by Karl Schumacher
Vice President, Global Business Strategy and Acquisition

Consumers who are experienced with the Internet are continuing to show a growing preference for both receiving and paying bills via the Internet, according to the results of a recent study of online consumers' bill-paying habits.

The study, conducted by NFO Research for the Production Mail and Document Factory Solutions Division of Pitney Bowes (NYSE:PBI), shows a growing awareness on the part of online consumers of the benefits of Internet billing and an increasing desire to use the Internet to receive and pay bills covering a wide variety of business transactions.

In fact, the study confirms what many e-commerce observers have come to believe that the time is ripe for meaningful growth in Internet billing.

More experience, more comfortable Why now? Because consumers are ready. Many online consumers now have several years of experience using the Internet for e-mail communications, for research, and for shopping and paying for products and services via credit card.

These consumers are increasingly comfortable with the security of Internet-related business transactions, and are showing a greater willingness to receive bills online from regular business partners and to authorize direct payment via the Internet.

The NFO Research also supports the findings of another recent study, conducted by Jupiter Research, which shows that the number of consumers using the Internet to receive and pay bills is expected to reach 18 million or ten times the current number in just three years.

Not surprisingly, the vast majority of online households responding to the NFO Research survey reported that mail is still the most widely used method for receiving and paying bills. Specifically, 85 percent of respondents reported using the mail for bill receipt and payment.

However, online households are increasingly cognizant of the many benefits of online billing, such as speed and convenience, and indicate a willingness to shift to that method of payment.

Nearly a third of respondents said they preferred to receive their bills in an electronic manner. And of those who prefer electronic receipt, more than 50 percent said they would prefer to pay their bills electronically, too.

Online consumers value speed and convenience. It's pretty clear that given a choice, online consumers don't want to waste time opening and sorting through bills, writing checks, and then stuffing and stamping envelopes each month.

Those attitudes came through clearly when respondents were asked if they would find it beneficial to receive and pay bills online. Nearly 75 percent of respondents indicated they recognize the benefits of digital delivery and said they would find it beneficial to receive bills in a manner other than the mail.

Even more significant, an astonishing 95 percent of respondents reported they would find it beneficial to both receive and pay bills via the same electronic method.

When asked about the types of bills they would most like to receive and pay online, respondents indicated a clear preference for the recurring monthly payments related to telephone, electricity, gas and cable TV service, insurance protection and credit cards.

Interestingly, more than half of consumers who prefer the Internet as the means of digital bill delivery said they prefer using a biller's home page, with another quarter preferring the services of a consolidator.

It's not clear, however, whether the online households' preference for using a biller's home page is due to familiarity with the biller or to a perception of superior service and value.

Biller direct vs. consolidator
Additionally, when asked about the convenience of consolidating bills, the vast majority of respondents — nearly seven out of ten — said they would find it valuable to consolidate billing. 

That's substantially more than indicated a preference for receiving bills though the biller's home page. Why the difference? It may be that online consumers are not yet familiar with the services of consolidators, or that their particular bills are not yet being consolidated. 

So mailers may want to consider the relative advantages of the two models before deciding on a single approach. The 'biller direct' model may have an initial advantage in attracting online consumers due to their familiarity with the biller's' home page. But the 'consolidation' approach may have a longer term advantage due to the added convenience it potentially offers consumers. 

On the other hand, there's no reason billers can't employ both models, enabling consumers to choose for themselves where they go to view and pay their electronic bills. 

As for the format of the online bills, respondents indicated a strong preference for receiving their billing data in much the same way that it appears in paper-based form today, or in a format that presents summary data with the ability to view details if desired through hotlinks or additional pages. Less than 5 percent of respondents want summary data only. 

Online households also indicated strongly they want control over security and access to their billing data. More than 80 percent said they want the ability to choose a login ID and password as opposed to having those control features assigned. 

Additionally, the amount owed tends not to be an obstacle for consumers considering the payment of bills online. Nearly 20 percent of respondents say they are comfortable with automatic direct debiting to pay online amounts ranging from $30 to of $100; another 22 percent say they are comfortable paying amounts from $100 to $200; and anther 30 percent say they are comfortable paying online amounts that are in excess of $200. 

About the study
The research study was conducted via e-mail among more than 300 online households nationwide and was completed in late October, 1999. It mirrors a similar study conducted a year earlier. 

Survey respondents represented a cross-section of online households by age, sex, geographic location, market size and income levels.