Between 2000 and 2010, the number of households that use online banking increased more than six-fold, and the number that use online bill payment increased nearly eight-fold. Online bill payers now represent a wide cross-section of the U.S. population, and women have edged out men as the primary users of the service.

Online banking and bill payment boast diverse user base

During the course of the Consumer Billing and Payment Trends survey, online bill payment has moved into the mainstream. Currently, 72.5 million U.S. households, 80 percent of all households with Internet access, use online banking, while 36.4 million households, 40 percent of all households with Internet access, use online bill payment.

In 2002, men represented the majority of online bill payers, at 61 percent, and they maintained the lead in usage of the service through 2009. In 2010, the tables turned, with women edging ahead to represent 51 percent of online bill payers.

Today, the age of online bill payers is also more representative of the entire U.S. population than when the study began. In 2002, more than half of online bill payers were between the ages of 35 and 54. In 2010, consumers age 21-34 made up 28 percent of online bill payers, consumers age 35-54 made up 48 percent, and consumers over age 55 made up a sizeable 24 percent of all online bill payers, underscoring the fact that the service is not only for the young.

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Consumers of all income levels have embraced online bill payment as well. In 2002, middle income consumers dominated use of the service, whereas in 2010 more than a third of online bill payers had a yearly household income of less than $50,000. Usage among the highest income brackets has grown as well.

"The face of online bill payment has changed significantly over the last decade," said Geoff Knapp, vice president, Online Banking and Consumer Insights, Fiserv. "Early users were tech-savvy and tended to be young and male, as is typical with new technology. Now it's moms and seniors and people at all income levels using the service. Online bill payment has become mainstream, and there's still room to grow."

Decline in paper checks, growth of e-bills

Among households with Internet access, online bill payment, both at financial institution websites and company (biller direct) websites has grown substantially during the last 10 years, with a corresponding reduction of paper checks. While other forms of payment have remained relatively stable as a percentage of overall bill payments, paper checks have declined from 61 percent of all payments in 2000 to 26 percent in 2010, while online bill payments have grown from 12 percent to 45 percent of all payments.

Electronic bills, or e-bills, which contain all the same information as paper bills but are delivered online, also appear to be catching on, perhaps due to technology that has made e-bills more visible within the online banking and bill payment service, as well as increased efforts to educate consumers about the benefits. The number of consumers that receive an e-bill jumped nine percent between 2009 and 2010. Today, 33 percent of all consumers who pay a bill at their financial institution website also receive at least one e-bill there, up from 24 percent in 2009.

Online bill payment use correlates with deeper banking relationships

Consumers who pay bills online have consistently used more services from their financial institution than the average customer, with usage of additional services becoming even more pronounced in recent years. The connection between online bill payment and consumer loyalty has remained strong as well.

In 2005, consumers who used the online bill payment service at their financial institution were 8 percent more likely than the average customer to have a savings account at the same institution, and by 2010 that number had increased to 13 percent. The percentage of customers who used online bill payment and also had a mortgage with their financial institution increased from 2 percent in 2005 to 10 percent in 2010. In addition, 49 percent of customers who use online bill payment said they were less likely to switch to another financial institution as a result of their experience with the service.

Newer technologies such as mobile banking and person-to-person payments are areas to watch over the next decade, and are already showing an adoption trajectory similar to online bill payment. In just two years, the number of mobile phone users who conducted one or more banking services via their mobile phone increased from 23 percent in 2008 to 30 percent in 2010.

The number of mobile banking users who receive or pay bills via their mobile phone jumped from 18 percent in 2008 to 30 percent in the same time period. This is most likely due to the increasing adoption of smartphones.