Edition: U.S. / Global

DOWNTIME; World Wide Banks: On-Line Financial Choices Grow

Published: July 8, 1999

JACK JACKSON can't remember the last time he wrote a check and hasn't spoken face to face with a bank teller in years. Mr. Jackson has handled his personal banking on line with Bank Boston since 1989, and he expanded to on-line banking for his public relations business three years ago.

Although he experienced two instances of bank errors that cost him several hours on the phone with customer service, that has not deterred him from banking on line. ''I think I've had to deal with the best and worst that it has to offer,'' Mr. Jackson said. ''It's easy to set up and it can be incredibly convenient, but anyone who has really bad financial habits may find that their problems will be exacerbated when they go on line. It's definitely not for everyone.''

One big difference with many on-line banking accounts is that as soon as you direct the bank to send out a payment from your account, that money's gone. You can't mail out a $50 check and figure that you can get to the bank to deposit the money to cover the check before it's presented by the recipient's bank for payment. But one thing on-line customers gain is convenience -- the bank's always open for business.

A few years ago, Mr. Jackson was unusual. Although some of the largest banks in the country, including Wells Fargo, Citibank and Chase Manhattan, have offered their customers on-line bill-payment options for nearly a decade, only during the last couple of years have customers really started to warm to the idea of clicking on the Send button at an on-line banking site.

According to IDC, a market research firm in Framingham, Mass., the number of people in the United States participating in at least one on-line banking function (like viewing deposits, transferring money between accounts and paying bills) rose to 12.4 million in 1999 from 1.4 million in 1996. IDC expects that number to rise to 18.7 million by the end of next year.

Industry analysts cite the widespread availability of modem-equipped computers as one reason for the increase in on-line banking activity. They add that people are also finally starting to get comfortable with the notion that entering bank account information on line is no riskier than giving a credit card number over the phone.

''On-line trading has really made people aware of how to bank on line,'' said Mitch Caplan, president of Telebank, a phone- and Internet-based bank. ''The security issues aren't really there any more.'' But while on-line trading offers discount services, many banks charge more for on-line accounts.

It has become much more convenient to pay bills and transfer money to other accounts via computer because many banks are moving their entire on-line consumer banking areas onto the Internet and off private networks, which required the customer to use communications software and a modem to dial directly into a company's computer system.

To pay bills on line with Chase in 1994, for example, a customer had to call Chase's customer service and order software disks for logging onto a private network. Since Chase moved its on-line banking functions to the Internet last February, on-line customers have been able to gain access to their accounts from any PC with an Internet connection by going to the bank's Web site and punching in an identifying name and password.

So what should you expect if you wean yourself from your checkbook? Setting up access to your bank account via the Internet is relatively simple. After securing your bank accounts with a customer ID and a password, you enter the account numbers and addresses of each company or person you pay regularly. As long as you can provide that information, you can send payments to large companies (like your cable and credit card companies) as well as to individuals, like your piano teacher.

Some banks charge a monthly fee, usually $5 to $15, for unlimited bill payments, but many are providing Internet banking access and bill payments at no extra charge.

The convenience of on-line banking has won some fans, like Lisa and Alex Giassa of Teaneck, N.J., who have had an on-line account since August 1998. ''It's definitely a convenience thing for us,'' Ms. Giassa said. ''If I know I have a bill due in a few days, I can go upstairs, pay it in a couple of minutes and not deal with any envelopes.''

But lest you think that the click of a Send button will instantaneously send off your son's college tuition payment on the day it is due, think again. Only about half of electronic payments are actually transmitted to recipients electronically. Many utility companies and merchants are not set up to receive electronic payments. Such companies are sent checks via regular mail -- an annoying lesson for those who don't make allowances for the delayed delivery and miss payment deadlines.

And that delay brings up the question of the ''float'' and why there's more of a float in electronic banking. In banking terms, a float is the period between the time you issue a check and the time it becomes available to the recipient. If you issue a check to an out-of-state recipient, the money will not be credited to the account of that company or person for up to five business days after the check gets to the recipient's bank. A recipient in the same state gets access to the money in up to three business days after it is deposited, while someone with an account at the same bank will get the money within one business day.


















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