Banks Start to Cater to Late Payers
Procrastinators Get Help
Settling Their Bills on Time;
Rushing Online Transfers
By JENNIFER SARANOW
Staff Reporter of THE WALL STREET JOURNAL
February 2, 2005; Page D3
Banks, looking to accommodate -- and get fees from -- procrastinators are rolling out new ways to send money at the last minute.
In recent months, a number of banks have come out with services to help people electronically transfer money -- quickly -- online. In the latest twist, J.P. Morgan Chase & Co.'s Bank One unit just began an overnight check-delivery service for people who want to speedily get money to family or friends, or to transfer money quickly to avoid late-bill payments.
Traditionally, to send money quickly via a bank, consumers have had to rely on online bill payments, which can take two to five days to complete, or wire transfers, which can cost as much as $20 to $30. Wiring money using services such as First Data Corp.'s Western Union generally costs around $10 for sending $100 for same-day delivery in the U.S.
The Bank One service, called Overnight Check, lets customers go online to send an actual check as late as 10 p.m. Eastern Standard Time for next-day delivery anywhere in the continental U.S. The service costs $14.99 per check and is only available to the bank's online customers.
The service is the latest effort on the part of banks to boost their bottom lines with fee-based products. The move also come as banks are increasingly coming out with what they claim are faster, more convenient payment options.
"Banks realize there is a need in the market for better and new services that allow consumers to send money quickly around the country," says Gwenn Bezard, research director at financial-services consulting firm AITE Group in New York.
Many of Bank One's rivals have tried to speed up and simplify the money-sending process in recent months with the release of electronic account-transfer services that allow customers to transfer money instantly to the accounts of other customers.
In November, Wells Fargo & Co. launched a "customer-to-customer transfer" service that allows clients to send money electronically from their own checking and savings accounts to other customers' accounts free of charge. Bank of America Corp. rolled out a similar service last fall, and in 2003 Citigroup Inc.'s Citibank unit launched a service that charges $5 to $10 for transfers.
In contrast to the electronic options, Bank One's new product relies on speedy delivery of old-fashioned checks. The idea of "rushing a check is a simpler concept to understand, whereas account-to-account transfer is not very popular yet," says analyst Mr. Bezard.
Indeed, Michael Cleary, executive vice president of retail marketing at Bank One, says the bank launched an electronic person-to-person transfer service four years ago called eMoneyMail, but took it off the market after two years when it didn't attract enough demand. Bank One says customers using Overnight Check can send checks to anyone in the U.S. regardless of whether the recipient is a Bank One customer. The bank is also positioning the service as a last-minute bill-paying method, as not all bill issuers except electronic payments, according to Mr. Cleary.
Overnight Check pays bills faster than Bank One's online bill-pay service, which guarantees payments in two days if they are made electronically and five days if a bill issuer doesn't accept electronic payments.
With Overnight Check, customers enter online the amount they want to send and the address they want to mail the money to. Bank One then sends an official bank check to the chosen destination, which is supposed to arrive by 10:30 a.m. local time the next business day. (Online bank transfers between accounts, by contrast, generally happen instantly.) For the service, Bank One uses a check-printing facility located close to a United Parcel Service Inc. facility. UPS then delivers the check.
The limit for the service is $50,000 per customer per day, and customers must have the amount they are sending in their account. The bank says the service will eventually be available to all J.P. Morgan Chase banking customers. |
