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BOSTON — According to a recent study by Aite Group’s Gwenn Bezard, banks and credit unions are beginning to actively address return on investment for popular online bill pay and e-bill functionality, features near-standard for every account type, member and customer.Bezard’s report said four particular factors are contributing to this necessity. The think firm analyst wrote in a new report, “1) The deterioration of the profile of new online banking users; 2) a downward trend on the average number of payments made at consolidator sites; 3) greater tendency by consumers to optimize their payment channel; and 4) the difficult lending environment in the past 12 months.”Combined, this means financial institutions-according to Bezard-are transitioning from in-sourcing, or “least cost,” routing approaches to tangible recouping of bill pay expenses. The result is both an increase in service fee revenue and a better experience for the consumer, he said.Still-as the old adage goes-be careful what you wish for. Despite the allure of expedited bill pay to recoup these fees, Bezard warned against over-reliance on this ROI method.“Banks will need to push multiple new products to achieve decent cost recouping; expedited bill pay alone will have a marginal impact on the online bill payment product’s profit and loss,” Bezard wrote.Digging deeper, Bezard interviewed 20 key industry figures for their take on bill pay and related ROI strategies.He said his initial findings came as no surprise, with e-bill pay expected to overtake all other methods of payment in the coming year. Moreover, this method is predicted to encompass nearly two-thirds of all payments four years from now.The Aite Group report also said that biller direct is expected to grow in tandem, with almost 70% of Web and phone payments to be transacted through this channel by 2012. In contrast, consolidated billing, direct debit, automated payment and walk-in bill payment methods are predicted to stay somewhat stagnant.Card payments in particular were highlighted as sporting the most potential in payment method increase, especially among non-traditional outlets.“Cards have a great opportunity to displace checks in verticals in which they are considerably under penetrated, such as utilities, insurance and a number of verticals that individually are not typically in the top verticals by number of bills issued,” Bezard said.Despite the enormity of the above numbers, the vendor landscape remains relatively small in this space, the Aite Group report said, in part due to Online Resources’ 2006 purchase of Princeton eCom and Fiserv’s acquisition of CheckFree the following year. Fiserv remains the largest e-biller by far, with Checkfree expected to process more than nine out of 10 e-bills this year.–[email protected]

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