(June 12, 2006) Think of electronic bill payments and, not surprisingly, the Internet usually comes to mind first. But many billers, especially banks, have yet to offer bill payments through telephone-based customer-service systems or automated interactive voice-response units, experts tell Digital Transactions magazine in an upcoming story on expedited bill payments.

The Web’s share of bill payments is increasing, according to an April survey of 2,038 randomly selected consumers done for Elizabethtown, Ky.-based Fort Knox National Co. by Javelin Strategy and Research and Crone Consulting. The Internet accounted for 40% of electronic bill payments in 2005, up from 31% in 2004, the survey found. The phone’s share, meanwhile, declined to 44% last year from 52% in 2004.

That doesn’t mean billers should hang up on the phone channel. In fact, some billers, particularly banks, ought to add it, according to bill-pay industry observers. Richard Crone, founder of San Carlos, Calif.-based Crone Consulting, estimates banks generate about 25% of consumer remittance because of their bills for credit card, auto-loan, personal-loan, and mortgage payments. But while many banks allow their customers to pay such bills through transfers from demand-deposit accounts at the same institution, they often fail to have bill-payment services that tap customers’ other sources of funds for payment.

Another reason billers should stick with or add the phone option is because many consumers still don’t have high-speed Internet connections at home. “If [billers] are not providing these options, they’re not providing the best service for their customers,” says Crone. “Ultimately it’s going to lead to consumer dissatisfaction.”

One company making hay from telephone payments is Norcross, Ga.-based bill-pay provider CheckFree Corp., which in January acquired PhoneCharge Inc. for $100 million in cash to round out its product offerings. According to a CheckFree filing with the Securities and Exchange Commission, PhoneCharge added more than 4 million telephone payment transactions, priced at more than $2 each, in the quarter ending March 31.

“It’s surprising; some companies either don’t have a very robust offering or [have] an outdated offering,” says Matt McKernan, senior vice president of CheckFree’s biller business unit. “They need to upgrade that solution.” McKernan wouldn’t talk in detail about PhoneCharge’s financials, but says, “It’s a financially sound business and a financially growing business. The fundamentals that make it attractive are the strong growth characteristics and the technology.”