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.