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Two credit unions are reporting they have almost doubled the number of online bill payment subscribers by offering the service free to qualified members.

According to PSCU Financial Services, VyStar Credit Union, Jacksonville, Fla., boosted online bill payment subscribers by 45% in just over four months, while Ent Federal Credit Union of Colorado Springs, Colo., posted similar gains through a year-long promotion campaign. Both credit unions use PSCUFS' PayLynx online bill payment service.

The $2.8-billion VyStar CU energized its program by offering online bill payment free to all members who signed up for electronic account statements.

"Members who try the service really like it, but they don't want to pay for it when they know that other large financial institutions offer it free," said CEO Terry West. "Our current strategy is that we will offer the service free of charge to members who participate in other electronic banking activities-such as electronic statements. We are considering providing bill payer free if members have other relationships as well, such as direct deposit. We believe this allows us to achieve enhanced loyalty from our members, while simultaneously promoting other electronic services. We also offer the service for a fee to members who do not elect to take advantage of our promotion."

West noted that in order to discourage inactive accounts, usage fees are applied to accounts after three months of inactivity.

In the case of the 149,000-member Ent FCU, it is offering online bill payment free to members who are classified as "premier" because of their loan or deposit balances. It also offers the service for a fee to other members. Ent FCU's manager of e-commerce, Victoria Selfridge, reported that it conducted an "ambitious" campaign to promote online bill payment that included employee incentives, free member seminars to demonstrate online bill payment in action and promotional articles in newsletters, the website and through messages on electronic statements.

PSCU-FS said that both credit unions report that they are now targeting price-sensitive, mainstream members and expect continued increases in enrollment-especially among users of online banking services.

"Research shows that online bill payment users consider the credit union as their primary financial institution," said PSCUFS CEO David J. Serlo. "These users also maintain higher balances and use more loan products. And repeat visits to a credit union's website also represent an excellent opportunity for marketing of other services. So it makes sense for credit unions to find ways to offer online bill payment service free to either reward members or to encourage them to participate in other programs."

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