Online Bill Payments Surpass Checks for the First Time Among Internet Households

For the first time, consumers in Internet-connected households are paying more of their bills online than by paper check, according to a new study conducted by Harris Interactive and the Marketing Workshop.

The 2007 Consumer Bill Payment Survey showed that, for the first time, online bill payments exceeded bill payments made by paper check among online households. Online payments made up 39 percent of the total volume of bill payments among online households, an increase of 4 percent over the previous December 2005 survey. In contrast, the volume of checks sent through the mail fell 4 percent to 34 percent of the overall volume.

The Consumer Bill Payment Survey – the seventh conducted since 2002 and sponsored by CheckFree Corporation (Nasdaq: CKFR – News) – highlights consumers’ growing use of online banking and electronic billing and payment services to help them manage their household finances.

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The January 2007 survey polled 2,018 online respondents who were at least partly responsible for household bill payments. Respondents are representative of the estimated 82.5 million U.S. households using the Internet, and the margin of error is plus or minus 2 percent.

"The fact that online bill payment has overtaken paper checks shows that people feel secure managing their finances online," said Gwenn Bezard, research director with Aite Group. "Once considered a nice-to-have add-on, online bill payment is now the foundation of the Web banking user experience. I expect further growth in this area due to Generation Y’s greater reliance on technology in their everyday lives as they move into early adulthood, and the increasing adoption of electronic bills, especially as the environment becomes a mainstream issue."

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Nationwide, consumers paying at least one bill online per month rose to 74 percent, compared to 69 percent of respondents in the previous December 2005 survey. Consumer adoption of online bill payment has more than doubled since January 2002, when only 37 percent of online households reported paying at least one bill online.

The West ranks first in overall adoption of electronic billing and payment, with 78 percent of online households paying their bills online, according to the survey. The South ranks second, with 76 percent. The Northeast ranked third in online bill payment, with 72 percent, and the Midwest trailed, with 71 percent.

Factors helping drive regional differences included higher broadband penetration rates, greater online banking use and technology-savvy populations in the West and South.

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In the West, 80 percent of surveyed households receive their Internet service through a broadband connection and 83 percent use online banking to check their account activity or transfer funds. By contrast, the Midwest, which trailed in EBP adoption, 70 percent of households have broadband Internet connections and 76 percent use online banking, according to the survey.

Consumers in Western states also were more likely to pay bills at online banking sites (42 percent), than those in the South (38 percent), Northeast (37 percent) and Midwest (33 percent).

Among the survey’s six consumer bill-payer personality segments, there were more E-Savvy Planners living in the West (11 percent) and South (15 percent) than in other regions. This consumer segment enjoys trying the latest technology products and using financial management tools to organize their finances. E-Savvy Planners pay bills online because it’s safer than mailing a check, they regularly check their credit reports and are more likely to use online banking (94 percent) and online bill payment (91 percent) services than other consumer segments.