EBP Transaction Volume and Costs

By Jon Haller
Director of Market Research,
Credit Union National Association

EBP and Members/Consumers

Forecasts have, for the most part, been toned down from original estimates, but still point to strong use ultimately. Technology research and advisory firm, TowerGroup, forecasts that EBP will see a notable rise in consumer use over the next several years, with electronically-paid bills ultimately accounting for nearly 30% of all paid consumer bills in 2010. They go on to predict that bill payment will grow "to be as important as, if not more, important than the branch and ATM are today."

EBP and Credit Unions

Expectedly, the likelihood that a credit union offers electronic bill payment services rises as asset size increases, from less than 10% among credit unions with assets of under $20 million to about 90% among those with assets of $300 million or more.

On average, 1.7% of a credit union’s members are currently paying at least one bill through its EBP service each month. The active-user penetration rises with the length of time the service has been available at the credit union, up until the third year, at which point it levels off. This suggests that once a credit union begins to offer EBP services, it has about a three-year period within which it will be in the best position to grow its base of active users.

The 2002/2003 Technology & E-Commerce Survey Report goes on to point out that those credit unions providing EBP services to their members are processing an average of 3,252 bill payments per month, or an average of 4.6 bill payments per active user. Expectedly, the average number of monthly bill payments made rises with asset size, reaching over 16,500 among credit unions with assets of $500 million or more (see figure below). The average number of bills paid per active user hovers between roughly 4.5 and 5.5 per user among all credit unions with assets of $20 million or more.

Credit unions that offer EBP services estimate that it costs their credit union, on average, nearly $30,000 per year to provide it, with this figure increasing with asset size and topping out at about $130,000 among EBP- offering credit unions with assets of $500 million or more (see figure below).

The above costs exclude salaries and benefits, and do not include any costs associated with providing their Internet banking program.

If you don’t charge for your bill-payment service, make sure your members know it. Play up this benefit in your marketing to members. On the other hand, if an across-the-board "no EBP fees" stance is not feasible for your credit union, consider eliminating or reducing the fees for those members using a specified "package" of your services or carrying a certain level of deposits/loans at the credit union.

Or consider allowing a certain number of free bill payments to be made before implementing charges. For example, at State Employees Credit Union, in North Carolina, the first 20 electronic payments each month are processed free of charge, with additional payments priced at 20 cents each, according to an article in Credit Union Journal.

Next month’s topic: Strongest Member Target Markets for Loan Services

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