Bill payment exceptions cost US industry USD 720 million annually – study

Based on this exception rate, it has been estimated that 130 million payments required exception handling, costing the US industry approximately USD 720 million on an annual basis.

The 2012 report, a follow up to a 2007 study that measured online banking-based bill payments, has further revealed that the overall exception rate in the US online banking channel increased from 0.4 percent in 2007 to 0.51 percent in 2011.

According to the study, a major cause of exceptions across all bill payment channels is missing or invalid consumer account numbers with their billers. For billers, this error is the leading cause of exceptions. For processors, missing or invalid account numbers is the second leading cause of exceptions, with processing differences topping the list.

In order to help reduce the number of bill payment exceptions, sharing information, standardizing processes and educating consumers are all critical steps, the research has found.

Study findings indicate that more than one-third of processors do not receive required information from billers to verify account numbers and masks, which define the format for a valid account number. Requiring that mask edits be applied prior to payment origination is a key procedure for reducing exceptions, but this practice is not universally applied.

Additionally, the study reveals there is a lack of standard procedures to follow when a US consumer enters an incorrect account number. Some processors notify the consumer, others attempt to make an edit, while others resort to sending a paper check. Although most billers stated they provide consumers with information and systems to help them include accurate account information when paying the biller directly, the majority reported they do not provide this same service for consumers paying through a bank or bill payment provider.