Electronic bill payment
 | It has been suggested that this article be merged into Electronic billing. (Discuss) Proposed since January 2012. |
Electronic bill payment is a feature of online banking and telephone banking, similar in its effect to a giro, allowing a depositor to send money from their demand account to a creditor or vendor such as a public utility or a department store to be credited against a specific account. The payment is optimally executed electronically in real time, though some financial institutions or payment services will wait until the next business day to send out the payment. The bank can usually also generate and mail a paper cheque or banker's draft to a creditor who is not set up to receive electronic payments.
Electronic billing can also feature invoices sent by e-mail or viewed on a secure web site (with notices of new invoices being sent by e-mail). The payment may be either by explicit authorization by the accountholder, or automatically with pre-authorization.
Most large banks also offer various convenience features with their electronic bill payment systems, such as the ability to schedule payments in advance to be made on a specified date, the ability to manage payments from any computer with a web browser, and various options for searching one's recent payment history: when did I last pay Company X? To whom did I make my most recent payment? In many cases one can also integrate the electronic payment data with accounting or personal finance software.
Peer-to-peer payment systems are extremely popular. One example is PayPal, a general-use acquirer. The buyer and seller must have a PayPal account. PayPal is used by many online sellers, such as 75% of eBay sellers, overstock.com, ritzcamera.com, and Walgreens.com.[citation needed] PayPal is also sometimes used to pay for personal debts in situations where both parties have an account.
Electronic bill payment and presentation (EBPP) includes an electronic bill payment system (EBPS). Although this technology was available from the mid 90's onward, only 26.2% of U.S. households had internet access at that time according to the U.S. Department of Commerce. By August 2000, adoption of EBPP systems started to dramatically increase. The customer is notified (typically be email) by the biller, and then is responsible to log on and pay the bill through the biller's website.[citation needed]
Using electronic Bill Presentment and Payment enables companies to fast-track customers payments online and get access to funds faster, which in turn results in cash flow improvement[1]
Limitations (United States)
Typically, US financial institutions formally prohibit the use of their consumer electronic bill payment systems for payments to any tax authorities, collection agencies, or recipients of court-ordered payments like child support or alimony.[citation needed] Any organizations or individuals outside of the United States are also usually excluded.[citation needed] Payments to government agencies for utilities such as water are usually permitted.[citation needed]
Why do banks offer bill payment as a free service? From a NY Times article (2003) -- “Now, big banks are working harder to win online bill-paying customers, often competing with individual companies for their business. "They want to own that customer relationship," said Avivah Litan, vice president for financial services at Gartner, the consulting group. "But the banks are really late to the market. The credit card companies and the telecom billers are winning." The race is on partly because paying bills online is now the fastest-growing use of the Internet, analysts say, gaining on things like reading news, getting movie times or downloading music. Even more important, the company that persuades a customer to forgo checks not only saves money but often earns that customer's loyalty. Most companies want customers on their own Web sites because they can then market additional products, answer questions and address problems -- while requiring less time from employees and saving on phone calls and letters. For banks, the potential benefits are even greater. Customers who use their bank's Web payment tools keep twice as much money at their bank as those who simply go online to check their accounts, according to a study to be released today by comScore Networks, which measures Internet use. The banks say that customers who pay online show more loyalty and are more receptive to other offers.” (http://www.nytimes.com/2003/04/21/business/banks-offer-sweeteners-to-paying-bills-online.html?pagewanted=all&src=pm)
See also
References
- ^ "eBPP workshop at CeBIT Future of Payments 2012" (PDF). Retrieved 2012-12-12.