Most consumers don't use credit cards to pay rent, telephone or gas bills. But there are signs of change.
The bank card associations have been encouraging consumers to pay recurring household bills with plastic and billers to accept such payments. Visa U.S.A. said its volume of bill payments rose from $4.6 billion in 1995 to $7 billion in 1996. MasterCard reported an increase from $2 billion to $3.2 billion in that year.
But that still leaves more than 98% of the $400 billion recurring remittance market unconquered.
It is one of several new frontiers the bank card industry has been exploring to boost volume.
In one typical promotion, Signet Bank of Richmond, Va., has mailed its first statement inserts about the service to its 70,000 Visa customers, said Jack L. Klinck, senior vice president.
The literature is meant to educate consumers that the payment option exists, Mr. Klinck said.
"We felt the time was right because there was enough critical mass in the customer base to make this successful," Mr. Klinck said. "The sheer number of merchants that are able to accept the card has risen dramatically in the past year."
Other newcomers to credit card acceptance include supermarkets, health care providers, insurers, and utilities, card association officials said.
Health clubs, subscription periodicals, and book and music clubs were among the early adopters of bill payments by card, said Kevin M. Sullivan, vice president of service industries at MasterCard International, Purchase, N.Y.
U S West Communications Inc., the Colorado-based regional phone company, began accepting credit cards in its 14-state territory in 1995. In the first half of 1997, the company said it received 382,000 such payments, worth $60 million.
David P. Beigie, a U S West spokesman, said the dollar amount is a "very small percentage" of the overall volume. "Most people still pay with a stamp," he said.
Though bill payers may not embrace credit card payments right away, Mr. Beigie said his company views them as a competitive weapon for the future.
"We're very interested in building customer loyalty and providing customer simplicity, and this program does both," he said. "It makes it very easy for people to pay their bills, and it takes another month-to- month worry away from people."
The card associations have tried to spread the same message. To consumers, the associations tout the float or cash-management benefits of using credit cards. To merchants, the message is about better collection rates.
MasterCard sends out kits to help banks coax billers to accept credit cards. Included is a computer disk with a spreadsheet that "allows the merchants to plug in their own numbers to compare the costs of accepting credit cards versus other payment methods," Mr. Sullivan said.
Convenience and cost savings have been key attractions for billers and key factors in the payment industry's growth, card executives said. Visa cited surveys saying one-third of U.S. consumers want the option of paying their recurring bills with a credit card.
"If card acceptance enhances your customer service level, improves cash flow, and retains more customers, then it's a good, sound strategic move," said Gregory Holmes, director of recurring card payment industries for Visa in San Francisco.
Internet service providers like America Online Inc. have been big boosters of recurring card payments, having built this method into their subscription packages.
"We simply found that it saved us a lot of administration costs," said Marilyn Allpress, director of member services at America Online in Vienna, Va.
Gas and electric companies also see merits in the practice. They are undergoing deregulation, and industry experts say payment options and convenience are ways they can keep their customers happy.
Mr. Klinck estimated 8% of utilities accept credit cards and expects more will do so as they move "from a monopolistic to a competitive environment."
"Think of the money that's out there with utilities," Mr. Klinck said.
Even for homeowners, the combined spending on gas, electric, and telephone bills makes up a large portion of monthly bill paying. "Right after the mortgage, it's right up there," he said.
