Musings from Brian J. Noggle

Not Worth My Time

Free clue to banks, financial institutions, and my creditors: Online bill paying is not worth my time nor trouble.

The Washington Post's Leslie Walker muses on online bill paying, but she focuses on the glitzy side:

Some things you expect to be no-brainers online turn out to be as tricky as a Rubik's cube. Bill payments fall into that category. Nine years after the Web went commercial, many large Internet players are still trying to piece together the electronic-bill puzzle.

The puzzle, I assume, is to do it effectively. Which would mean profitably, of course, but the people behind the online bill paying maelstrom need to remember an important thing: it's got to benefit consumers as well.

America Online is the latest to believe it has found the answer. Launched on Tuesday, AOL Bill Pay lets AOL members pay 2,500 different billers from a single menu. The service is free to subscribers even though AOL is paying a partner, Yodlee Inc., an undisclosed sum to do the heavy lifting behind the scenes.

America Online, unfortunately, you are nothing but the mechanism through which the money would flow. You can pay 2,500 billers? Big whoop. My checkbook is virtually unlimited, as are the more secure money orders. The number of people you can pay are not the stumbling block.

Increasingly, online bill paying is becoming a strategic tool used by large businesses to reel in and retain customers, especially since it appeals strongly to folks with high incomes and lots of monthly bills. Banks and other financial institutions have been falling over one another in the rush to offer free online bill payments, based on a belief that customers who take the trouble to set up the accounts will remain more loyal than those who don't. So far, one-third of the nation's largest banks and brokerage firms offer free Internet bill payments, according to financial research firm TowerGroup.

Okay, so large businesses will accept bill payment through this medium as a means to reel in and retain customers. Hmmm. So what? What's the advantage over cash, check, or money order? I reckon it might be cheaper or more instantaneous for the recipient who accepts online bill pay. After all, the money's sucked from the payer's account into your coffers immediately, without the need to hire a bunch of letter openers.

But what's the benefit for me, the payer?

Let's face it. As far as these online bill paying schemes go, the people whom I can pay are still limited. A user cannot necessarily pay everyone whom he wants to pay, and so the user is expected to make his life more complicated using a variety of different mechanisms through which he can settle his accounts.

As Walker points out in her piece, she doesn't want to spread her secure financial information too much throughout the Internet--yet, the recipients, and the companies who play middlemen, all get the data. It's a security risk multiplied by the number of payees and middlemen. Any one of them could get hacked and suddenly, I am buying computers for Romanians.

Worse, if anyone of these entities has a mere computer glitch, suddenly my bank account is empty and all other checks, debits, and withdrawals are bouncing, and my bank is charging me an extra $20 a day to remind me that my account is still empty. I have seen enough critical defects outside the financial industry to recognize how tenuous the Web is and to put my actual information--and my credit rating--on the line.

In exchange for assuming these risks, what do my creditors and the online bill-paying industry offer me? Convenience.

I say: Not good enough.

So as a consumer, I am expected to incur the risks of theft, identity theft, and defect-related (unreversible) Insufficient Funds notices for mere convenience, while the person I am paying gets instantaneous access to the cash at a lower cost to the creditor. Sometimes I can pay extra for these goodies, too. You know what? Maybe I am not high enough income to be a target for this scam, but I am damn happy to expend the cost of ink, eight cents for a check, and thirty seven cents of postage for my peace of mind.

So my question to my creditors is, "What's in it for me?"

All of you in the online bill paying industry ought to come up with a better answer than "Convenience." Paying bills is never convenient. Show me the money.

- posted by Brian J. @ 10:54 PM