Electronic billing
Electronic billing or electronic bill payment and presentment, is when a company, organization, or group sends its bills over the internet, and customers pay the bills electronically.[1]
History
The Council for Electronic Billing and Payment of the National Automated Clearing House Association is credited with broadly promoting and communicating various forms of electronic billing in the USA. Certain electronic billing applications also provide the ability to electronically settle payment for goods or services.
Different types
- Biller-direct - This refers to an approach in which consumers make payments directly to one biller that issues bills that they receive at the website of the firm that issued the bill. An example would be of a public utility company offering this payment service to its consumers. A market has emerged for outsourced billing providers who specialize in electronic billing processes and technology for companies that need to send bills directly to their customers.[2]
- Bank-aggregator - The approach under this model is to make payment at an aggregator or consolidator site, usually from a consumer's bank’s website. This model allows the consumer to make payments to multiple billers that are pre-registered to receive payments. An example in the UK is OneVu or eBills in Switzerland..
Parties involved
Billers, bankers, aggregators and consolidators can play various roles in the overall process. Once roles are defined, it is easier to identify which model is most appropriate for the client's strategy. Billers may also implement more than one model in order to best serve their clients. Because the industry is continuously changing and redefining, the options and opportunities will continue to expand.
- Biller payment provider (BPP) - An agent of the biller that accepts remittance information on behalf of the Biller.
- Biller service provider (BSP) - An agent of the biller that provides the service for the Biller.
- Consolidator - A biller service provider that consolidates bills from multiple Billers or other bill service providers (BSPs) and delivers them for presentment to the customer service provider (CSP).[3]
- Customer service provider (CSP) – An agent of the customer that provides an interface directly to customers, businesses or others for bill presentment. CSP enrolls customers, enables presentment and provides customer care, among other functions.
NACHA
NACHA-The Electronic Payments Association is a not-for-profit trade association that develops operating rules and business practices for the Automated Clearing House (ACH) Network and for other areas of electronic payments. NACHA activities and initiatives facilitate the adoption of electronic payments in the areas of Internet commerce, electronic bill payment and presentment, financial electronic data interchange (EDI), international payments, electronic checks, electronic benefits transfer (EBT) and student lending.
To define some guidelines for best practices, NACHA has created the Council for Electronic Billing and Payment of the NACHA InteroperaBILL Initiative of the Banking Industry Technology Secretariat (BITS).
Limitations (United States)
Typically, US financial institutions formally prohibit the use of their consumer electronic bill payment systems for payments to certain agencies such as: 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.
Electronic bill pay systems fall into two categories, "pay-anyone" services and restricted biller list services. In a pay-anyone service, the provider will facilitate a payment to the payee regardless of whether they have an electronic connection with that payee or not. If they cannot deliver the payment to the payee electronically, they will print and mail a paper check on the payer's behalf. The largest providers of electronic bill pay services can deliver about 80% of their payments electronically, so 20% of payments facilitated by the large pay-anyone services are still made by mailing a paper check to the biller. This is the primary reason why some billers in a pay-anyone service require as much as a 5-day lead time for the payment to reach the payee.
Restricted biller list payment services allow you to pay any biller that is in the provider's network, and in these services where the provider has an electronic relationship with the biller, the payments will be delivered electronically.