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