Electronic bill payment
Encyclopedia
Electronic bill payment is a feature of online banking
, similar in its effect to a giro
, allowing a depositor to send money from their demand account
to a creditor
or vendor such as a public utility
or a department store
to be credited against a specific account. The payment is optimally executed electronically in real time
, though some financial institution
s or payment services will wait until the next business day to send out the payment. The bank can usually also generate and mail a paper cheque
or banker's draft
to a creditor who is not set up to receive electronic payments.
Electronic billing
can also feature invoices sent by e-mail
or viewed on a secure web site (with notices of new invoices being sent by e-mail).
Most large banks also offer various convenience features with their electronic bill payment systems, such as the ability to schedule payments in advance to be made on a specified date, the ability to manage payments from any computer with a web browser, and various options for searching one's
recent payment history: when did I last pay Company X? To whom did I make my most recent payment? In many cases one can also integrate the electronic payment data with accounting or personal finance software.
Peer-to-peer payment systems are extremely popular. The best and most widely known example is PayPal
. PayPal allows you to pay for just about anything online as long as the seller also has a PayPal account. Many online sellers use PayPal such as 75% of eBay sellers, overstock.com, ritzcamera.com, and Walgreens.com (Traver, 2004). PayPal is also sometimes used to pay for personal debts in situations where both parties have an account.
Electronic bill payment and presentation (EBPP) includes an electronic bill payment system (EBPS). Although this technology was available from the mid 90's onward, only 26.2% of U.S. households had internet access at that time according to the U.S. Department of Commerce. By August 2000, adoption of EBPP systems started to dramatically increase. The customer is notified (typically be email) by the biller, and then is responsible to log on and pay the bill through the biller's website.
or alimony
. Any organizations or individuals outside of the United States are also usually excluded. Payments to government agencies for utilities such as water are usually permitted.
Online banking
Online banking allows customers to conduct financial transactions on a secure website operated by their retail or virtual bank, credit union or building society.-Features:...
, similar in its effect to a giro
Giro
A Giro or giro transfer is a payment transfer from one bank account to another bank account and instigated by the payer, not the payee...
, allowing a depositor to send money from their demand account
Demand account
A transactional account is a deposit account held at a bank or other financial institution, for the purpose of securely and quickly providing frequent access to funds on demand, through a variety of different channels....
to a creditor
Creditor
A creditor is a party that has a claim to the services of a second party. It is a person or institution to whom money is owed. The first party, in general, has provided some property or service to the second party under the assumption that the second party will return an equivalent property or...
or vendor such as a public utility
Public utility
A public utility is an organization that maintains the infrastructure for a public service . Public utilities are subject to forms of public control and regulation ranging from local community-based groups to state-wide government monopolies...
or a department store
Department store
A department store is a retail establishment which satisfies a wide range of the consumer's personal and residential durable goods product needs; and at the same time offering the consumer a choice of multiple merchandise lines, at variable price points, in all product categories...
to be credited against a specific account. The payment is optimally executed electronically in real time
Real-time computing
In computer science, real-time computing , or reactive computing, is the study of hardware and software systems that are subject to a "real-time constraint"— e.g. operational deadlines from event to system response. Real-time programs must guarantee response within strict time constraints...
, though some financial institution
Financial institution
In financial economics, a financial institution is an institution that provides financial services for its clients or members. Probably the most important financial service provided by financial institutions is acting as financial intermediaries...
s or payment services will wait until the next business day to send out the payment. The bank can usually also generate and mail a paper cheque
Cheque
A cheque is a document/instrument See the negotiable cow—itself a fictional story—for discussions of cheques written on unusual surfaces. that orders a payment of money from a bank account...
or banker's draft
Banker's draft
A banker's draft is a cheque where the funds are taken directly from the financial institution rather than the individual drawer's account....
to a creditor who is not set up to receive electronic payments.
Electronic billing
Electronic billing
Electronic billing is the electronic delivery of invoices and related information by a company to its customers. Electronic billing is referred to by a variety of terms,including the following:*Electronic bill payment...
can also feature invoices sent by e-mail
E-mail
Electronic mail, commonly known as email or e-mail, is a method of exchanging digital messages from an author to one or more recipients. Modern email operates across the Internet or other computer networks. Some early email systems required that the author and the recipient both be online at the...
or viewed on a secure web site (with notices of new invoices being sent by e-mail).
Most large banks also offer various convenience features with their electronic bill payment systems, such as the ability to schedule payments in advance to be made on a specified date, the ability to manage payments from any computer with a web browser, and various options for searching one's
recent payment history: when did I last pay Company X? To whom did I make my most recent payment? In many cases one can also integrate the electronic payment data with accounting or personal finance software.
Peer-to-peer payment systems are extremely popular. The best and most widely known example is PayPal
PayPal
PayPal is an American-based global e-commerce business allowing payments and money transfers to be made through the Internet. Online money transfers serve as electronic alternatives to paying with traditional paper methods, such as checks and money orders....
. PayPal allows you to pay for just about anything online as long as the seller also has a PayPal account. Many online sellers use PayPal such as 75% of eBay sellers, overstock.com, ritzcamera.com, and Walgreens.com (Traver, 2004). PayPal is also sometimes used to pay for personal debts in situations where both parties have an account.
Electronic bill payment and presentation (EBPP) includes an electronic bill payment system (EBPS). Although this technology was available from the mid 90's onward, only 26.2% of U.S. households had internet access at that time according to the U.S. Department of Commerce. By August 2000, adoption of EBPP systems started to dramatically increase. The customer is notified (typically be email) by the biller, and then is responsible to log on and pay the bill through the biller's website.
Limitations (United States)
Typically, US financial institutions formally prohibit the use of their consumer electronic bill payment systems for payments to any tax authorities, collection agencies, or recipients of court-ordered payments like child supportChild support
In family law and public policy, child support is an ongoing, periodic payment made by a parent for the financial benefit of a child following the end of a marriage or other relationship...
or alimony
Alimony
Alimony is a U.S. term denoting a legal obligation to provide financial support to one's spouse from the other spouse after marital separation or from the ex-spouse upon divorce...
. Any organizations or individuals outside of the United States are also usually excluded. Payments to government agencies for utilities such as water are usually permitted.