The bill-pay payoff

Free checking and credit unions have traditionally gone hand in hand. Free bill-pay and credit unions, on the other hand, have not formed such a ready relationship.

Citing the relatively high per-member fees paid for bill-pay and the modest percentage of members interested in the service, CUs

Yet, this pricing model may be on the way out for several reasons. First off is market pressure. Bank of America has gotten the most press for its decision to do away with bill-pay fees. But certain areas of the U.S., like Miami, had already been offering fee-free bill-pay, notes CUES member Grant Sheehan, CEO of $60 million Miami Firefighters Federal Credit Union, in "The Big Squeeze," p. 60.

Sheehan also describes bill-pay as a very "sticky product." And an InsightExpress (www.insightexpress.com) survey of 500 people backs this up. Of the 57 percent who have paid bills on line, 54 percent said the service has made them less likely to switch financial institutions, reports CUES Tech Port(R) (www.cuestechport.com; on the left side of the home page, click on "e-newsletter," then "past issues," then choose Oct. 15, 2003.) Of those who said they do not pay bills on line, 61 percent said the reason was fees.

Moving beyond market pressures, some credit unions are making free bill-pay part of a bigger electronic package, say, bundling bill payment with a debit card and direct deposit to encourage a stronger relationship with the CU as well as helping to curb member check-writing, a cost savings.

Last but not least, one credit union is going so far as to say free bill-pay pays off in measurable contributions to the bottom line. Quantifiable research at $2.4 billion Wescom Credit Union, Pasadena, Calif., shows households that sign up for bill-pay become $400 more profitable annually. For details-plus arguments against free bill-pay, turn to p. 60.

Mary Arnold