Electronic Bill Payment - Limitations (United States)

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 support 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.

Why do banks offer bill payment as a free service? From a NY Times article (2003) -- “Now, big banks are working harder to win online bill-paying customers, often competing with individual companies for their business. "They want to own that customer relationship," said Avivah Litan, vice president for financial services at Gartner, the consulting group. "But the banks are really late to the market. The credit card companies and the telecom billers are winning." The race is on partly because paying bills online is now the fastest-growing use of the Internet, analysts say, gaining on things like reading news, getting movie times or downloading music. Even more important, the company that persuades a customer to forgo checks not only saves money but often earns that customer's loyalty. Most companies want customers on their own Web sites because they can then market additional products, answer questions and address problems -- while requiring less time from employees and saving on phone calls and letters. For banks, the potential benefits are even greater. Customers who use their bank's Web payment tools keep twice as much money at their bank as those who simply go online to check their accounts, according to a study to be released today by comScore Networks, which measures Internet use. The banks say that customers who pay online show more loyalty and are more receptive to other offers.” (http://www.nytimes.com/2003/04/21/business/banks-offer-sweeteners-to-paying-bills-online.html?pagewanted=all&src=pm)