Why Companies Want You to Receive Your Bill Electronically

by Kevin on March 26, 2009

If you are like me you have received multiple mailers from your current service companies (utilities, credit card companies, etc.) reminding you that you can receive your bill electronically. Some of them even stuff them in with your invoice to remind you as you write that check and seal the envelope that “there is an easier way to do this“. Some companies like DirecTV even offer an incentive of $5 to $20 off of one bill if you will agree to accept all of your bills via e-mail/electronically.

This sounds all well and good, but have you ever stopped to ponder why there is a big push for electronic billing?

The Reason They Tell Us

The companies remind us that receiving the bill online saves trees and helps the environment. That’s the main reason they push in our face.

Don’t you want to help the environment?

Don’t you want to save a tree?

Come on, everyone is doing it! Imagine all the trees you could save.

It is a fact that if you received every single one of your bills online you would save some paper. I completely agree.

But it isn’t the reason the company wants you to make the switch. It isn’t out of the goodness of their corporate hearts. (If it was they would stop all of their mail marketing efforts. How many credit card offers have you received in the last month? Imagine the wasted paper in that.)

So what is?

The Real Reason Companies Want Electronic Billing

Those guys up at headquarters are so sneaky. They’ll push the environmental reason on you and maybe even make you feel bad about it.

But they could care less about the environment. All that matters is corporate profit. Remember that.

Companies want you to accept electronic billing for the simple fact that…

…you are less likely to take action!

You get an e-mail. You’re busy. I’ll check that later. I’ll make my payment online later. I’ll look at the bill details later.

What happens?

You forget to even look at the bill. You make your payment in a rush right before the due date. You miss extra charges or wrong usage. You end up paying extra.

You forget to line up the online payment. Remember, you’re busy. So am I. The due date comes and goes. The next thing you know you’ve got a notice that you have now earned yourself late fees and penalties. The firm knows you will end up paying and they’ve just added a few dollars of profit to the bottom line.

How to Avoid Electronic Billing Issues

I don’t have the magic button for organizing your life. To be honest, I’m having trouble organizing my own. But I mark my bills as high priority when they come in. I try to act immediately. I try to set up automatic payments.

Tomorrow we’ll talk about how to avoid these issues in greater detail. I hope you’ll come back to continue reading.

In the meantime I want to see if anyone has ever missed a bill because they never got an e-mail, it got caught in your spam folder, or you simply forgot about it. Hit me up in the comments.

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Canadian Personal Finance Blog » Blog Archive » Random Thoughts on Advice
March 27, 2009 at 3:15 am

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Philip March 26, 2009 at 7:17 am

Sure it could be that they think people will miss their bills but do you really think that is their only reason?

Think about the paper costs they are reducing, how about the cost for mailing that they are saving on existing customers? How about the cost to print and the equipment to stuff all those envelopes to ship out! It is sooo much easier for a computer to run a report and send out notices to everyone that they have a bill due.

I think they save more that way than they earn from late payment fees, I personally would rather have something sit in my inbox as a reminder than a piece of paper that gets shuffled under a pile and becomes late.

Philip March 26, 2009 at 7:18 am

Oh yea, and I agree they could pretty much care less about the trees 🙂

Baker @ ManVsDebt March 26, 2009 at 8:13 am

I agree with the poster above. I think primarily businesses do this because it is easier for them from an operational stand point.
Although, I know for a fact banks offer free bill paying and online services in an attempt to hook customer. By that I mean making it more painful for them to leave than they would benefit from switching banks.
I’ve gone through this exact situation with Chase. I’ve been using online billpay for years so it has all my info. All my bills I pay online have my accounts auto-stored, etc… I’m finally getting motivated enough to switch bank, but they kept me locked in for several months because I didn’t feel like putting the time energy into switching!

Missy March 26, 2009 at 9:41 am

An absurd theory. I don’t agree. I believe banks, retailers, and others push e-bills and e-pay because it is cheaper for them to do so and they want green street cred.

It is very in vogue nowadays to go and be green. If anything they do it more out of vanity, than old fashioned greed.

Kevin March 26, 2009 at 9:55 am

@Philip, @Baker, and @Missy: As I said I think the environmental piece is a part of it, but I don’t buy that it is the end reason that they make the changes.

I mean seriously folks, how much CRAP do you get on a daily basis from companies? I get about 3 credit card offers a week. Don’t tell me credit card company is trying to save money by getting me to get my bill electronically. That’s garbage. The same company is sending me mailers for new accounts.

Yes, going green is in vogue. But if it is so in vogue, why do I still get mailers from them? The two don’t go together.

Baker makes a good point about trying to hook you with the free services. I agree with that. The more entrenched they can become in our lives the better (Google, anyone?).

Justin March 26, 2009 at 9:58 am

Im not really concerned with why companies want me to use electronic billing. The thing is, I want to use electronic billing. I find it to be a much more convenient way of receiving bills. To be honest I dont even open mail and i hate having to sort through piles of paper. I much prefer having all my bills in pdf format tucked away in my bills folder.

As well as the convenience the environmental impact of paper would also be a concern of mine. I am happy that companies are using this as a selling point for their service. This increases awareness amongst people about our environment and reminds then to do the simple things (such as getting your bill online) to try to reduce their impact.

I have to disagree with you when you say that companies are doing this as a way of scamming more money out of people. I think companies would be more focussed on reducing overheads and increasing profitability rather than trying to make a quick unsustainable buck off the customer. Charging people late fees and pressuring them with notices is not a way to make money from customers. In fact, customers would probably begin to become a bit more aware of their bill and start questioning the company more if this were to happen.

Ebills or whatever you want to call them is a step closer to this ficitional paperless office that we used to hear so much about. Maybe that concept is soon going to become a reality.

-Justin

Russell Fascenda March 26, 2009 at 3:35 pm

I think it’s clearly a money-saving program, no paper, no postage, no labor in the mailroom. I have missed an e-mail from electronic billing, and not realize it until the following month.

I had taken advantage of a low-cost loan offer to be paid in about 4 months. The company credited the late fee and any interest, and restored the promotional interest rate.

Now I will admit some creditors have online bill payment that charges you an extra fee, but you aren’t required to use those. I currently receive satellite TV, electric, and a few credit card bills through e-mail.

Abigail March 26, 2009 at 3:36 pm

Kevin,

Actually Missy & Phillip weren’t talking about the environmental angle. They were talking about the COST of buying the paper, printing it out, mailing it. Every month. To tens or hundreds of thousands of members.

Yes, they probably do get a few people forgetting to pay online. But most people do so much online, that doesn’t really work these days.

Just the paper alone would cost an enormous amount! Then it has to be cut to the right size. Then there’s the ink costs (and printers, and fixing printers that break…) and the cost of the envelopes (also printed on). Then the cost of mailing EACH envelope. Oh and let’s not forget the salaries of the people who oversee the printing process or do quality control or whatever. The fewer statements printed, the fewer man hours they have to pay for.

Think of it this way: If a credit card company can get 10,000 people to do paperless billing, it’s automatically saving $4,200 A MONTH (over $50,000 a year) just on mailing costs. Plus whatever the company would save on ink, electricity for the printers, salary, and the paper & envelopes.

That’s a little more compelling than the small percentage of people who will forget to open the email/pay the bill on time.

Do You Dave Ramsey? March 26, 2009 at 3:42 pm

Hmm, I wonder if you’re not being overly cynical on this one. I think companies are wanting to automate as much as they can for the purposes of cost containment. Sure, some of the motives may be cloaked as green movements but I’m not against a single action having a dual purpose.

Will some people forget to pay if the bill comes in their email? Sure, but some will forget if it comes in the mail. I think that’s a function of personal choice.

I know I didn’t move my bills to email for the reason you mentioned – they’d become lost in my inbox but the same statement could be made of someone with a more digital mindset.

I am intrigued to see your follow-up tomorrow as I sure you have some good advice for us… I have a solution that has worked beautify for me but I’ll save that for tomorrow’s comment section.

Thanks!
Dave

Russell Fascenda March 26, 2009 at 3:47 pm

Kevin, you also mentioned the credit card offers you receive in the mail as contradicting the push for electronic billing. But there’s a big difference in mailing those offers. They don’t have to be mailed first-class which saves postage cost, and they don’t have account information so they can be printed and mailed by outside contractors which saves labor and printing equipment costs.

Mike @ TheThriftyLife March 26, 2009 at 4:58 pm

Don’t confuse marketing/promotonal offers with required statements to existing customers. Those are two completely different things. If you’re a customer they may want to sell you on additional services but there’s a value as well as a cost associated with sending a marketing mailer. With statements there’s no value, its required to keep your customer paying their bill.

I’m sure you’re right about people missing more payments, but the flip side of that is people AUTOMATING payments online. So there’s one way that you can deal with a possible pitfall of electronic billing. But seriously – if you’re too lazy to even read your bill when you get it via email, how much effort are you going to take to pick up the phone and call about an error if you find one? The lazy guy who can’t be bothered to check his bills, deserves the penalty.

Sorry I have no compassion for not paying attention when it comes to money either going into or out of your wallet. If you don’t care enough to track it, you shouldn’t care if a mistake is made.

I agree with the other commenters who’ve stated that the real reason here is cost of printing, paper and postage. Ever compared the cost of doing a physical mailing vs an email campaign? Its fractions of pennies on the dollar.

Regarding green initiatives – you sound too cynical on that subject. There are some companies that actually do want to protect the environment, checkout a companies stated corporate goals to verify that on a per-company basis. You won’t get very far just throwing out blanket statements without some backup evidence.

I personally receive NO credit card or other promotions in the mail thanks to LifeLock. Their service, besides protecting my families personal information also restricts junk mail by contacting companies directly on your behalf. Look into it if you’re swamped with paper that you just throw away anyway.

PW March 26, 2009 at 6:41 pm

I have paid my bills online for at least 5 yrs and love it, and get most of my bills electronically in email to both my home and work address in case 1 system is down.I every few weeks have a task reminder in my comptuter to check on balances of credit cards, utility bills etc. just to make sure nothing has been posted illegally. I never get late fees and in fact because I never overdraw or pay anything late I just got a nice new interest rate on my checking and no min amt required. I love paying bills online, love it!! I don’t keep my bills in a master file because they are accessabile online. Most $ moves electronically from my bank to the biller, only a handful of electronic checks go out from my bill pay. I pay my bills from work during lunch, check balances during lunch, move my 4 from place to place during luch, and have lifelock also, so minimal mail. I think I am one who is putting the post office out of business as even now for work we transfer papers back and forth via pdf. Working on taking electronic checks from our clients. IF YOU EVER HAD TO YOU CAN CALL ALL YOUR BILLERS ON THE PHONE AND THEY TELL YOU THE BALANCE DUE WHERE TO SEND CHECK ETC IF YOU EVER HAVE TO GO BACK TO SNAIL MAIL. I even got my landscapers to start taking monthly checks via electronic bill pay. Gotta love it.

lauren March 26, 2009 at 7:09 pm

My partner receives all of his bills by email to save on the cost but most of the time we end up having to print it out to stick up on the fridge to remind us to go and pay it. So basically the printing cost of the bills has been passed on to us… so we aren’t saving money at all!

Elena March 26, 2009 at 7:59 pm

I got a system I created to make sure I pay bills online on time so late fees are not part of my life. Maybe once in a while, I get sick and bills stop being a priority and then I have to pay a late fee, maybe twice a year, that’s only 2 fees (but I still try to avoid doing that). I don’t credit card companies created the online statement to get more money out of people THAT way. I think people who have credit card debt and use online statements only tend to not check the details every single month, so the % might change – they won’t even know. It also is not as much in the eye as a paper statement. I open the paper statement, see I spent a thousand 3 months ago and I keep getting hit with a charge of let’s say $20 per month, plus I pay a minimum payment, oh, man that’s 31%, it used to be 9.99%, what happened to that original offer? – I’d better pay it off this month! With an online statement that I don’t open this kind of revelation will not happen.
It’s kinda cute that you launched this paranoid version of why credit card companies encourage online statements. Whether you really think that, or just decided to see people’s reactions – you got a discussion going on.

My Life ROI March 26, 2009 at 9:35 pm

I think that you advocating automatic payments contradicts your concern that e-billing may cause people to overlook wrong charges.

If anything causes people to overlook wrong charges it is automatic billing.

I set up a calendar reminder for every bill I have and it alerts me a week before it is due. I check the bill to make sure it is accurate and then I schedule the payment.

I would rather not have the company take the money directly. If they do and you find an error later where is your negotiating ground?

Kevin March 27, 2009 at 9:04 am

Everyone: I posted my follow up post today. You can check it out here.

@Justin: I like receiving e-bills as well, but I don’t think it is a cookie cutter, “set and forget” fix.

@Russell: I don’t think it’s a mailroom issue — most firms outsource this (yes even for account information mailers). And if you want to talk about paper costs many times these credit card offers (several per week) outweight the one per month I get with my statement in it. You might save on the postage, but there is still an envelope, still paper, the little fake plastic card in it, etc. I don’t buy that the costs are significantly different when my own company (AMEX) is actively courting me for premium cards.

@Abigail: Again I see your point. But let’s not paint it up in a “this is the best thing for you” paint. There are risks involved.

@DYDR: Perhaps I am being too cynical. 🙂

@Mike: I may come off as cynical, that was kind of the point. So you’re paying $10/month to protect your identity? You might want to check out a post that Master Your Card did a while back where you can LifeLock yourself for free.

@Lauren: That sucks! I would switch back to paper bills if that were the case.

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