Study: Bill Payment Exceptions Cost Industry $720 Million Annually



Study: Bill Payment Exceptions Cost Industry $720 Million Annually
Communications, Education, and Standardization Reduce Exception Rates

HERNDON, Va., May 1, 2012 – Nacha – The Electronic Payments Association and its Council for Electronic Billing and Payment (CEBP) released today results of a study that documents volume, causes, and costs of bill payment exceptions[1] across several payment channels. The 2012 Exceptions Benchmarking Study reveals that 0.58 percent of total bill payments (including checks, ACH, cards and cash payments) in 2011 were not able to be posted accurately upon receipt by billers. Based on this exception rate, it is estimated that 130 million payments required exception handling, costing the industry approximately $720 million annually.

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

“Although the percentage of exceptions may appear inconsequential, volume is high, and the impact on billers, processors, financial institutions, small businesses, and even consumers is significant,” said Kathy Romano, Director of Payment Processing for Verizon’s landline customer business and member of CEBP.  “Exceptions require someone to manually resolve issues, creating additional expense for corporations and processing organizations.  More importantly, consumers’ payments will be delayed in processing, sometimes resulting in late fees or even service impacts.”

“Consumers and businesses alike want convenient, versatile, and secure payment options,” said Janet O. Estep, president and CEO of Nacha. “As such, a growing number of businesses and consumers are making the conscious decision to use electronic payments such as Direct Deposit via ACH and Direct Payment via ACH.  To continue to meet the needs of these businesses and consumers and retain confidence in electronic payments systems, it is important that we work to reduce exception volume.”

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 is critical.  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 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. 

“This study demonstrates how important sharing information and standardizing processes is to reducing bill payment exceptions,” said Chris Huppert, chair of CEBP and Senior Vice President, Wells Fargo.  “It also underscores the value of programs such as EBIDS, which requires bill payment originators to apply account edits provided by the biller before originating a payment.  By enforcing edit rules, EBIDS improves efficiencies and ultimately reduces bill payment exceptions.” 

The CEBP recommends specific strategies to help mitigate the number of bill payment exceptions. In addition to using services such as EBIDS for standardization purposes and to ensure account masks are being used and shared, the CEBP suggests the following:

  • Developing directories/shared databases to verify account numbers, structures, and billing/remittance details
  • Enhancing communications among billers, banks, and processors, especially for resolving exceptions
  • Increasing available options to correct or validate account numbers by sharing scrub files and/or master account files. 

About the 2012 Exceptions Benchmarking Study
The 2012 Exceptions Benchmarking Study is based on findings of a survey administered by Blueflame Consulting, LLC, between September and November 2011. The findings include responses from 71 participants - 47 billers and 24 financial institutions and processors.  The study documents volume, causes, and costs of bill payment exceptions across multiple payment channels (ACH Network, check, credit card) and models (biller direct, bank/consolidator, lockbox, walk-in).  For more information about the study, please visit

About the Council for Electronic Billing and Payment
The Council for Electronic Billing and Payment (CEBP) promotes the adoption and use of consumer, business, and government billing and payment programs and services across multiple delivery channels. Through three annual meetings, CEBP provides an open forum for education, resource development, solution innovation, research, and the exchange of information about developments and trends in the electronic billing and electronic payment industries. For more information, please visit