Electronic bill payment (EBP) is becoming a major customer service issue. Banks hawk it as an ultra-convenient service for their customers all the while planning for that day when payments are conducted entirely electronically from end-to-end and the costly days of paper processing are over. Presently, some sources contend, that's a pipe dream. Customers-many of whom don't understand the limitations of an "electronic" payment process that is arguably 75 percent paper-based-question the effectiveness of the system when their electronic payments are delayed or lost in the mail. And when EBP systems fail, customers are forced to track down their money, reissue the payment in question and mollify the merchant who's on the phone with TRW. This is not how banks will build critical mass for EBP.

No EBP provider is immune from this problem. Consider EBP's renowned CheckFree: "Sixty percent of all their payments are paper or tape," says a prominent industry consultant who wished to remain anonymous. "They have customer service problems because (their system) is so paper-intensive and there are so many steps in the process."

And banks that attempt EBP themselves also face this challenge. So the question becomes how should banks pursue true electronic bill pay- upgrading systems which are arguably steeped in item processing investments-without impacting operating efficiencies and without alienating customers from the new service. "It becomes a trade-off between existing infrastructure, existing processes, investments and a more efficient transaction (process) with reliable service quality," says Visa International svp Jack Levine, who is responsible for Visa's E-pay service.

But as banks transition to true end-to-end electronic bill pay, they cannot ignore the problem; they must inform customers of their systems' limitations and prepare customer service representatives for these aberrations. And as EBP technology and its providers shake out, banks may find that their solution actually rests in the hands of the CheckFrees and E-pays, which could join up, says the industry consultant "offering services from a wholesale perspective to the banks that could be very powerful."

-bers tfn.com

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