyberBills StatusFactory, you must keep track of a separate billing address.

Trouble is, the vast majority of companies—from heating-oil conglomerates to cockroach exterminators—can't send electronic bills. Online bill-pay provider CheckFree holds a near monopoly in the back-office infrastructure it provides to e-payers. Yet it receives digital bills from only about 245 (admittedly large) merchants.

CheckFree officials estimate that the company handles more than 50 percent of the online bills U.S. households receive. If you can dispatch only half of your bills electronically, the remaining half—sent through the mail—must still be dealt with, and in most cases entered into an online payment system manually.

Third-party e-payers such as Paytrust and StatusFactory process paper bills for you. They scan and digitize the invoices and aggregate them electronically on a secure Web page. Getting set up is not instantaneous: It takes at least a month for payees to recognize your new billing address (although these services notify the billers for you, saving you that chore). But once that's completed, you can pay all your bills online from one place. This is the obvious trend for electronic bill paying—and it's the reason Paytrust won our highest rating.

But Paytrust and StatusFactory aren't without drawbacks. Small e-merchants—not to mention credit card companies—may balk when your shipping address differs from your billing address (although many billers do allow for two addresses on file: one for bills and one for promotions or coupons). Also, you must have your billing address on hand—or stashed in your noggin—whenever you open a new account with a merchant. And reading the fine print can be difficult online. Expect to pay a minimum of $4 for hard copies.

 

Want to See Your Bills Online? A recent Gartner study shows that just 17 percent of the 127 million adult Net users want to view their bills online. Of that percentage, only half want them consolidated at one site. However, analysts predict that by 2004, some 25 million people will prefer to get their bills from one place.

Don't Bank on It

Whether you receive bills electronically or on paper, electronic bill-pay sites continue to make converts. Almost all financial institutions doing business online now offer such a service. America Online, Yahoo, and the United States Postal Service are also exploring online bill payment.

The key convenience of paying through your bank is that your accounts are already set up. Banks automatically reconcile your balances. If your billing needs are light, they offer great bang for the buck.

On the other hand, banks and financial institutions offer a less complete solution than third-party bill-pay services. For example, you might assume that an e-payment system would check your account balance and let you know if you can cover a payment—or automatically delay payment if you can't. None of the banks we tested offer insufficient funds notifications.

Likewise, a good e-payer should send an alert five business days in advance that your credit card bill due date is approaching, sparing you costly late charges. Or what if you misplace your phone bill? E-payers should calculate a gap in pay dates and let you know the due date has elapsed. Only a few of the services we tested, including CheckFree, Paytrust, Quicken Bill Manager, and StatusFactory, offer such alerts.

No Paper, Please

Most of the banks we tested offered a few key features you should look for in an online bill-payment solution—such as automatic account reconciliation, wireless access, payment confirmations, and integration with Intuit Quicken and Microsoft Money. But none offered them all. Third-party bill payers come closer to the mark, although they tend to cost a little more.

The better players handle a wider variety of payees and offer a greater range of services. Paytrust does the best job of managing everything online, eliminating paper altogether. The site's interface is quick to learn and easy to navigate. You get plenty of advance warning about upcoming bills and recurring payments. You can also link to your checking account directly, which helps reconcile balances. Customer service is first-rate: Phone numbers and online help are easy to find. No stamps, no paper bills, no lost envelopes—all for $12.95 a month, which covers 30 transactions, or pay $4.95 per month and 50 cents per transaction. (Receiving and paying a bill are considered separate transactions.) Payments to merchants that use e-billing with Paytrust are free.

Paytrust also eliminates much of the hassle of using a secondary billing address. When you add a new biller, the company finds out whether it accepts electronic payments, and changes your billing address with the payee for you.

Quicken Bill Manager offers bill conversion for $9.90 per month for 20 bills; otherwise pay $5.95 per month for 20 bills without converting paper bills into electronic format. The service's reporting features are excellent; reminders and alerts help you avoid late fees. You can pay from multiple accounts at any bank or brokerage. And needless to say, the site easily integrates with Intuit's personal finance package.

If you're willing to handle envelopes, CheckFree offers the best usability for a mixed assortment of electronic and paper bills. The site is organized with an array of features for accessing past statements, viewing electronic bills, and reminding you of due dates. However, at $12.95 per month for 35 bills, it doesn't offer the convenience of bill conversion like Paytrust and Quicken do.

By comparison, StatusFactory lacks refinement—especially where customer service and rates are concerned. Like Paytrust, it provides you a unique billing address and scans invoices into electronic format. You're charged by the number of payees, anywhere from $3.50 a month for five bills to $29.95 for unlimited service. Overall the site can be slow, and bill paying requires multiple steps. However, the reporting feature is excellent.

Give Credit Where It's Due

Web banks pale in comparison to third-party services. However, Bank of America and Wachovia scored the best for their easy navigation and excellent customer service.

All the banks we tested allow you to add payees by filling out simple forms. They make it painless to schedule recurring payments, such as a mortgage or car loan. All keep data entry to a minimum. And they're easy to navigate—mostly because they offer few frills.

Wachovia wins top honors for usability where banks are concerned, thanks to a straightforward interface that sweeps you from a log-on screen directly to your account summary page. Its support includes secure messaging and a toll-free number. And at $5.95 per month, you can hardly complain about the price.

Bank of America scores high marks too. Kudos to its Nicknames feature, which lets you code-name various accounts. And we appreciate the ability to search by payment history. The bank may waive the $5.95-per-month bill-payment fee, depending on the type of account you have.

Bank One provides excellent customer service; human help is available around the clock. And its Session Summary screen, which lets you review your transactions before you log off, is a model for others to follow. Wells Fargo's customer service and help features also scored well. However, adding payees is cumbersome, requiring multiple screens and account numbers (even where none exist). At press time, Wells Fargo did not offer payment alerts but plans to add the feature soon.

E*Trade Bank lets you take care of all your bills at the same time with its multiple bill–payment options. It's too bad the navigation is confusing. BankDirect Bill Pay presents users with a simple and easy-to-use site, but its overall lack of information sends you scrambling to the FAQs for help.

TOP ONLINE BILL-PAYMENT SERVICES Service Pros Cons Verdict Paytrust (800) 729-8787 $12.95 per month for 30 transactions One-stop electronic bill management; top-notch navigation and reporting; wireless access. Requires a separate billing address. Keeps its promise to make online bill paying easy and convenient. Bank of America (800) 678-2632 $5.95 per month Excellent navigation and reporting; hundreds of electronic billers; wireless banking. No alarms; primitive bill management; no bill conversion. Non-BofA customers should consider switching banks. CheckFree (888) 212-9342 $12.95 per month Fine reporting feature and monthly account summaries; data entry made easy. Doesn’t digitize paper bills; no wireless access; a little pricey. Lots of electronic billers and fine usability make it easy to recommend. Quicken Bill Manager $9.90 per month for 20 bills with conversion, or $5.95 per month without conversion Lots of reminders; detailed reporting; bill conversion option available. Could provide better online help; no wireless access. Includes important extras—and integrates easily with finance software. Wachovia (888) 722-6793 $5.95 per month Excellent pending- payment and recurring-payment options; first-rate customer service. Doesn’t convert paper bills to electronic format; no wireless access. Among the best of breed for banks offering bill payment. BankDirect Bill Pay (877) 839-2737 Free; $9.95 setup fee Clean interface; lets you view electronic bills and change or stop scheduled payments. Spotty help; no bill presentment, multiple payments, or wireless access. Bill-pay features don’t come any cheaper—and it shows. Bank One (800) 482-3675 $4.95 per month Plenty of useful info front and center; 24/7 customer service. Bare-bones service; no e-bills or wireless banking. Bank One customers have no reason not to use it—but you can do better. E*Trade Bank (800) 382-2651 Free with E*Trade checking account Multiple views of accounts and bills; ability to pay from multiple accounts; wireless access. No conversion of paper bills; no alerts. Takes away the pain—but not the paper. StatusFactory (702) 567-8855 $3.50 to $29.95 per month Handles all your bills—even paper ones; first-class reports; variety of accounts offered. Clumsy navigation; entering new payees is tedious; no wireless banking. Destined to be a winner—after a bit of refinement to its interface. Wells Fargo 800-956-4442 $6.95 per month* Plenty of customer service; schedule payments via phone or WebTV; alerts coming soon. No bill management; confusing navigation; no wireless access. A no-brainer for those already banking with this financial giant. *Free with a $5,000 minimum balance in combined accounts. RATINGS         Excellent Good Fair Poor Unacceptable

Copyright © 2004 Ziff Davis Media Inc. All Rights Reserved. Originally appearing in Ziff Davis Smart Business.