May 152013

By W. Abdelgawad for

Everyone seems to want you to put your money on autopilot. Employers and banks encourage you to set up direct deposit of your paycheck. The gym, the phone company and subscription web services all encourage you to set up automatic billing. Online bill pay services let you turn on automatic bill pay, so that your bills get paid instantly from your checking account or by credit card as soon as they come in.

Even many finance experts recommend automating your financial processes. Doing so, they say, can help you stick to your budget, and prevent you from paying late on important bills.

Direct deposit

Automating your finances is not a good idea.

I’m going to have to be a contrarian on this one. Setting your finances on autopilot can have unintended and dangerous consequences:

1. You might miss extra or accidental charges on bills. Maybe your phone bill has suddenly jumped for no good reason. Maybe your bank has signed you up for some extra paid service you didn’t want. The sad reality is that most companies are looking for ways to take more of your money. They’re not looking for ways to give you money, that’s for sure.

If you receive paper bills and take a moment to look them over, you will almost certainly catch any inappropriate charges. Even if you pay your bills online, those few minutes that it takes you to log on and review the bill will probably be enough to spot anything that doesn’t belong.

Check out the story of Chris Bovis of the UK, who was hit with a £19,000 phone bill because of a glitch in his iPhone that caused it to send and receive internet data in error. The phone company tried to take the money out of Chris’ bank account but the bank blocked the transfer. If Chris had signed up for automatic billing who knows what might have happened. The phone company might have been allowed to take the money, resulting in overdraft charges returned checks.

2. Encourages overspending. Just having a credit card is known to encourage people to spend more than they can afford, since everything happens “out of sight”, so to speak. So how about when the credit card bill gets paid automatically and you don’t even have to review it?

You could very easily get careless with your spending and end up in serious debt.

3. Greater chance of overdrawing your checking account. If you’ve got different services auto-billing your checking account and you’re not keeping an eye on it, there’s a good chance you could become overdrawn. Maybe someone doesn’t cash a check you wrote right away, and you don’t notice it. Maybe a service bills you quarterly instead of monthly and you get hit with a bigger bill that you expected.

Build Good Financial Habits Instead

Instead of setting your finances on autopilot, develop good money management skills. Don’t get me wrong, there’s nothing with direct deposit – I use it myself – or with online bill pay. But scrutinize your bills before you pay them. Review your credit card statements,  and bank and brokerage statements. Use a debit card rather than credit card (or pay cash, or write checks). Every month compare your income against your spending.

These habits will serve you well over the long run, in your personal life and in business as well.

Apr 082013

By Renee D. for

Having the ability to pay bills online has been made life easier for millions of people. While there was some concern initially, online bill pay services have become so popular and commonplace that most people never give any thought to security.

Online security

Online security – how secure is your bill pay account?

Most companies and financial institutions offer state-of-the-art protection for the different types of services offered. Unfortunately, however, there are still a few that depend on older security systems that do little to protect personal and financial information.

For anyone interested in paying bills online, it is important to choose a reputable service but also one with the highest level of security available. The biggest challenge is that most consumers know little about security, which makes it difficult to know which companies and institutions are actually safe opposed to those that pose some degree of risk. Knowing what to look for would make it easier for an individual to choose a service for paying bills online but without worrying about personal or financial information being stolen, shared, or sold.

Security Measures

There are actually several different levels of security available to keep consumer information safe. The following are a few of the most important security measures to look for in any online bill payment service.

o User ID – In addition to setting up an initial user ID, customers of any bill pay service should have the ability to change this identification whenever wanted

o Password – As with the user ID, an individual would choose a unique password that no one else would have but another critical security measure a system that allows a user’s password to be reset. However, not only should the password be something chosen by the customer but validated with unique security questions for which answers would have to be provided.

o Customer Service – Consumers should have the ability to reach a live customer support representative whenever there are questions or concerns about an account or transaction. Therefore, any service being considered for paying bills online should also have support 365-day, 24-hour support.

o Terminology – Another challenge when trying to separate online bill pay services from those that could lead to information being compromised is terminology.

Unless a person has a technical background, it would be difficult to know what security terminology means. Although not every term used should be researched, it would prove beneficial for a person to gain a general understanding of online bill pay terminology.

o Gateway – The gateway is very important for someone who wants to send or receive money online but also pay bills. Although many online bill pay services use only a payment gateway, some of the more reputable sites utilize this gateway in conjunction with the payment handoff option. The three main types of gateways are described below:

o Payment Gateway – With this gateway, messages are sent via an API to authorized networks, which in turn receives an approval or denial response. This particular gateway is deeply embedded within the company or organization’s software, which mandates a diligent PCI certificate but in some instances, certification for PA-DSS as well.

o Virtual Terminal – In this case, a site that offers payment services would be replaced with an actual terminal connected to a workstation used with a swipe device for swiping credit and debit cards.

o Payment Handoff – This is actually a combination of a payment gateway and virtual terminal. For payment approval, only a small portion of the virtual terminal would be required and for payments being captured and authorized, a third-party would be involved. Depending on the setup, paying bills online would be done in real time or scheduled batches.

o Collected Information – The type of information gathered by online bill pay sites varies but in general, this type of service should be most interested in a person’s name, email address, physical mailing address, and phone number. This information would be used for two primary purposes to include processing financial transactions and sending out informative or alert emails. If additional information is requested during the registration process, more research should be performed on that particular company or organization.

o Information Protection – For the personal information that is provided, a secure server is needed. Using SSL (Secure Socket Layer) technology encrypted into the gateway database would make this information accessible only to someone with specific authorization. As a result, any information provided would remain confidential.

o Stored Information – While personal information would be stored on the server, any financial information to include bank account information, credit card numbers, social security number, and so on should never be stored on the online bill pay company or organization’s server.

o Cookies – Most people are aware that cookies are often used by hackers as a means of gaining information about the types of sites visited or transactions completed. Specific to paying bills online, it is common for cookies to be used but only to get a better understand of what customers prefer to the bill pay site. However, if the latest technology is used for security, enabled cookies should not cause a problem.

o Information Sharing –When first registering with an online bill pay services, it is common for an “opt-in” box to appear. There would be a brief description of what happens if checked, which is critical. If not careful, a person could accidentally choose to opt-in, which means to give that company or organization permission to sell or share personal information. Sometimes, the Terms and Conditions will also provide key insight into whether the bill pay service offers customer information to third-parties. Obviously, information should never be sent, shared, or sold to anyone.

o Redirects – The last thing we wanted to mention about security for online bill pay sites has to do with redirects to third-parties. Although third-party references or even affiliate links might be provided on a bill pay website, at no time should there be an automatic redirect. Only consumers should have the authority to visit another site, which adds to security when paying bills online.

Nov 092012

By Renee D. for

The internet has of course been around for decades now, but services like online bill pay are fairly recent. Also known as “electronic bill payments” or “e-bill payments”, online bill pay is a unique service that most banks, credit unions, and specialty companies offer consumers for both business and personal need.

What is an Online Payment Service?

As the name implies, this service makes it possible for you to pay your bills via the internet as opposed to mailing them in through the post. The exact methods of pay would depend on the exact company or financial institution.

Online bill pay

Online bill pay has grown in the last few years.

For instance, some bill pay systems are set up so money would be deducted directly from your checking or savings account with a bank or credit union. Alternatively, payment could be made using a credit card or debit card. In fact, there are some services that accept both forms of payment.

Components of Bill Pay Services

Along with different methods to pay bills online are system features that vary for each business or financial institution. However, every bill pay service offers many of the same features, such as:

Delivery – Due to consumer demand, most payments are sent in real time. On the other hand, there are some payments that are processed as part of a batch. With this, payments from multiple customers would be sent together but to different creditors.

Fees – Although it is common practice for fees to be charged when sending money via a transfer or bill pay system, the amount varies from one company or financial institution to another. Because the fees charged can be significant, you should familiarize yourself with the fee structure prior to using any service for paying bills online.

Retail or Peer-to-Peer Payments – While most of the better known payment services accommodate payments of all types, there are some that only process payments to retailers and peers, which would include online retailers like,, and, among others.

The EBP System – Electronic Billing and Payment

The National Automated Clearing House Association’s electronic billing system was created by The Council for Electronic Billing and Payment (EBP). This model made it possible for specific billing applications to be implemented and payments to be submitted by customers. Once approved and launched, EBP systems provided the ability to pay bills over the phone but also via the internet. As part of this new system, customers were also given the opportunity to access financial and billing information.

Any good online bill pay service will offer efficient customer support by telephone and email to help customers facilitate payments, get answers to important questions, or raise concerns. There are other benefits to paying bills online. For instance, making payments is easier and more convenient but also less expensive since the need for stamps is eliminated. Online bill pay is also environmentally friendly since fewer trees are cut down to produce paper.

Between banks, credit unions, and special bill pay companies, different types of systems are used. However, the two most common systems include the following:

Bank Aggregator – With this model, payments are made at an aggregator or consolidator site. In most cases, the payments are facilitated by the individual’s own bank via website. The greatest benefit to this option is the ability to pay several creditors at once that are already registered and approved to receive payments.

Biller Direct – This second model allows an individual to make payments through just one biller. With this, the bill pay service could accommodate bills issued from a creditor that are sent to the creditor’s website. For instance, an electric or gas bill would authorize the bill pay company or financial institution to be a third-party through which a person could make the payment.

Team Approach

While it might seem that paying bills online is a process that involves only the debtor and bill pay facilitator, in reality there are several parties involved. For instance, bankers, billers, consolidators, and aggregators also play a key role in bills being paid online. Obviously, the exact parties involved depends on the service but also the consumer’s specific need. Some of the primary players in online payment services include:

Biller Payment Provider or BPP – This is a biller’s agent through which remittance information would be received on behalf of the actual biller

Biller Service Provider or BSP – Also a biller’s agent, the focus for this is not on the customer but instead on the biller

Consolidator – A consolidator is a biller service provider responsible for consolidating bills from more than one biller. In addition, the consolidator would consolidate other Bill Service Providers, which would then be presented to a Customer Service Provider or CSP.

Customer Service Provider or CSP – As the title implies, this is a customer support professional that provides answers and assistance to individuals and businesses but other presenters of bills as well. As part of the CSP’s job, customer would receive assistance with enrollment, given approval to present bills, and provided ongoing support for issues or concerns that might arise.

Jul 082012
Online banking, woman with laptop

Online Bill Pay: Should You Use Your Bank or an Outside Vendor?

By Joyce Morse for

Most banks today offer the option of online bill pay; however, there are several independent companies that also provide online bill pay services. They are becoming more popular but many people still do not know the difference between the two and the limitations of each.

Online Bill Pay through Your Bank

If you choose to use the online bill pay service through your bank, you can set up as many payees as you wish. They can be businesses or individuals, and payment can be sent electronically or by paper check. Many businesses are already recognized by banks such as credit card companies and you do not even need to provide a payment address.

You will need to provide some information to the bank to set up these accounts:

  • Your account number with the company
  • The payment amount
  • The payment date
  • Phone number and address if it is not on file

You will have to set up each account individually and instruct the bank which account to use if you have more than one. Many banks also offer mobile banking with an app where you can control your payments from your smart phone or other mobile device. However, you usually cannot add a payee with the mobile app or make other changes to your account other than setting up a payment to an existing account.

Banks will send you reminders through email or text messages when your payment is due or when it has been sent if you request it. You can also set up automatic payments so you don’t have to remember each month. It is also guaranteed by the bank to be paid on time if you follow the procedures that they provide.

Independent Bill Pay Vendors

You can also use an independent company to pay your bills online. This has become more popular in recent years, which means you will have more companies to choose from. They provide similar services to a bank’s online bill pay service, but there are some key differences.

With an independent company, you can set up payments through more than one bank account. This is helpful if you have accounts at more than one bank or if you manage another person’s account, like a parent, at a different facility. Instead of having multiple logins and passwords, there is only one to remember for all of your accounts.

You can usually pay individuals as well as businesses, but not always, so be sure to find out before you sign up. A major difference between banks and independent online bill pay services is the cost. Many banks offer the service for free since you have an account with them. Independent companies usually charge for the service, either a monthly fee or by transaction.

If you choose to use an independent company, make sure it is a reputable one that has been around for some time and has a good credit rating with the Better Business Bureau.

Nov 152010

Clearly there is some element of risk involved in any sort of online financial transaction. Credit card numbers or bank account numbers can be stolen, passwords intercepted…

I recently had an unauthorized $400 charge against my debit card. Someone used it to pay for a plane ticket. My card is always in my wallet, but I often use it to make purchases online or pay bills. Apparently the card information was intercepted or stolen somehow.

The https prefix indicates a secure website

The https prefix indicates a secure website

The card has been closed and my bank refunded the charge, but the point is that online financial transactions carry a risk. Online bill payment is no exception.

So how do we minimize the risk? How do we know that an online bill payment website is secure? How can we safely transfer money online, or buy a product without worry?

1. Make sure the bill payment website is secure. The website address or URL should begin with https rather than http. https indicateds a “secure socket layer” or SSL connection, which is one in which data is fully encrypted and therefore protected.

Typically with an https website you will see a padlock icon in the corner of the browser window, either at the top or the bottom (or in some cases it may even turn the URL address background light blue or green). Clicking the padlock icon reveals the site’s security certificate and allows you to read about the protection that this affords.

2. Make sure the login process is secure. A quality bill payment website will usually give the customer two options: either to pay instantly as a guest, or to register and save payment information for future transactions. Neither one of these is necessarily better – it depends on your preferences – but both options should be secure.

If you’re paying as a guest, the website will usually ask only for your email address, then ask you to choose a payment option. Payment options could include online bank account, credit card or debit card. If you choose to pay by credit card or debit card, you may have to verify the card through 3D secure-a process used by major credit card companies as an added XML layer for online credit and debit card transactions. Visa call this process “Verified by Visa”, MasterCard call it “MasterCard SecureCode”, JCB International call it “J/Secure” and American Express call this “SafeKey”.

When choosing this option, look for specific statements on the website that credit card or debit card information will not be saved or stored in any way.

If you choose to register, a well designed and secure website will ask you to choose a name and password for future logins, and may also ask for your name, email address, physical address, and telephone number. You may even be asked for your date of birth, driver’s license number or passport number, though in my opinion asking for such information is excessive and carries the risk of identity theft. The same is true for your social security number. There’s no good reason for a commercial website or bill pay website to ask for such info.

You will often be asked to set up security questions in case you lose your login info. This is legitimate and common. Some websites now use cell phone verification. If you attempt to log in from any computer other than your usual computer, the website will send a verification code to your phone by text message. You must then enter the verification code into the website to proceed.

While these procedures may seem excessive, they are part of a good security system and they are there for your protection.

May 052007

Save Time With Online Bill Payment

Online Bill Payment Through Your Bank

Nowadays, most major banks offer online banking, including some degree of online bill payment functions. If your bank does not offer online bill payment services, you might consider switching to a bank that does, simply for the sheer convenience of paying bills this way.

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