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."

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