The online bill-paying revolution can change
your financial life -- if you find the right ally
By Holden Lewis • Bankrate.com

As the online revolution keeps spreading, companies are finding ways to make money by offering to solve problems that you didn't know you had.

The latest target: paying your bills.

Businesses are betting big bucks that you want to get rid of the tedious ritual of writing checks, stuffing them in envelopes, stamping and mailing them. They're also guessing that companies are getting sick of sending them out to you.

They're wagering that you'll be eager to seize the convenience of receiving and paying bills over the Web.

Banks with online capabilities also provide bill-paying services and are surveyed by Bankrate.com.

Bill-paying services share some common methods: You log on to a secure Web page and with a couple of clicks you pay your bills, either by electronic transfer or by telling your bill-paying service to write and send a paper check. But there are a lot of differences among these services:

• Some banks offer online bill-paying.
• Third-party companies let you pay bills through their Web sites, acting as intermediaries between billers and banks.
• With some of these outfits you continue to have bills mailed to your home; with others, bills are sent directly to your bill-paying service.
• Some companies charge for the service and some don't.

Careful! -- the online game keeps changing
The industry is changing so rapidly that the service that works best for you now might not be the best choice six months from now. Keep that in mind whether you choose to pay bills online now or decide to wait.

Craig Musni, a graphic designer in California, uses a company called StatusFactory to pay what he owes. His bills are sent to StatusFactory, where they are scanned and posted online. When Musni logs on using a password, he can look at what essentially are pictures of his bills, then pay them. The bills are archived on the site.

"The way I used to do my bills worked when I was not quite as busy and not quite as married," Musni says. "Now that my time has shrunk, it's nice to be able to go online and pay bills and not have to go to the post office and buy stamps and put them in the mailbox."

He says the only difficulty was the hassle of changing 10 to 15 billing addresses. Credit-card companies were reluctant to switch his billing address to StatusFactory, and Musni had to sweet-talk United Parcel Service into shipping mail-order items to a place other than the billing address.

Right now there are three main ways to pay bills on the Web:

• You change your billing address to a company that receives your bills in the mail, scans them and posts images of them on its Web site. You pay those bills online. You can pay other bills via this site, too -- even to individuals such as a baby sitter. If the recipient doesn't accept electronic payments (that baby sitter, for example), the service will send a paper check. The leaders in this type of online bill-paying are companies such as Paytrust, PayMyBills.com and StatusFactory.
• You continue to get most of your bills mailed to your home, but you elect to receive some bills electronically. You sign up with a company that lets you pay all of these bills over its Web site. The company will send a check if the biller doesn't take electronic payments. Leaders of this type of service include Checkfree, Quicken, Yahoo Bill Pay and First Union.
• You sign up for a service that allows you to pay over the Web, but only to a select set of companies that send you electronic bills. You can't pay individuals or companies that aren't on the list, those you pay the old-fashioned way. Leaders of this type of service include TransPoint, Microsoft Money Central and Citibank.

As you choose among types of online bill-payment, you are also choosing among companies. And if you have online banking capability already, you are also checking with your bank to see if they offer an online bill-paying service.

Not necessarily faster
For their convenience, these services don't remove all the annoyances of bill-paying. For example, you can't wait until the payment due date or you risk being assessed a late payment. In fact, many of these services require you to pay your bill five working days before it's due.

"It requires more lead time than a letter and a stamp due to their processing," says a customer of an online bank in an e-mail interview. "There has been an occasional lost payment. But as long as the bank has a record of it, they work with the other party to stop payment and reissue another check."

The people who tout online bill-paying stress the convenience. Most services allow you to synchronize your online payments with the Quicken or Microsoft Money software in your computer. You don't have to lick envelopes, pay postage and find a mailbox. If you are away from home for long periods, it's nice to be able to view your bills online and pay them.

The most popular places to pay bills on the Web -- banks, Checkfree and Transpoint -- don't make you change your billing addresses. Most of them have agreements with a few companies, such as utilities, that offer electronic billing, so you can choose not to get bills in the mail from those companies.

A year from now
As the industry changes rapidly -- one marketing director joked that his company was ancient at the age of seven months -- you can be confident that the service you sign up for at the beginning of 2000 will not be the same in 2001.

Online billing stands at the same crossroads that the computer industry occupied in the 1980s, when Atari, Texas Instruments, Apple, Commodore, IBM, Osborne, Kaypro, Amiga and NeXT fought for supremacy. Remember them? Now some of those names are mere footnotes of electronic history.

The same will happen in the online billing industry.

Only the foolhardy would predict the outcome of the battles among the many online-billing service providers, so here's a foolish forecast: In a few years, most consumers who pay their bills online will do so through their bank's Web site.

"What we hear from our customers," says Lou Anne Alexander, vice president of emerging payments for First Union, "is that they don't see banking and bill-paying as separate products."

-- Posted: Dec. 28, 1999