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Do It Direct

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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.

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