Increased Use of Online Bill Payment Will Drive Consumer Adoption of Other Online Services

Online bill payment shifted in 2005 from emerging market status to established practice, as a significant share of consumers and organizations continued to adopt the service. TowerGroup estimates that 41.1 million consumer households, or nearly two-fifths of US households, embraced online bill payment in 2005. New research from TowerGroup finds that this increased comfort and familiarity with online bill payment will help drive consumers toward adoption of other online services and functionalities — such as bill presentment, the use of non-traditional payment options, or the use of online account applications — in 2006.

In the year to come, TowerGroup also anticipates that the traction gained by online bill payment will continue to encourage less traditional players, such as core processors, to enter the market, while established bill payment providers will evolve and refine their core business models. The focus for both traditional and non-traditional players will be around building the growth trend in consumer adoption through a combination of product innovation and improvements to security.

In the area of product innovation, same-day payments will be a key focus in 2006, with several initiatives underway to make same-day delivery a widely accessible service option. An expansion in access to card-based payment alternatives within the online bill payment suite, as well as growth in a new breed of biller-oriented services will also be important features in 2006. Security and measures to implement new technologies and best practices will be critical from both compliance and consumer confidence perspectives.

In its new research, TowerGroup identifies seven key issues that impacted online bill payment during 2005. Dubbed the “Seven Cs,” these issues document the past year’s top business drivers while highlighting what to watch in 2006 as online bill payment continues to mature. The Seven Cs are:

• Core business assessment
• Convenience payments
• Consumer confidence
• Core processor expansion
• Consumer adoption
• Card initiatives
• Compliance

The report, “Navigating the Seven Cs of Bill Payment into 2006″ by Beth Robertson, senior analyst in the Global Payments research service at TowerGroup, is available to qualified members of the press for review. To request a copy or to arrange an interview with Ms. Robertson, contact Rachael Adler at +1.212.455.8037 or radler@cooperkatz.com.

At TowerGroup, Ms. Robertson also covers identity theft, online security and fraud and non-traditional online payment options.