Online Bill-Pay: Separating Myths from Facts

Date: Nov 29, 2017 11:06:49 AM

Many financial institutions (FIs) offer their customers the ability to pay bills via an online portal; this service is called Online Bill-pay. To initiate the transaction, a consumer will typically select or key-in the company they are making the payment to (e.g., a utility, department store, homeowner’s association, etc.), and then key-in other critical pieces of information, including their account number and the dollar amount of the payment.

Compared to a check that is manually written, signed, and mailed, most consumers believe that paying via online bill-pay means that their payment will arrive more quickly into the bank account of the company they are paying to. After all, it is an “electronic” payment (e.g., ACH or e-check). Guess what: that’s a myth!

The fact is, when consumers use their FI’s online bill-pay service, consumers do not realize that most financial institutions will then print a paper check with the information captured from the portal, and then mail that check to the company via normal post office processing. Not very electronic, is it? This ability to pay through a bank’s online portal is more like a checkbook replacement as opposed to true electronic bill-pay. From the perspective of the company expecting to receive payment, they will not have access to their funds any quicker. They will receive a paper check at a physical location, and that check will have to be deposited manually (through a lockbox service or some alternative manual depositing process). In fact, compared to a paper check whose funds are debited and credited only after the check is deposited, the consumer who pays via online bill-pay often has their funds withdrawn immediately, even though the paper check that the FI sends does not clear for several days.

This is where CheckAlt’s EBP service busts the myth as it offers truly electronic capabilities! This service becomes tremendously beneficial for those corporates receiving payments. With CheckAlt’s EBP service in place, physical paper is eliminated from the process! For financial institutions who partner with CheckAlt on our EBP service, their corporate clients benefit in two distinct ways:

1. The elimination of mail-float, which can often be two to seven days long, depending on where a check is sent from and mailed to. Having access to hundreds of thousands of dollars or even millions of dollars five, or six, or seven days sooner can be impactful;

2. Significantly reduced exception processing, as electronic mapping of electronically received payment data allows for the auto-reconciliation of received funds (vs. the receipt of physical paper checks).

Bonus Benefit: Less paper = less trees being cut down.

For corporate banking clients, the combined benefits of these lead to more immediate access to liquidity, and therefore, better yield optimization. Additionally, reduced exception processing equates to more time spent by corporates on value-add analyses, as their personnel are unleashed from time-intensive decisioning processes.

CheckAlt’s EBP service powers FIs with the ability to turn the myth of electronic bill-pay into reality!