Trapped by Online Bills

This is somewhat of a continuation of the topic I introduced last week in terms of controversy involving new fees being introduced by major banks. This week, an article by the New York Times detailed a major issue related to online banking: people who participate in online banking are finding it increasingly difficult to switch banks due to their reliance on the online software.

This problem is primarily due to online bill paying. Online banking software has made it so that people have numerous bills being paid over the internet. Switching banks would mean a major hassle in terms of stopping bill payments in one account and re-entering them to be paid by the other bank. This inconvenience prevents people from switching banks, which allows the banks to make controversial changes like raising fees with less fear of customer abandonment.

This fact can easily be represented through the statistics. In the last 30 days, 44 million people have used online banking software to pay their bills, which is up from just 32 million five years ago and just 7% of people have chosen to switch banks this year, down from 12% last year.

Earlier this month, Representative Brad Miller of North Carolina introduced a bill that attempted to make it easier for people to switch banks. The bill stated that, among others (you can read the full list here), a person has the right to close his or her account at any time for no charge, whether his or her account be positive, negative or zero. Unfortunately for all of us, this bill has little chance of passing through the Republican Congress.

Thus, the question I ask you is whether it is fair that a company to make their software complex just in an effort to keep customers. Online bill payment is such a convenience that people are definitely going to use it. To me, it seems morally wrong to take advantage of this fact to prevent customers from switching to a competitor.