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Consumers who do not have access to the Internet, a computer or a credit card can still tap into the electronic age to pay bills. The solution is direct payment.
Direct payment allows you to have your bills paid automatically from your bank account. Once you sign up you will never have to worry about making that payment again.
The Direct Deposit and Direct Payment Coalition was formed to promote the benefits of Direct Deposit and Direct Payment to consumers, companies and the country. The coalition is composed of the Federal Reserve, the National Automated Clearing House Association (NACHA) and regional ACH associations. The Coalition produced the following chart to help consumers weigh out the advantages/disadvantages of direct payment. For more information, please visit the Coalition's Web sites at
www.directdeposit.org or www.directpayment.org
OPTIONS FOR ELECTRONIC BILL PAYMENT
Bill Payment Options
Direct Payment
Definition: Automatic bill paying service that does not require a
computer. Payments you designate are debited from your
bank account automatically
Also known as direct debit, automatic bill payment,
automatic debit, electronic bill payment,
automatic withdrawal
Provider: Billers
Benefits: * No need for computer, software or Internet access
* Free (in most cases)
* Tried and true -- operating successfully for 25
years
* Confidential and secure -- uses same network as Direct
Deposit
* Automatic -- do not have to do anything to pay bills
once set up
* Reliable, accurate and on time -- payments are never
made by paper checks
* Ideal for recurring payments, such as utilities,
mortgages and installment loans, insurance,
investments and health club fees
Drawbacks: * Must sign up with each biller separately (in most
areas)
* Limited flexibility in terms of amount and timing of
payment
* Sign-up process can take a full billing cycle
(generally 30-60 days)
Availability: Virtually every bank can handle Direct Payment transactions.
Seventy-three percent of utilities, 44% of
communications companies and 41% of insurance, finance
and real estate companies (combined) offer Direct
Payment to customers.(A)
Computer Banking Services and Personal Finance Software
Definition:
Banking and bill paying services on your computer,
either through the Internet or computer software.
Customers receive paper bills in the mail and designate
payment through their computers(*).
Also known as online banking, Internet banking, Web
banking, virtual banking, PC banking
(*) Some options may be offered via telephone as
well.
Provider: Banks, credit unions, savings and loans or third party
personal finance software, such as Quicken or
Microsoft Money.
Benefits: * Control amount paid for each bill and when payments
are sent
* Payment amount flexibility -- can make partial
payments easily
* One-stop banking option -- can also pay bills, check
account balances, review finances and more
* Can bank and pay bills anytime, day or night
Drawback: * Cost -- approximately $5 or $6 a month for online
banking. Prices range from $30 to $100 for most
personal finance programs
* Must have a computer with a modem. In most cases,
Internet access also necessary
* No service if Internet connection down
* New and unproven -- no clear standard yet and
security measures still evolving
* Not automatic -- still have to make time to pay
bills
* Payments not always made electronically -- in some
cases may still involve third party issuing paper
checks for you
Availability: At the end of 1998, there were almost 300 online
banking sites, including sites offered by all major
banks.(B)
The two most popular personal finance programs are
Intuit's Quicken and Microsoft Money. Microsoft Money
has users in more than 10.5 million U.S. households.(C)
Online Bill Presentment and Payment Services
Definition: Billing and payment service provided through the
Internet. Customers receive and view bills online, and
initiate payment on the Web.
Also known as
electronic bill presentment and payment
Provider: Billers, third party service providers, such as
CheckFree or TransPoint, or banks*.
* Several banks offer online bill presentment and
payment as an option through their online banking
services
Benefits: * Control amount paid for each bill and when payments
are sent
* Payment amount flexibility -- can make partial
payments easily
* Pay many bills through one service and one Web site
(bank and third party service provider sites only)
* Can pay bills anytime, day or night
* Eliminates paper bills
Drawbacks: * Cost -- approximately $10 a month for up to 15
electronic payments (for banks and third party providers)
* Must have a computer and Internet access
* No service if Internet connection down
* New and unproven -- no clear standard yet and
security measures still evolving
* Not automatic -- still have to make time to
pay bills
* Payments not always made electronically -- in some
cases may still involve third party issuing paper
checks for you
Availability: CheckFree and TransPoint, the two largest providers,
serve all 50 states.
CheckFree serves one-fourth of the top 100
billers. TransPoint currently is running a pilot
program with about 40 billers.
A Vantis International Research, June 1998
B Online Banking Report, Feb. 1999
C USA TODAY Tech Report, Jan. 7, 1999
The specific companies and services listed above are cited for reference only. The coalition in no way endorses any of the above mentioned products or services.
