Issuers use incentives to push paperless billing
Banks pile on promotions, incentives, to get consumers to turn off paper billing
more consumers are paying bills online, far fewer have given up on paper bills
and statements, prompting credit card issuers and lenders to dangle
incentives such as sweepstakes and extra features to get consumers to switch
off the paper.
half of consumers use online bill payment services, but only about 15 percent
have opted out of receiving paper bills and statements, says Josh Wendroff, director of marketing for 3I
Infotech, which provides payment processing services. As a result, companies must manage both paper
and online billing for the same customers, plus spend money on postage.
get customers to realize the value in going 100 percent electronic, most banks
have used positive incentives, offering consumers a reward for turning off the
paper. However, some companies have experimented with a negative incentive -- essentially, charging consumers to receive paper bills. Though negative
incentives have not taken off in most industries, including financial
services, they will likely become more widely used once the majority of
consumers have opted out of paper billing, Wendroff says.
have been a few cases of companies that started charging for paper bills and
basically had a customer revolt and ended up having to stop," says Wendroff.
"But more companies have been looking at it because of the financial incentive
to do so."
The promise of rewards
most companies are luring consumers with extra benefits and promotions. Some
give consumers who turn off a paper statement extra features such as e-mail
alerts to help better manage their money. That feature might appeal to
someone like 36-year-old Sadarie Chambliss Holston of Upper Marlboro, Md., who
needs a visual reminder that her bills are due. "It's too easy to click it and
forget it," she says of electronic statements.
the recession, financial incentives have become more popular. For example,
Discover is enrolling all customers who have opted for electronic billing
statements into a sweepstakes through the end of the year in which one winner
will receive $15,000 and three others will receive $5,000. Wells Fargo has done
sweepstakes a couple of times a year, says Martha Smolen, senior vice president
of online customer and sales management at Wells Fargo. The bank's most recent
promotion, which ended Dec. 15, 2010, gave those who switched to electronic billing a
chance to win $50,000. Other banks, including Citi and Chase, have also
offered sweepstakes promotions.
way companies have made their case is through environmental appeals. For
example, earlier this year, Wells Fargo announced that it would contribute
$30,000 to the Arbor Day Foundation to help plant trees and honor its customers
who had opted out of paper statements.
identity theft a concern for many, card issuers are also touting the security
benefits of online billing since there's no chance of paper statements being
stolen from a customer's mailbox.
Some people are very motivated by the environmental message, some like the ability to win that cash, and if you've had fraud committed against you, a fraud message is very powerful.
Wells Fargo spokeswoman
statements allow cardmembers another level of protection, since they're sent
electronically and are protected behind a secure log-in," says Mai Lee Ua, a
spokeswoman for Discover. Financial services companies, such as Discover, are
increasing their educational campaigns to let consumers know about security, as
well as clear up other misconceptions. For example, many people are afraid that
electronic statements can't be used for tax purposes, says Smolen.
messages resonate with different people," says Smolen. "Some people are very
motivated by the environmental message, some like the ability to win that cash,
and if you've had fraud committed against you, a fraud message is very
A green future
companies are rolling out the incentives today, there may not be as much of a
need tomorrow. "What you really see is a split demographically," says Wendroff.
While older Americans prefer to have that paper bill in hand, younger people
are more comfortable doing everything online.
In fact, American Express has been satisfied with the pace
at which customers have embraced online billing. "What we've found is that as
card members continue to get more comfortable with our online experience and
increasingly see the value in the additional benefits that online statements
offer, they are making the switch to paperless billing. Therefore, we have not
launched any promotions or incentives to promote paperless statements for the
past few years," says Mona Hamouly, a spokeswoman for the company.
are also nudging consumers toward e-billing by adjusting their online payment
setup procedures so that paper statements are turned off automatically when
consumers opt to pay online.
of the reasons that companies have not done that in the past is because they
have had different payment providers in charge of online billing and paper
billing, Wendroff says. "It was difficult to coordinate who was receiving paper
and who was receiving a statement online." Today, it's becoming more common for
companies to use one payment provider for all billing services, Wendroff adds.
is also prompting the shift. With mobile payment options, the pervasiveness of
broadband and improved electronic security, paper statements are becoming less
record players, tape decks and VCRs, some experts think paper billing will one
day go the way of the dinosaurs. "I think it's a socialization issue," says
See related: The problem with paperless credit card bills: forgetting to pay, 10 ways to go green with credit cards, 12 tips for automatic bill paying
Published: January 10, 2011
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