Hello.
It's not so much that the banks are "making money" on the transaction.
Rather, it's just a lot cheaper for them than if you wrote your friend
or dentist a paper check.
From the San Jose Mercury News:
"Futurists and bank presidents have waxed rhapsodic about a time when
consumers both receive and pay bills electronically, replacing the
expensive and logistically complicated mailing and processing of bills
and checks.
The Federal Reserve system itself processes some 17 billion checks a
year, and it has been estimated that the total cost of processing an
individual check can range between $1 to $5. A fully electronic
payment averages less than $1."
source: siliconvalley.com
http://www.siliconvalley.com/mld/siliconvalley/3954199.htm
Bankers Online also has a good article on this subject:
"Want to Make Money with Online Bill Pay? Stop Trying!"
http://www.bankersonline.com/vendor_guru/netzee/netzee_billpay.html
Again, according to this article, banks are not directly "making
money" with online bill payment transactions. Rather, banks are
cutting costs because the online transactions are much cheaper for
them to process than paper checks.
"...some profit increase can be attributed to the cost savings of bill
pay itself. For example, assume the average number of bills a customer
pays per month is 12. Apply a conservative end-to-end cost of $.40 per
payment to outsource an electronic bill payment transaction. Compare
that to the cost of processing a single check in-house at $1.30 per
check. In a year, just from paying household bills, the cost of
serving the bill pay customer is reduced by almost $150 per consumer."
souce: Bankersonline.com
http://www.bankersonline.com/vendor_guru/netzee/netzee_billpay.html
There are other factors involved as well. Banks have found that
providing online bill payment services help them retain their best
customers.
"Wachovia recently learned that their bill pay users maintain more
than double the number of accounts (5.4 accounts vs. 2.4 accounts)
than their offline line counterparts. As the adoption of bill pay
increases, this ratio may decrease, but it still points to the fact
that a bank's best customers are attracted to bill pay services. In
addition, findings show that once a customer uses online bill pay, the
likelihood they will leave a bank significantly decreases. Both
Wachovia and Bank of America report that the attrition of customers
who use bill pay is less than half of those not using the service."
souce: Bankersonline.com
http://www.bankersonline.com/vendor_guru/netzee/netzee_billpay.html
Also see:
"Online Banking and Electronic Bill Presentment & Payment are Cost
Effective"
http://198.11.21.25/capstoneTest/Students/Papers/docs/ProceedingsPaper37150.pdf
[ Note that this document is in PDF format, so the Adobe Acrobat
Reader is required. If you don't have that, visit Adobe's web site:
http://www.adobe.com/products/acrobat/readstep2.html ]
Like the previous articles, this one suggests that banks can cut
transaction processing costs by 50% or more with online bill payment.
search strategy:
"online bill", processing, checks, cost effective
I hope this helps. |
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