Online Bill Services Ease Mundane Task
/ October 10th, 2000
It's the fifth of the month and (gulp!) you forgot to mail your credit card payment before leaving
for vacation. Wouldn't it be nice if you could take that hamster's nest of bills on your kitchen
table and let someone else deal with it? Well, you can.
By 2003, industry analysts expect 25 million U.S. households to pay two billion bills online. Online
bill payment and presentment services, as they're known, won't necessarily save you money, but they
can save you time. As long as you have Internet access and a Web browser, you can cut a check at 2
a.m. in Trinidad, or noon in New York.
It sounds convenient. But is it safe, secure, and affordable? There are several things you need to
know about the rights and responsibilities that come with online bill payment. Here are a few of the
most commonly asked questions:
How does online bill payment work?
Electronic bill payment is user-friendly. All you need is
Internet access and a Web browser, such as Netscape or Microsoft Internet Explorer. After you've been
authorized to use the service, you set up a payment schedule for regular bill payments such as your
mortgage, or one-time payments for a birthday gift. You indicate the payee, the date the check must
be sent, and how often you want the bill paid. You then authorize the online service to pay the bill.
Several vendor companies, such as utility companies, can both send and receive bills electronically,
while others work only with paper (many bill payment services scan your paper bills and send them to
Either way, the process is the same for the consumer: The bill payment service either cuts a check on
the date you specify, or transfers the money from your account using the Automated Clearing House
(ACH). The ACH is the secure transfer system that connects all U.S. financial institutions. To be
safe--that is, to make sure your payment arrives on time--schedule your payments to be sent five to
seven days before the due date.
The service withdraws the funds from the account of your choosing, and the transactions appear on
your monthly credit union share draft statement.
Unlike your financial institution, which may sometimes cover a temporary overdraft, online bill
payment services charge penalties for bounced checks. If you're used to playing checkbook roulette,
online bill payment is not for you.
You don't want
become a commodity
on the Internet
and neither do
Where do I sign up?
Considering the personal nature of the transactions you're conducting,
you may feel more comfortable subscribing through a trusted financial institution such as your credit
union. Many financial institutions subscribe to a service such as
"All of your bills are managed in one place on the Internet," says Erin Cullen, Microsoft's product
marketing manager. "You don't have to dig in the drawer for that Macy's bill."
You also can sign up directly through those Web sites or through a portal such as
What information will I have to give?
To sign up, you'll have to fill out a registration form
that asks for personal information such as your Social Security number and your mother's maiden name.
Be prepared with the names and addresses of people and companies you want to pay, as well as your
credit union share draft account information. The service will send you a confirmation number that
lets you log on to the system.
To make sure
arrive on time,
to be sent five
to seven days
before the due date.
What will the online bill payment service do with my personal information?
payment services ask for personal information for verification and identification, and should have
stringent policies stating that they will never sell or pass on your information to any company,
government, or third party. Ask to see those policies.
How much does it cost?
Fees vary depending on the number of checks you write and the service
you choose. Transpoint offers a standard service for $2.95 that allows you to write up to 20 checks a
month to more than 750 major vendors, including utility companies and department stores. Its premium
service costs $5.95 and allows you to write up to 20 checks to the same 750 companies, plus just
about anyone else from your babysitter to your florist. You can write additional checks for a nominal
fee. Other online bill payment services offer similar plans.
How can I keep track of my transactions?
The bill payment service you choose should provide a
comprehensive, real-time system for tracking and editing the bills you've paid, scheduled, or
stopped. The service usually will store your account activity for six months to a year. It's crucial
that you keep your own records of all the transactions you have made, and check your regular credit
union statements carefully.
Is there anyone I can't pay?
You can write a check to almost anyone in the U.S. except for
the Internal Revenue Service. You also must make court-ordered payments, like child support, the
Are my transactions secure?
You don't want to see your personal information become the
hottest commodity on the Internet black market, and neither do reputable bill payment services. Many
use a strong 128-bit encryption that scrambles your information so a third party can't read it.
You'll also be given a password and user ID. Transpoint also conducts regular audits and hires an
outside firm to test the system, says Cullen. Still, it is ultimately your responsibility to ensure
the provider you choose will protect your information.
automatically signs you out of a session if you're inactive
longer than 10 minutes. It's best if you sign out immediately after you finish scheduling and making
of all the
What happens if someone withdraws money from my account illegally?
The Electronic Funds
Transfer Act (EFTA) states that you can't be held liable for more than $50 if someone uses your
account without your authorization. Read the fine print, however, as the act only applies for a
certain number of days after you discover the error. Checkfree and Transpoint clearly outline their
guarantees on their Web sites, and have a team of customer service representatives available 24 hours
a day, 365 days a year. Your financial institution may have other requirements for reporting a
What should I do if I find an error?
Errors are rare, but if you find a discrepancy, call or
e-mail the service immediately. Put it in writing and mail it, as well. Most services will conduct an
investigation into the problem and get back to you in a few days. In many cases, if the error is
theirs, they will contact the vendor who sent the bill and try to resolve the problem for you.
|Keep your information secure|
- Use a secure browser. Most computers come with a secure browser already installed. You also can download some browsers free over the Internet.
- Keep records of your online transactions.
- Review your monthly credit union and online statements for billing errors or unauthorized purchases.
- Read the policies of the online bill payment service, particularly those concerning security, errors, and use of your personal information.
- Never give your password to anyone online, even to your Internet service provider.
- You can file a complaint with the Federal Trade Commission by contacting the Consumer Response Center toll free at 877-FTC-HELP [382-4357]; TDD 202-236-2502; or by writing to Consumer Response Center, Federal Trade Commission, 600 Pennsylvania Ave., NW, Washington, DC 20580.