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Electronic billing

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Electronic billing or electronic bill payment and presentment, is when a company presents (sends) its bills and customers pay these electronically over the Internet.[1]

History

The model was created by the Council for Electronic Billing and Payment of the National Automated Clearing House Association. Certain electronic billing applications also provide the ability to electronically settle payment for goods or services. Customers of banks and billing companies can use the internet or the phone to conveniently remit payments as well as access their billing information. The service is also supported by customer service representatives (CSRs) contacted directly by the consumer to facilitate payments or receive general assistance and answer questions. It can produce substantial savings to traditional print & mail billing and payment remittance, and as an added benefit is a significant reduction in the use of paper.

Different Types

  • Biller-direct - This refers to an approach in which consumers make payments directly to one biller that issues bills that they receive at the website of the firm that issued the bill. An example would be of a public utility company offering this payment service to its consumers. A market has emerged for outsourced billing providers who specialize in electronic billing processes and technology for companies that need to send bills directly to their customers.
  • Bank-aggregator - The approach under this model is to make payment at an aggregator or consolidator site, usually from a consumer's bank’s website. This model allows the consumer to make payments to multiple billers that are pre-registered to receive payments. An example in the UK is OneVu.

Parties involved

Billers, bankers, aggregators and consolidators can play various roles in the overall process. Once roles are defined, it is easier to identify which model is most appropriate for the client's strategy. Billers may also implement more than one model in order to best serve their clients. Because the industry is continuously changing and redefining, the options and opportunities will continue to expand.

  • Biller payment provider (BPP) - An agent of the biller that accepts remittance information on behalf of the Biller.
  • Biller service provider (BSP) - An agent of the biller that provides the service for the Biller.
  • Consolidator - A biller service provider that consolidates bills from multiple Billers or other bill service providers (BSPs) and delivers them for presentment to the customer service provider (CSP).[2]
  • Customer service provider (CSP) – An agent of the customer that provides an interface directly to customers, businesses or others for bill presentment. CSP enrolls customers, enables presentment and provides customer care, among other functions.

NACHA

NACHA-The Electronic Payments Association is a not-for-profit trade association that develops operating rules and business practices for the Automated Clearing House (ACH) Network and for other areas of electronic payments. NACHA activities and initiatives facilitate the adoption of electronic payments in the areas of Internet commerce, electronic bill payment and presentment, financial electronic data interchange (EDI), international payments, electronic checks, electronic benefits transfer (EBT) and student lending.

To define some guidelines for best practices, NACHA has created the Council for Electronic Billing and Payment of the NACHA InteroperaBILL Initiative of the Banking Industry Technology Secretariat (BITS).

Online banking

Electronic bill payment is a now-common feature of online banking, similar in effect to a giro, allowing a depositor to send money from his 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.

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 over internet, 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.

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. Any organizations or individuals outside of the United States are also usually excluded. Payments to government agencies for utilities such as water are usually permitted.

Electronic bill pay systems fall into two categories, "pay-anyone" services and restricted biller list services. In a pay-anyone service, the provider will facilitate a payment to the payee regardless of whether they have an electronic connection with that payee or not. If they cannot deliver the payment to the payee electronically, they will print and mail a paper check on the payer's behalf. The largest providers of electronic bill pay services can deliver about 80% of their payments electronically, so 20% of payments facilitated by the large pay-anyone services are still made by mailing a paper check to the biller. This is the primary reason why some billers in a pay-anyone service require as much as a 5 day lead time for the payment to reach the payee.

Restricted biller list payment services allow you to pay any biller that is in the provider's network, and in these services where the provider has an electronic relationship with the biller, the payments will be delivered electronically.

SADAD Payment System (Saudi Arabia)

SADAD Payment System SADAD was established by the Saudi Arabian Monetary Agency (SAMA) to be the national Electronic Bill Presentment and Payment service provider for the Kingdom of Saudi Arabia (KSA). The core mandate for SADAD is to facilitate and streamline bill payment transactions of end consumers through all channels of the Kingdom’s Banks. SADAD was launched on October 3, 2004.

SADAD links the commercial sector and local banks, offering the ability to collect customer payments electronically through all the banking channels in the kingdom 24 hours a day.

References

  1. ^ "What is EBPP (electronic bill presentment and payment)?". webopedia.com. Retrieved 2008-07-13.
  2. ^ Information on several solutions
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