E-Commerce Commission Press Kit

large bank, the initial investment could be millions of dollars; a more limited solution for a smallbank might cost tens of thousands of dollars), the bank’s Web site can handle one customerinquiry or tens of thousands a day.Booz-Allen & Hamilton estimates that it costs about a penny to conduct a banking transactionusing the Internet and more than one dollar if handled by a teller at a branch bank (Figure 8). 72New ServicesToday’s online banking allows customers to check account balances, transfer funds, and updatecustomer information—transactions that can already be performed through traditional bankingchannels. For some customers, the convenience of banking from home or the office is preferableto calling the bank’s automated phone service or going to a branch bank. Others do not find theservices offered online today reason enough to change their banking habits.In the future, analysts expect that Internet banking will be enhanced with new services that makeonline banking easier and more convenient than banking by ATM, by phone, or visiting the branchbank. Paying bills electronically is one such example.Checks are the preferred method of bill payment in the United States. 73 For a business, preparingand sending paper bills can be costly. For a consumer, paying bills by check can take a great dealof time. Billers print out and mail the bills to a consumer’s home. The consumer writes a check,records the check number and amount paid, balances the checkbook, finds a stamp and mails thecheck back to the biller. The biller receives the check, updates his accounts and sends the checkto the bank to credit to his account. Handling paper bills and checks can cost a biller between$1.65 and $2.70 each time he sends out a bill. 74 It costs the customer time and the price of astamp to pay each bill.Today’s Internet-based bill payment services take some of the paperwork out of the process.Rather than writing a paper check and mailing it to the vendor, a customer authorizes his bank topay bills on his behalf. This saves the customer some time, and may save the vendor some money,if all steps are completed electronically. However, vendors still incur the costs of mailing the billto the customer. And, smaller vendors without an electronic connection still have a series ofmanual and paper-based steps to complete.Some banks believe that future Web-based bill payment services can make the entire processpaperless. The vendor will send an electronic image of the bill to the customer’s bank. Thecustomer will electronically authorize the bank to pay the bill, the bank will debit the customer’saccount, and the vendor will receive payment electronically. The vendor’s printing and mailingcosts are eliminated, and processing costs are greatly reduced. The customer enjoys theconvenience of paying bills without having to keep stamps and envelopes on hand. With servicesthat automatically update account balances, the customer also saves time he formerly spentbalancing his checkbook.30