Paying Your Bills at the Keyboard

August 28, 2006
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Every year, paper checks by the billions must be sorted, processed, shipped through a complex network, processed again, and scanned electronically or returned to the writer by mail. That's one of the reasons why your bank would like you to pay your bills electronically - and they're making it easy and profitable for you to do so.

Until recently, the idea had been slow to catch on. Change doesn't come easily to many of us, especially when it comes to how we handle our money. Fears on the part of many small business owners and consumers about the security of paperless transactions added formidable hurdles on the road to a checkless society.

In the last few years, however, the sluggish stream of Americans viewing and paying bills online has become a raging torrent. According to Jupiter Research, nearly 30 million Americans were signed up to view their bills online at the end of 2003. Half of those were paying at least some of their bills online. By the end of 2006, Jupiter estimates that more than 41 million individuals and business owners will be viewing bills online with two-thirds of them paying electronically.

"I love not having to write and mail checks each month," said Allison Winn Scotch, New York. "Now I just log on to my bank's Website when I have a moment. No more worrying about buying stamps and getting to a mailbox."

And, of course, the savings in postage gets more attractive with each round of postage rate increases. Another jump in stamp prices is scheduled for January of next year.

If you've resisted the idea of using your computer to pay bills, now may be the time for you to try it for your business, at home, or both. The spread of high-speed Internet connections, greatly improved Websites, and technology that simplifies the procedure have combined to make online bill paying easy, comfortable, and profitable.

IS ONLINE BILL PAYING SAFE?

"Online bill payment is at least as secure as conventional payment [paper checks]," said Elizabeth Robertson, senior analyst at the research firm, TowerGroup.

Some researchers go further, saying that online bill paying is less vulnerable to fraud and identity theft than conventional paper transactions.

Some banks are offering new incentives to demonstrate their confidence in the safety of online payments. For example, Bank of America promises "zero liability" to protect customers against unauthorized charges.

There are three basic categories of electronic bill paying service providers: individual creditors, banks and brokerages, and independent Websites. Among the individual creditors are utilities and credit card companies, most of which allow paying of bills online at their individual Websites at no charge.

Telephone giant Verizon is typical of utilities offering customers the option of paying online or authorizing automatic deductions from their bank or credit union accounts. When you sign up with Verizon, you may elect to stop receiving paper bills in the mail in favor of viewing complete bills online. If you do, the company will send you an e-mail notice when a new bill becomes available online.

According to the company, the number of Verizon bills being paid electronically now exceeds 6 million, up from 3.3 million in 2002.

The disadvantage of dealing directly with individual creditors for online payment is that you must sign up for each one separately. According to researchers at TowerGroup, the average household receives 13 bills monthly. Most HVAC dealers will receive more, perhaps twice that many. That could mean lost time logging on to a variety of Websites.

ONE-STOP SHOPPING

More convenient for those who want to pay as many bills as possible from one site are the services offered by banks and brokerage firms. Most major banks in the United States now offer online banking and bill paying for their customers. Using their service, you may pay most, if not all, of your bills from the same site.

Some banks even allow you to pay an individual through their Website. Thus, if you want to repay your brother-in-law for those theater tickets, the bank will create and mail a check to him and debit your checking account, all with the tapping of a few keys on your keyboard.

When you pay bills to major creditors, the entire transaction is often, but not always, done electronically with no paper check involved.

Some banks charge for their bill-paying service, some offer it free. Others may or may not charge for the service depending on the type or size of the customer's account. Independent companies charge from $4.95 to about $15 per month, depending on the range and type of service offered.

Why would a business owner who could probably find a free service be willing to pay for online bill paying?

"We agree that rather than pay a fee, the first place consumers should look when they want to get started paying bills online is their bank's Website," said Judy DeRango Wicks, vice president of CheckFree.com. "In many cases today the bank's service is free to everyone, or free to those who meet certain parameters set by the bank.

"For those who can't get this service from their financial services provider, CheckFree offers two services, one of which is free - www.mycheckfree.com - which offers all of the e-bills we have in distribution, nearly 300 e-billers. The CheckFree ‘pay anyone' service is also available for a fee to consumers whose banks don't offer electronic billing and payment."

NOT EVERYONE IS HAPPY

Of course, even the most ardent fans of online bill paying have some complaints. "When I schedule a payment to be made, the actual payment date is often a full week from the time I authorize the payment," said Lisa Beamer, Pittsburgh.

"That seems excessive to me for something that is being done electronically. I assume that when I put a check in the mail that it's going to get to where it needs to be in less than a week."

And there are those folks who remain unconvinced about the security of online payments. "I guess I just feel safer with my collection of cancelled checks to prove I paid my bill," said one holdout. "I have trouble getting used to the idea of someone else paying my bills."

Still, if the current trend is a reliable indicator, taking pen in hand to pay your bills seems destined to become as archaic as carbon paper and typewriters in the office.

If you're still unconvinced, consider dipping a cautious toe in the online bill paying waters. Sign up with just one creditor, pay one bill, and sit back to see what happens. Chances are you'll be hooked.

There are also a number of independent Websites providing electronic bill-paying service. Among the most popular of these are Paytrust (http://paytrust.com), and Checkfree, (http://checkfree.com), both of which offer a variety of peripheral money management services and charge a monthly fee.

Publication date: 08/28/2006

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