Americans Embracing Electronic Bill Payment

Anthrax scares may convince more people to pay their bills via the Internet, but a study found that Americans are already well on their way to preferring electronic payments over cash or checks.

The study, released Thursday by the American Bankers Assn. and Boston-based Dove Consulting, found 49% of in-store purchases are now made with debit cards, credit cards or prepaid cards.

In a 1999 survey by the same groups, 42% of such purchases were made with plastic.

Meanwhile, two-thirds of consumers pay at least one monthly bill electronically, according to the survey of 1,500 adults, which was conducted in the summer. Some use credit cards, debit cards or online banking, and most use automatic payments deducted directly from their checking accounts, said Beth Costa, a Dove director.

Banks prefer electronic payments, which are far cheaper to process than check or cash transactions. Consumers had been slower to adopt the new technologies than banks had hoped, but the new survey showed that “e-payments” are making inroads, Costa said.

“We have made significant strides in the 1990s, with tremendous shift in consumer use of debit cards and exponential growth in credit cards,” Costa said.

Proponents of automatic payments have won converts by emphasizing the convenience of having monthly bills deducted directly from a bank account, Costa said.

Some financial services analysts have speculated that electronic payments could see a further jump if Americans begin to shun getting mail because of anthrax scares.

Few consumers have adopted completely paperless bill-paying--that is, with bills that are viewable only on Web sites or via e-mail.

Most still receive paper statements in the mail. But many Americans have begun paying at least some of their bills via the Internet.

A recent survey by Gomez Advisors found 40% of adults who use the Internet had paid a credit card bill online.

That number is likely to grow: Dove’s survey found that one-third of respondents planned to use online bill payment by 2003.

Costa doesn’t expect to see cash or check transactions disappear, however. In another Dove survey of 1,200 adults, conducted after the Sept. 11 attacks, 21% said they planned to use cash more often in the next six months. Costa said this preference for cash probably reflected the respondents’ desire to control their spending as the economy deteriorates in the wake of the attacks.