Online Resources Study Shows Increased Appeal Of Free Bill Payment

Consumer Response to Price Incentives Typify Early Mass Market Phase of Adoption Curve

MCLEAN, Va., September 29, 2003

Online Resources Corp. (Nasdaq: ORCC), a leading outsourcer of Internet banking and payment services, today released the results of a study on the adoption rates of Internet bill payment services based on different pricing levels offered by its client financial institutions. Key findings indicate that consumer response to free bill payment service offers has increased as online bill payment moves to the consumer mass market.

The study is based on key lifecycle metrics regularly tracked by Online Resources across its 550 financial institution clients. The study included 113 clients who use simplified bill payment pricing, removing influences of those institutions that offer the service through hybrid or relationship pricing models. In contrast to results reported by the Company in a similar study last year, this year's results indicate that a free price incentive now has a material impact on increasing bill payment conversion, as shown in the following table.

Last year, the rate of conversion to online bill payment for services that were offered free of charge was 31 percent and those offered for less than or equal to $5.00 per month was 28 percent, a difference of only three percentage points. This year's study shows that the conversion rate for free services was 40 percent and for those offered for a fee was 28 percent, a difference of 12 percentage points.

The study is outlined in Online Resources' new white paper titled, "Online Bill Payment Market Update: Fee or Free?" The white paper also cites other recent industry studies that support that consumers who adopt bill payment services become as much as 40 percent more profitable to their financial institutions.

Following are key findings from Online Resources' study:

• Financial institutions that offer free bill payment have a 26 percent higher banking adoption rate than those that charge $5.00 or less per month and 40 percent higher than financial institutions that charge more than $5.00 per month.
• Conversion to bill payment of online bankers is 42 percent higher when online bill payment is offered free of charge versus when it is offered for a fee of $5.00 or less, and 105 percent higher versus when it is offered for a fee of more than $5.00.
• Bill payment adoption for financial institutions that offer the service free of charge is 80 percent higher than for financial institutions that charge $5.00 or less, and 190 percent higher than those that charge more than $5.00.

The study further supports that while price incentives are increasingly effective in gaining consumer adoption of online bill payment, active use of customer relationship management (CRM) techniques can be effective for those financial institutions that continue to offer the service for a fee.

"As online bill payment shifts from the early adoption phase to the broader consumer mass market, price incentives become a more important factor in the consumer's purchase decision," said Matthew P. Lawlor, chairman and chief executive officer of Online Resources. "Fortunately, for banks and credit unions that provide online services, there is growing evidence that bill payment price incentives can be offset by increased deposit and loan balances, as well as retention and cost advantages."

To obtain a copy of the white paper, please visit www.orcc.com or call Beth Halloran at Online Resources, 703.394.5248.

About Online Resources

Online Resources (Nasdaq: ORCC - www.orcc.com) is an outsourcer of Internet banking and payment services to over 500 financial institutions nationwide. In contrast to other providers, Online Resources owns, operates and drives critical banking, payments and marketing infrastructure that enable a superior customer experience and Internet channel success. The company's services, branded to our financial institution clients, power approximately 100 million transactions and $7 billion in consumer bill payments annually. Founded in 1989, Online Resources has been recognized as one of the nation's fastest growing technology companies.

This news release contains statements about future events and expectations, which are "forward-looking statements." Any statement in this release that is not a statement of historical fact may be deemed to be a forward-looking statement. Such forward-looking statements involve known and unknown risks, uncertainties and other factors which may cause the company's actual results, performance or achievements to be materially different from any future results, performance or achievements expressed or implied by such forward-looking statements. Specifically factors that might cause such a difference include, but are not limited to: the company's history of losses and anticipation of future losses; the company's dependence on the marketing efforts of third parties; the potential fluctuations in the company's operating results; the company's potential need for additional capital; the company's potential inability to expand the company's services and related products in the event of substantial increases in demand for these services and related products; the company's competition; the company's ability to attract and retain skilled personnel; the company's reliance on the company's patents and other intellectual property; the early stage of market adoption of the services it offers; consolidation of the banking and financial services industry; and those risks and uncertainties discussed in filings made by the company with the Securities and Exchange Commission, including those risks and uncertainties contained under the heading "Risk Factors" in the company's Form 10-K, latest 10-Q, and S-3 as filed with the Securities and Exchange Commission. These factors should be considered in evaluating the forward-looking statements, and undue reliance should not be placed on such statements.

Media Contact:
Beth Halloran
Director, Corporate Communications
703.394.5248
bhalloran@orcc.com