Bank on it; companies help millions pay their bills online.

THE BALTIMORE SUN

Like many other consumers, David Gomberg sits down at least once a month to pay his bills.

But instead of whipping out a checkbook, the 59-year-old Laurel resident logs onto his banks Web page and tells the bank what bills to pay and when to pay them. Ten minutes later hes done without addressing an envelope, writing a check or licking a stamp.

Like millions of consumers, Gomberg has turned to the Internet for help with one of lifes more monotonous and depressing little chores.

"The bank sends paper statements, which at this stage of the game I dont even look at anymore," Gomberg said. "I file them for posterity if I need them, but basically, at the beginning of the month or whenever its convenient, I go in and balance the checkbook based on whats on the Web site. I dont even need to wait for the paper. "

Industry analysts estimate that 8.5 percent of U.S. households engage in some type of online banking, and Forrester Research of Cambridge, Mass., reported last year that more than 2 million households use an online bill payment system. That number is growing as the infrastructure falls into place.

"If you look at consumer research, the most-hated regular recurring task that people are faced with is dealing with their bills, said Ed McLaughlin, chief executive officer of Paytrust, an online company that offers electronic bill payment services."

Consumers have a variety of services to choose from. Traditional banks are expanding their online presence to compete with Web-based operations such as Paytrust.com, StatusFactory.com, PayMyBills.com and Microsofts MoneyCentral. Last month, the U.S. Postal Service unveiled its own online bill-paying program under a partnership with Checkfree and Youraccounts.com.

Many services offer free tryouts for periods of up to six months. After that, they charge a monthly fee, about $9 on average for 25 payments, with a surcharge for each payment over the monthly limit.

As a result, they may not be for everyone. For consumers with only a handful of bills, the service charge may outweigh any savings in postage. And many bill payers dont feel comfortable with the whole idea.

"The people that are doing it tend to be your time-pressed, technologically comfortable kinds of consumers," said Forrester analyst Ken Clemmer. Because in almost all [circumstances] youve got to pay for the privilege thats a deterrent for a lot of people to start up to even try the service plan.

"And then you have to have sort of a reason to abandon the old tried-and-true system of sitting down every month with your checkbook. And that seems to work for a lot of consumers," he added.

How does it work? First, most customers who pay online still receive their bills in the mail. Once they receive a bill, they can log onto their bank account and authorize the bank to cut a check, specifying when to send the check and how much of the bill to pay.

Some services make payments electronically, eliminating the post office altogether, although not all creditors are equipped to do so.

Companies such as Paytrust and PayMyBills go a step further. For a monthly fee, which can range from $2.95 to $29.95, the companies will physically receive and aggregate your bills at a processing center, post them on a secure Web site and notify you by e-mail. You can then review each bill online and authorize payment.

For recurring bills such as rent, mortgages or car loans, many services will set up automatic payment on the same day each month.

Some services will arrange with your creditors to send you an electronic bill, eliminating paper altogether. This is known in the trade as bill presentment, and although fewer than 100 companies bill their customers this way, Internet analysts say the number is growing. "Bill presentment means you go to the Web and your bills come to you there instead of your mailbox. The [online] payment thats going on right now is almost entirely bank-based, said Clemmer, who predicted that $2 billion worth of bills will be presented annually by 2004.

Giant Bank of America, which has the largest retail banking operation in the Baltimore area, has 2.1 million online customers nationwide. Of those, approximately 700,000 use the banks online billpaying service, and the company has announced a bill presentment alliance with Checkfree.com.

"We conduct about $800 million worth of online bill-pay transactions a month," said Linda Mueller, a Bank of America spokeswoman. With the alliance, she said, the bank hopes to accelerate consumer interest.

To alleviate consumer fears about fraud, some online companies such as Paytrust and PayMyBills insure their customers for up to $100,000 against unauthorized transactions. But many consumers remain skittish about giving companies access to their bank accounts.

That's one reason many online companies are aggressively pushing their services with free trials and signup booths in suburban shopping malls. For example, StatusFactory.com set up shop outside the food court at Towson Town Center one weekend this month to pitch its 60-day trial to shoppers.

Although the signup trade was brisk, it wasnt clear how many consumers were persuaded to try the service.

Clutching the new cordless phone and T-shirt she received for signing up, Amanda Gavarny, a 19-year-old student at the Maryland Institute, College of Art, said she planned to cancel the service as soon as the company sent her an e-mail.

"I'd rather not rely on computers for everything," she said.

With fraud relatively rare, privacy advocates say they're more concerned about how bill payment firms use or misuse the personal shopping and financial information they gather.

"Most consumers are worried about the unauthorized use of information, said Barry Steinhardt, associate director of the American Civil Liberties Union. "I think its the authorized use of data that we need to be especially worried about."

In privacy statements they post online, banks and online bill payment services typically pledge that they do not disclose identifying information about their customers, but may share certain types of information with business affiliates.

For banks, that may mean mortgage companies and credit card companies that are part of the same corporate empire. Even Web-based bill payment companies have formed strategic alliances with the corporations for whom they provide services.

"The only protection you have is whatevers given to you by the sites privacy policy," said Steinhardt, adding that what's significant about online banking is that consumers are disclosing information in a format that is easy for marketers to use.

While electronic bill payers are generally happy with their services, they encounter occasional glitches.

Gomberg, who had been satisfied with his online bank, was surprised one day when he received a notice of nonpayment from his credit card company. After some digging, he discovered that the credit card company had recently switched billing addresses, which caused a delay in his payment. Eventually, the credit card company waived the late fee, and NetBank credited Gomberg the $50 or so that had accumulated in interest on his credit card account.

Gomberg, who is retired after a career in information systems security, said hes not too concerned about privacy issues.

"Its inevitable to a certain extent, anyway, these days, he said, "and you just have to decide, I guess, whether you want to put your money under the mattress or not."

Where to look

If youre interested in paying bills online, you have plenty of choices.

Here are some of the most popular services:

NetBank.com offers free online bill payment services if you have a checking account: www.netbank.com.

Paytrust.com offers a free three-month trial of its bill payment pro

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