As an added feature to its personal finance channel, America Online (Dulles, Va.) has recently introduced AOL Bill Pay, a free financial management tool that allows existing customers to receive and pay bills online. In a joint development effort with Redwood City, Calif.-based Yodlee, an online account aggregation solutions provider, AOL is offering bill presentment and same-day payment. The online service provider is targeting customers who currently pay bills online on their billers' Web sites or on a consolidated bill-pay site, where customers can pay for bills from multiple providers on the one site.
Consumer use is higher at consolidator sites than at bill-direct sites, according to John Keeling, executive director, AOL personal finance. The reason for the popularity of consolidator sites is their convenience - customers can pay all of their bills in one place, with one username and password, he says.
As a result of research, however, AOL has determined that bill payers using these types of Web sites are not satisfied with the experience. With AOL Bill Pay, the online service provider hopes to offer a more user-friendly bill payment option. "We wanted to target members who are paying at biller sites and offer a product that improves upon the experience that they are already having," says Keeling.
Although managing finances online has not been a popular trend yet among AOL customers, paying bills online has been popular - over 50 percent of AOL customers pay their bills online. Online bill payment is just the beginning of Web-based financial management, according to Keeling. "We discovered that the first step for most people is starting to pay their bills online," says Keeling. "From paying bills, it might lead to a broader set of online financial management, like managing their accounts and essentially managing checking, savings and brokerage accounts."
What is the driving force for AOL customers to use the bill pay service? Customers often pay their bills at the last minute, says Keeling. Using AOL's service will allow the customer to make a payment on the actual due date, without a transaction delay. "Our consumers like paying their bills at the very last possible moment, which means on the due date and receiving that same-day credit for that payment," says Keeling. "A problem they have with traditional consolidator sites and traditional payment technologies is that typically there is a two- to five-day payment delay from the time the money is deducted from the user's account to when it is actually posted to the biller."
Another value-added feature of the AOL bill pay service is the choice of alerts customers can receive regarding certain bills or accounts. For example, AOL customers can set up alerts that notify them if there has been a substantial amount of money spent on a certain credit card, or if they are about to exceed their monthly minutes on a cell phone plan, according to Keeling.
AOL demarcates these alerts, as well as bills, with a unique green-colored envelope icon in the customer's e-mail inbox. The green envelope icon is reserved for official mail from AOL and helps prevent fraud. According to Keeling, "It is meant to give members confidence that the mail they are receiving is in fact from AOL."