So you've missed your mortgage payment, your health insurance has lapsed and your car is being repossessed. It could be worse-you might still have to go to the bother of popping bill payments in the mail every month.

A quick poll of five consumers who use their respective banks' electronic bill payment services found that all had horror stories to tell.

In one person's case, the first she learned of her bills not having been automatically paid for three months was when creditors caught up with her at her new address-one of them looking to repossess her car. Another consumer wound up having to pay $180 out of pocket-an amount that would have been far greater had he not noticed his bank was penalizing him $60 a day because of a misunderstanding over funds availability. Another missed a mortgage payment and incurred a $60 penalty because his bank did not pass on his e-payment to his mortgage company in timely fashion. Another had a breach in the family's medical insurance coverage and almost had to go through the arduous process of requalifying for health insurance. In some of these cases, penalties were waived after the problems were resolved, but not without a fair amount of fretting and much follow-through by the consumers.

Our fifth consumers, the editor of a BTN sister banking publication, says there were "always hassles" paying bills through Chase Manhattan Corp.'s online banking Web site, the latest being that the bank can't reconnect him the service after a lapse in his using it. Three of the other four interviewees use top ten banks for e-billing, including Chase and SunTrust Banks Inc., Atlanta, and one consumer uses CheckFree Corp.'s Web site directly.

Although not scientific, such anecdotal reports support hard numbers from Cyber Dialogue on the inadequacy of e-billing. The New York-based research and Internet marketing firm recently asked consumers if they had ever paid bills online and abandoned the exercise. The responses of the 2,000 consumers surveyed suggest that 2.4 million consumers have given up paying bills electronically. Most of those probably quit within the past 12 months, since electronic bill payment has only been prevalent since mid-1999, explains Sam Callard, senior analyst in Cyber Dialogue's finance practice.

The 2.4 million quitters are out of a probable electronic bill paying population of 6 million to 8 million (Cyber Dialogue was still analyzing the results of its annual online banking survey to come up with a more precise figure as BTN went to press.) The total number of bill payers figure is an extrapolation of the statistic that, historically, 30% to 40% of the online banking population pays bills online; as of the second-quarter, 19.4 million domestic consumers banked online, Callard says. Without a full analysis, it's hard to say how significant a level of defection that is, he adds, noting that the number will come down as service improves, "Just as with online banking in general."

Last summer, Cyber Dialogue's groundbreaking and controversial research on defection by online banking customers suggested that 33% had quit in the previous 12 months. The rate of defection has halved in the intervening 12 months, with only 16% of this year's respondents saying they had quit online banking. Last year's survey, the first industrywide research on abandonment of online banking, did not ask directly about bill payment. Even if consumers are now abandoning electronic bill payment at a slower rate, it's clear that banks and others interested in promoting e-billing have to make the experience more appealing. The general tendency is to fall back on what has become a clich? in the industry: Consumers must adopt e-billing before it becomes a reality.

An article in the June issue of 'Consumer Reports' advises consumers against paying electronically any bills "that vary each month or are prone to errors, such as for credit cards or phone service." Jeetu Patel, vice president of research at Chicago-based billing research firm Doculabs Inc., says that if a bill payment service were scored on a 10-point scale, "The consumer experience would rate as about five out of ten. It needs to move to an eight or nine."

Our anecdotal evidence suggests that the situation for some is getting worse, not better. John X, a computer network designer who preferred not to be named since his firm works for banks, says the latest version of Chase Manhattan Corp.'s Web banking software makes paying bills worse. Now, when a biller says he neglected to pay his bill, John finds himself unable to verify whether he made an online payment because he can't locate records of past payments in the new Chase software. And as a computer specialist, he should have an edge, he notes. "I can't find that screen, and I work with this stuff!"

Although a consumer might be forgiven for having the impression that his bill is instantly paid once he clicks on his computer, John says it occasionally takes up to 14 days for a payment made on screen to clear. Banks are widely accused of holding on to e-payments to benefit from the associated float. "The situation is disadvantageous to the consumer, but the bank doesn't apologize, it just says that's it's policy," John says. He does say that that the bank at least reimburses him for any late-payment penalties imposed by the biller when his payment has been timely. By contrast, Michael Weiksner, former manager of financial strategy for Cyber Dialogue, wound up $180 out of pocket because of an e-billing mishap. Weiksner, also banking with one of the country's top ten banks, was lucky to quickly notice surprise $60 charges appearing daily on his bank statement. These turned out to be penalties associated with the bank automatically presenting and representing his credit card bill for payment. Although the funds weren't in his checking account, he thought they would be swept in from his money-market account, when in fact only his savings account was so linked to his checking account.

Patti Murphy, a contributing writer for this publication, also accepts some of the blame for what happened to her. A long-time user of CheckFree's bill payment software, she forgot to inform the e-billing firm that she had moved. "My sense was that there was no need because my dealings with CheckFree were all online," she says. When CheckFree had a problem making one of Murhphy's regular bill payments and could not contact her by mail, they "dropped" her as a customer and stopped making regular payments, such as for insurance and a car loan, on her behalf. "I never knew until I got dunning notices," she says.

One can only speculate as to what happens the credit ratings of consumers who miss payments-especially those, such as mortgage payments, that get very heavy weighting in the formulation of credit scores. Even if the mistake gets corrected with the biller and bank, is the consumer's credit report changed to reflect this? "Oh, I'm sure it has affected my credit rating," says Murphy, citing a mortgage refinancing application she recently submitted that was refused. "I just applied as a test, but I haven't had time to check up on my credit report."

Of his situation, Weiksner, who mentions annoyances with online banking besides billing, says, "The whole online thing is bungled." Even though he was unaware of how his accounts were linked, he notes the irony of his being penalized by his bank considering that his is "a pretty sweet account" and that the bank ostensibly wants to do more business with him, and more of it online, as well. Weiksner, who left Cyber Dialogue to start a nonprofit political organization, was instrumental in last year's online banking defection study.

John X, who missed a mortgage payment because of bank error in handling his bill, notes he was less put out by the lender's penalty fee, which amounted to roughly $60, than by the idea that his family budget might be out to the tune of a mortgage payment. The doubled mortgage bill came in February, and "I wondered if during the hubbub of Christmas I had forgotten to pay it," he says.

Lynn Koller, formerly employed by a Florida bank consultancy and now a freelance writer who contributes to BTN, only got satisfaction in her major billing dispute after making it known she worked for a bank consulting firm. Koller was attempting to keep the family's health insurance despite a premium payment having gone astray. In hindsight, it seems that the insurer misplaced the Koller's payment. However, Koller also faults her bank for being of little help despite the fact that Suntrust guarantees to resolve any such difficulties for customers who pay bills through its Web site.

"Sometimes they try to bamboozle you by saying something very vague in response to a problem," she says. Given that the coupons or biller remittance forms don't travel with the bill payment when it's made on screen, there's lots of confusion about whether payments have been made. "When you start first it's terrible, you get all sorts of notices," she says, "but then the kinks get worked out."

Of course, there are those who won't stick with e-billing to reach that point and others who will never try because they are put off by bad word of mouth. Saving the 33-cent cost of a postage stamp per bill paid electronically is arguably not worth the likely aggravation of having to prove that a payment was made. It's interesting to observe how the bill scanning services seem to have captured consumers' imagination-even though they charge for e-billing and most banks do not. Perhaps their appeal is simplicity.

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