The Details About E-Bills and Bill Payment

By Gail Rickards

I just read the following projection from a just-released study conducted by the Internet Research Group: "By 2002, 25% of all U.S. households will be able to view and pay at least 8 monthly bills online."

What does the statistic translate to? 330 million bills won't be printed on paper, placed in envelopes, stamped, carted to the post office, sorted, shipped, and delivered to our homes.

Instead, they will appear on bill payment sites, looking exactly as they would if they had been printed on paper. Securely and quickly, a graphic digital file for each bill will arrive at the correct site according to each customer's instructions.

Over the next 18 months, e-billing (shorthand for "electronic bill presentment") will make online banking very attractive. E-bills will take most of the work out of your bill paying routine.

How Does Bill Payment Work Without E-Bills?
Setting up bill payment takes your time and effort. For each paper bill you receive in the mail, you enter the company or person to pay, the payment address, amount owed, and date due. You also have to check whether a bill is one-time-only or should be paid on a regular (i.e. monthly) schedule.

The bill-payer handles your bills one of two ways: 1) if there is an electronic address for the payee, it originates an electronic funds transfer (EFT); or 2) if there is no electronic address, it issues and mails a check. Today, checks are used more than 50% of the time because the majority of companies are not set up to receive electronic payments.

Next month, you receive your bills in the mail. New bills must be entered into your bill payment system with all the required fields completed. Recurring bills (such as your monthly mortgage or car payment) are paid automatically before their due date. You can cancel payment before the due date, but if you decide later that you want to re-start automatic payment, you have to re-enter the necessary information.

E-Bills Simplify Bill Payment and Add Flexibility
An e-bill is delivered electronically to your bill folder in your bill-payer's site. Then you have a variety of options for how it gets paid:

You pay it yourself.
Your bill payment service pays it electronically this month.
Your bill payment service pays it every month--as long as the bill doesn't exceed a pre-determined dollar limit that you set. If your utility bill suddenly doubles, for instance, your bill payment service will ask you online whether to pay it or not.

Are E-Bills Safe?
The transmission of an encrypted e-bill file to your bill folder on your bill-payer's site uses the latest security technology. The site is secure, and you have to log in with a unique ID and password.

You have other protections, too:

Regulation E^* covers research and resolution of Electronic Funds Transfer errors, including those made in online bill payment.
Stop payment rules (spelled out in the Uniform Commercial Code) apply to any payment you authorize--electronically or on paper. Be sure to contact your bank before the transaction is charged to your account.
You contract with bill payment services. Major bill-payers, such as CheckFree, guarantee their services, including handling e-bills.

The E-Billing Foundation is Solid
The ACH Network, a highly reliable and efficient nationwide electronic funds transfer system that processed nearly $20 trillion in transactions last year, is governed by the National Automated Clearing House Association (NACHA) Operating Rules.

Last year, NACHA released electronic bill presentment and payment practices crafted by a high level group of billing companies, bankers, and service and technology companies. The practices set technical and business standards based on several principles:

The security and privacy of billing and payment information is essential.
E-billers and bill-payers must act on requests and instructions in a timely manner.
They must maintain adequate records and tracking systems.
Problem notification must occur so that e-billers and bill-payers can take corrective action.
Customers and other participants must receive information about whom to contact and how.

Knowing what I now do about the foundation beneath the major e-billing expansion we can expect to see over the next few years--in addition to the technological security used in I-banking--I can't wait for the day when all my bills are e-bills. How about you?

*Regulation E is a federal banking regulation that spells out how and during what time period a person can inquire about an error or problem involving an electronic transaction--such as using an ATM--and exactly how the bank must handle research and resolution.

Do you have questions, comments or topic requests?
E-mail me at: gail@rickardsconsulting.com