| The majority of major banks and financial | | | | - If they are paying a bill for the first |
| institutions in the United States today offer | | | | time, they need to go through a simple |
| bill pay services to their customers. This | | | | one-time setup process for the biller. This |
| article explains how these electronic bill | | | | involves selecting a biller from a list of |
| pay services work. | | | | supported billers, or entering the biller |
| | | | information from their paper bill into a web |
| The majority of major banks and financial | | | | form. The data required by the consumer to |
| institutions in the United States today offer | | | | add a new biller will include the biller |
| bill pay services to their customers. Most | | | | name, biller address and phone number, and |
| banks choose to out-source their bill pay | | | | the consumer's account number with the |
| applications to 3rd party providers. The | | | | biller. This biller setup is a one time |
| largest providers of bill pay services to | | | | process for the consumer. After a new biller |
| financial institutions are CheckFree and | | | | has been established in the consumer profile, |
| Metavante. | | | | that biller will remain in their personal |
| | | | list of billers for ease of making future |
| These 3rd party providers establish and | | | | payments. |
| maintain electronic connections to the major | | | | |
| billers in the country, and utilize the ACH | | | | - If the newly added biller has the ability |
| system to deliver the payer's money to the | | | | to send e-bills, the consumer will be |
| recipient biller. While many billers will | | | | prompted with that information and can choose |
| accept credit cards for bill payments on | | | | to accept or decline the offer to receive |
| their own web sites (these are called biller | | | | e-bills. |
| direct web sites) these same billers are less | | | | |
| likely to accept credit cards when bills are | | | | - Once the consumer has setup the biller that |
| paid through banking web sites. This is | | | | they want to pay, they indicate the date that |
| primarily due to the fact that ACH payments | | | | they want the payment sent to the biller, and |
| are very inexpensive to the biller, whereas | | | | the amount of the payment. |
| credit card payments can be comparatively | | | | |
| quite expensive due to the associated | | | | - In addition to allowing the consumer to |
| interchange costs that cards carry. | | | | make single payments to billers, many on-line |
| | | | bill payment applications will also allow the |
| In addition to being able to pay bills at | | | | consumer to setup recurring payments. If the |
| banking web sites, many banks have also | | | | consumer elects to setup recurring payments, |
| enabled the capability for the consumer to | | | | the provider will automatically generate a |
| receive an electronic version of their bill | | | | payment every month to that biller on behalf |
| as well. These electronic bills are called | | | | of the consumer until the time that the |
| e-bills. | | | | consumer chooses to turn the recurring |
| | | | service off. |
| If the 3rd party provider does not have an | | | | |
| electronic connection to the biller that a | | | | - On or around the due date for the payment, |
| consumer is trying to pay, the provider will | | | | an ACH debit is made against the consumer |
| print and mail a check to the biller on the | | | | account to withdraw the specified funds, and |
| consumers' behalf. Currently, the major bill | | | | a corresponding ACH credit (or paper check) |
| pay providers deliver about 80% of their | | | | is generated to deposit those funds to the |
| bills electronically via the ACH system, and | | | | recipient's bank account. If the consumer |
| the remaining 20% are paid via paper check. | | | | does not have enough money in their account |
| The ability for a consumer to pay any bill | | | | to cover the amount of the payment, the ACH |
| that they need to pay, regardless of whether | | | | debit to the consumer's bank account will be |
| the provider has an electronic connection to | | | | rejected and the payment will not be made. |
| the biller or not, is called a pay-anyone | | | | |
| capability. | | | | - The on-line banking bill pay website |
| | | | maintains a historical view of transactions |
| Here is how the typical bill pay application | | | | so that the consumer can have a record of the |
| works: | | | | date and amount of previous payment |
| | | | transactions. |
| - A consumer logs onto their bank's | | | | |
| on-line bill payment application. | | | | Copyright © 2007, Payment Info Center All |
| | | | rights reserved. |