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A new wave of companies hopes to take over the online billing and payment industry, aggregating utility and credit card bills in one place where consumers can pay with a single click. These upstarts could cut card issuers out of important consumer relationships. What are banks doing to fight back?
Online statement reviews and payment of financial services, utility, and telecommunications bills are on the fast track to becoming the killer application banks and other companies are seeking to bind customers more closely to their brands.
At the same time, though, that precise capability could become the application that forever sunders credit card issuers from their customers.
This industry is still in its infancy, with only about 100,000 consumers regularly paying their bills online. Of an estimated 60,000 potentially interested billers in North America, only a handful of the largest routinely make online payment an option. However, Cambridge, Mass.-based Forrester Research estimated in a September 1999 study that 21 million Americans will be paying their bills over the Internet by 2004, with 1.9 trillion e-bills delivered annually by that time.
Similarly, Stamford, Conn.based GartnerGroup recently surveyed 1,000 Internet users, asking what service not now available they would most like to see. The vast majority, according to Avivah Litan, research director of payment systems, said the most compelling application would be "to be able to view all their accounts on one page, and pay all their bills with one click. "
Most large credit card issuers now offer the option of paying online, but the threat to issuers is this: Consumers clearly want to have a single site available where they can pay a variety of monthly bills, such as cable television, telephone, electric, gas, Internet service, and, of course, credit card. Issuers could provide such sites to their cardholders, but so could a lot of other companies.
In fact, there are literally dozens of such sites springing up. They use so-called screen scraping and other technologies to present consumers with statements and one-stop shopping for bill payment on the World Wide Web.
Limited Scope
Banks, as a rule, have simply offered the option of paying bills related to the customer's banking and credit card activities. Such limited scope of such services leaves banks...