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Central Oregon residents opt for online payments(Bulletin, The (Bend, OR) (KRT) Via Thomson Dialog NewsEdge) Feb. 26--It goes by many names: ePay, SpeedBills or Paperless Billing. No matter what you call it, online bill payment is a very real phenomenon that is quickly gaining favor and may one day eliminate check transactions completely. Popular online payment firm PayPal, a subsidiary of online auction provider eBay, processed more than $27 billion in payments worldwide last year. During that same period, industry experts estimate that more than 40 million households in the United States used some kind of online bill payment program. Many of those households are in Central Oregon. Bend resident Bill Mullins has taken the plunge. Since first using the program five years ago, the certified money management volunteer at the Centers for Financial Education in Bend hasn't looked back. "Right now, I only write four checks a month," he said. "I pay virtually everything I can with online programs." Mullins said he is signed up for four automated pay programs . where a company links to a person's checking account and withdraws payments monthly . and is using two additional online bill payment services that require his permission every month to complete the transactions. Those programs pay for everything from his cable and Internet access to his phone and power bills. "The Web sites work really well," Mullins said. "There are no transaction fees, so it's just like going to the store and paying in person. "Besides the obvious money-savings factor, like paying for stamps, when you go to a Web site and pay your bills, they tell you it's been done," he continued. "It gives you confirmation information, and you don't have to be concerned about a check getting lost in the mail." Online payments originated in most cases, from financial and educational institutions. For banks and credit unions, online networks were a convenient means for someone to access accounts without physically being at a branch. For colleges and universities, it began as a good way to collect tuition from students who didn't like standing in lines in front of the registrar's offices. It's caught on from there. "When we went live, immediately, registration was a pretty big hit," said Alicia Moore, director of admissions at Central Oregon Community College, which started its online program in 2000. "As younger students come in, we're getting more and more online payments. They're more comfortable with the technology." Soon, businesses caught on. In Central Oregon, Pacific Power and Cascade Natural Gas Corp. launched online payment services in 2001. "It made sense to keep up with the technology when other companies are doing this as well," said Pacific Power spokeswoman Bekki Witt. "It was logical for us to make the next step." The utilities and phone provider Qwest Communications International Inc., and cable/Internet provider BendBroadband all provide online bill payment services of some kind, along with many smaller companies. The popularity of the programs has been fairly consistent across the board. Pacific Power officials say the company has signed up 8 percent of its customer base, or 120,000 people. Cascade Gas said 10 percent of its 235,000 commercial and residential clients use its program. "I think this is the way people want to go," said Julie Marshall, Cascade Gas's vice president of customer service. "A lot of our customer base is rural and is slow to accept (online bill payment), but we're seeing success in pockets of our base, and the demand is definitely growing." BendBroadband Customer Service Director Kelley Carson said her company's online bill pay program has a subscriber penetration rate of about 13 percent to 14 percent. "Within the first six months (of launching service), we signed up 3 to 5 percent of our customer base," said Carson, whose company began the program in late 2004. "Bend is the type of town where people travel a lot. And wherever they go, if they forgot to pay their bills, they can just go online. "The demographic in Central Oregon is more tech-savvy and more comfortable with doing business electronically than that of other places," she continued. "That's why our program has a high penetration rate in Bend." BendBroadband's experience of customers quickly accepting online payment programs is common. Of five companies interviewed, only one used incentives to attract users. Qwest, the phone provider, currently has a $10,000 sweepstakes for customers who sign up for "Paperless Billing," its version of online bill payment. Customers who sign up are entered into a drawing for three prizes, including the grand prize of $6,000. But other companies say incentives weren't necessary. "Customers wanted (online bill payment)," Carson said. "And we gave it to them." The service's popularity with consumers stems from its convenience. Most companies do not charge extra fees for an online transaction versus a conventional payment method. Cascade Gas, however, is charging $3.50 per transaction. The company is switching service providers next month, which will eliminate the fee. Additionally, Cascade Gas plans on making online transaction history available by May. "We do have a lot of people calling us, complaining about the $3.50 transactions fee," she said. "This will make it much better for them." At the same transaction cost, being able to pay bills with a click of a mouse becomes much more attractive than writing a check and mailing it. Online bill paying doesn't appeal only to consumers, however. One of the reasons for the program's success is that businesses are realizing benefits as well. "The benefit (for us) is that we don't have to process paper bills, so there's some waste-reduction," Witt said. "It cuts out a lot of the handling of checks, a process that's very labor-intensive," said Cascade Gas' Marshall. "Anytime you mail a check to us, many people touch it before it reaches our bank account. With the Internet, the money gets to us faster." BendBroadband's Carson said her company's cost per transaction is about even between conventional and online payments, but the numbers don't reflect the time savings of an automated system. "The money gets taken out of their account within 24 hours of them making the payment, and the system requires basically no maintenance," Carson said. "It's cheaper for us to process these transactions, and we get paid right away as well, which is great." With the increasing threat of identity theft and online fraud, many consumers are wary of using Internet payment systems. Worse yet, some aren't wary at all, carelessly listing crucial financial information on the Web for all to see. There were 255,000 cases of reported identity theft in the United States last year, according to the Federal Trade Commission. That's 37 percent of the total number of consumer complaints received by the FTC in 2005. Internet-related issues, including identity theft, accounted for 46 percent of all fraud complaints in the FTC report. Bend resident Mullins, however, isn't concerned. "Fear of ID theft keeps some people away," he said, "but really, if you pay as much attention to Internet payments as you do for checks, (online bill payment) won't be any more problematic than conventional payment methods. It may be even less so." "Those things happen," Mullins continued. "If they're going to get your information, they're going to get it whether you're online or not. The best protection is to not give out personal information to people you don't know and check your credit history every four months." Businesses with online bill pay say they're confident with the security encryptions they have with their systems. More importantly, consumers are getting more confident in those measures, business officials said. "I think there is a natural hesitation there (with online bill payment)," Witt said. "But typically, the convenience factor, the ease with which they can pay their bills, that outweighs the concerns." "People are feeling better about it all the time," BendBroadband's Carson said. "It just seems like it is now a socially accepted way to pay your bills." As more and more companies are offering online bill payment systems, businesses with existing systems are upping the ante. Carson said BendBroadband is launching new online services by late summer that will allow consumers to select the services they want, like cable television packages, online. The new system costs about $75,000 to $100,000 to install, Carson said. Opinions vary about whether physical financial transactions will cease as online services grow. "I do think that day is coming," said Carson, who thinks 80 percent of BendBroadband's subscriber base will pay online by 2021. "We will continue to offer different means of payment because we still have customers without checking accounts, and we have our reception lobby, which will continue to accommodate them. (But) in 15 years, I'd imagine (online bill-payment) would be the norm." Pacific Power's Witt argued otherwise. "We still have a lot of people going to pay their bills at our physical locations because there are still people who prefer to pay by that means. It's hard to see Internet payments completely replacing paper bills; it just depends on what people are more comfortable with." Online payment user Mullins believes a significant number of individuals will embrace traditional payments for a long time. "There are still people who pay cash, still people who haven't bought CDs," he said. "Not everyone grew up in an era where they're comfortable with new technology." But that change is coming, whether consumers are ready or not, he added. "It's just another step," Mullins said. "One hundred years ago, everybody paid in cash. Before that, they would trade for goods they wanted. It went from cash to checks, and now it's online bill pay. It's a natural progression." |