Maybe it's less painful than writing a check or handing over cash, but consumers are growing fonder of online bill payment.

The number of people clicking through their utility bills in the United States will increase nearly 38% this year from 2002 to 40 million, market research firm Gartner said Thursday. In 2001, only 15 million Americans used their computers to pay bills.

Online bill payments have been a boon for billers. In a survey of more than 100 major companies that bill online, Gartner analyst Avivah Litan found they spent an average of $1.1 million on Web payment-processing systems. Because it's cheaper to process transactions via the Web, that money can be recouped in a year by getting 200,000 customers to pay their monthly bills online. And the cost savings continue year after year.

While billers have been aggressive in attracting customers to the Web, banks have been slow to react. A Gartner survey of more than 1,000 online adults conducted in September found 79% view bills at a biller's site, versus 10% using a bank consolidation service. By not failing to get customers to consolidate bill payments on bank sites, financial institutions are making it easier to lose customers.

Consumers who signed up to pay bills online were more than twice as likely to stay with their banks to avoid the hassle of setting up and automating their bill-payment preferences and payees again, Litan said. In addition, online customers on average had 40% higher checking and savings account balances, compared to other customers.

"It's a really good retention tool for your best customers," she said.

To lure customers to the Web, banks should offer discounts or free trial-service periods, Litan said. In addition, banks should offer as many services as possible, beyond basic self-service automatic enrollment, automated payment plans, and the ability to dispute charges online.

For example, if a wireless customer could save money with a different plan, the bank should provide the biller with the ability to notify that customer.

"Banks need to work in conjunction with billers, as well as present their own bills," Litan said. "They can do a lot more with this application than they're doing now."

However, one thing banks shouldn't do is charge for the service. "The main reason people go to biller Web sites is because the service is free," Litan said. "If you charge, then you build a barrier."

Litan's findings coincide with what startup bill-consolidation firms, banks, and portals discovered in the past. Those that launched services costing $5 to $13 a month failed miserably at attracting customers. Bank of America, for example, saw a 70% to 80% jump in enrollment after it dropped its service fees, Litan said.

Among banks, Bank of America has been most aggressive in marketing its online service, while Wells Fargo has done the best job of melding its offline operations with its online services.

The Gartner survey also found that 45% of consumers said they paid bills online to save time, while just 10% cited cost savings.