Bank Sweetens Paying Bills Online

By Bruce Mohl

The new Bank of America policy, which withdraws the funds from the customer's account only when the payment arrives at the recipient, closely resembles how a paper check is processed. Offline, customers write a check and have the funds withdrawn from their account only when the recipient deposits the check.

Bank of America (NYSE: BAC) changed its online bill-payment policy on Feb. 11, allowing customers to earn interest on their money until the payment is delivered rather than having funds deducted from their accounts immediately.

"It's a huge customer win. This was the number one customer request," said Sanjay Gupta, e-commerce executive with Bank of America. "There's no reason to write a paper check anymore."

Customers Keep Their Money
Some U.S. financial institutions already allow online customers to hold their money longer. Citizens Bank, for example, says it has since 1999 allowed online bill-pay customers to retain money in their accounts until payment is delivered.

However, Bank of America is the largest and most influential convert to the approach. Gupta said 7.3 million customers use online bill payment at Bank of America. He said the bank's customers represent 59 percent of the U.S. online billpay market....for more of the story from CRM Buyer