Bill-paying services offer convenience

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

But instead of whipping out a checkbook, he logs onto his bank's Web page and tells the bank what bills to pay and when to pay them. Ten minutes later he's done -- without addressing an envelope, writing a check or licking a stamp.

Like millions of consumers, Gomberg, 59, of Laurel, Md., has turned to the Internet for help with one of life's more monotonous and depressing little chores.

''The bank sends paper statements, which at this stage of the game I don't 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 it's convenient, I go in and balance the checkbook based on what's on the Web site. I don't 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 Microsoft's 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 don't 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) you've got to pay for the privilege -- that's 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 that's 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.

Web-based bill payment companies are also banking on a bigger piece of the consumer pie. Likening their services to a personal billing assistant, McLaughlin enthusiastically looks at Paytrust with a ''we do all the work for you'' attitude. ''You just tell us who your biller is, what banks or different accounts you want to use and we'll take it from there,'' he said, adding that no transactions happen without customer authorization. ''So you maintain complete control over when to pay, who to pay, how much to pay, but all of the drudgery is taken out of the equation.''

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.

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 he's not too concerned about privacy issues.

''It's 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.''

Distributed by the Los Angeles Times-Washington Post News Service