Recent research shows explosive growth in online bill payment as more consumers move away from paper checks in favor of paying bills on financial institution and biller Web sites.
It's a trend that benefits all participants: consumers save time,

The 2005/2006 STAR Consumer Payments Usage Study found that 40% of consumers with Internet access paid bills online, up from 8% in 2004. Moreover, an increasing percentage of online payments are going directly to the biller's Web site. The survey found that 45% pay via the biller's Web site, up 8% from 2004. By comparison, payments through financial institutions' home banking sites were made by 57%, representing an increase of 1% from the 2004 survey.

More Billers Are Getting On Board
The STAR Network is expanding direct-to-biller payments among a growing number of low-risk biller categories including automatic recurring payments and unsecured loans, such as credit card payments, student loans and private label cards (in pilot now). Merchant participation has grown by 61% in the past year. The 2006 Direct Biller Payments Study, sponsored by First Data, found that 79% of billers surveyed are actively moving customers away from cash and checks.

Revenue Potential
The same study found that more than 90% of all payments received are either ACH or check, indicating a significant opportunity to convert these transactions to interchange-based transactions by promoting the STAR Bill Payment Service.

Here are two examples of potential interchange revenue derived by converting ACH and check transactions to STAR Bill Payment transactions:

• 100,000 transactions x $0.45* interchange cap = $45,000
• 50,000 transactions x $0.45* interchange cap = $22,500

*Issuers generally receive the full interchange fee since the total transaction amount for bill payments is higher than everyday purchases.

The STAR Bill Payment Service is a complementary product for cardholders who aren't comfortable with online banking applications, so it's a service that can enhance your existing online banking program by offering more choices. Cardholders can make payments the way they want, while still using your institution's card and generating additional revenue.

We can help you promote the service and educate cardholders with low-cost inserts, suggestions for statement messaging, and information on employee training and conducting joint promotions with key billers. For more information, contact your Relationship Manager.