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Key questions to ask before you jump online to pay bills

What's the difference between online bill-presentment, online bill-payment and online banking?

With online bill-presentment, you get your bill via the Web instead of receiving a paper bill in the mail. Usually, you get an e-mail reminder, too. The Web bill has a "pay" button: You click on it with your mouse and pay the bill. Your check is never in the mail.

Some companies allow you to pay any bill online, regardless of whether it is presented online. In other words, you can receive a bill in the mail and pay it online. If the biller doesn't accept electronic transfers, the bill-paying service will send a check in the mail.

Online banking -- as opposed to online bill-paying -- refers to reviewing balances and transferring money among accounts over the Internet.

How much time do I want to spend to set up service?
The pay-anyone services can take some time to set up. Let's say you want to pay your lawn-care service's bills over the Web. The lawn-mowing guy isn't going to present bills online, and his name won't pop up on the list of pre-ordained payees on your bill-paying service's list. So you have to provide the details: the name of the payee, the address, a phone number and an account number. It can take a couple of hours or more to enter all the information for the 15 or 20 bills an average household pays in a month.

The good news is that your bill-paying service will store the information, so you have to enter it only once. The bad news is that if you decide to switch bill-paying services, you might have to type in all that account information all over again.


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Do I want to conduct my online banking and my online bill-paying on different Web sites?
For some people, it just seems weird to do online banking at one site and bill-paying at another site.

Customers tell First Union that they want their bill-paying, account balances and investment information all on one Web site, says Lou Anne Alexander, vice president of emerging payments for the Charlotte-based bank.

"I think you'll see this convergence of online bill-payment and online banking," she says.

First Union has been one of the most aggressive banks in promoting online bill-paying services, and Alexander believes that someday the bank's customers will be able to pay bills not only with a personal computer, but via ATMs and with handheld computers, such as the Palm Pilot. First Union also allows customers to pay bills using a touch-tone phone.

Do I mind having my bills sent to an online company's address?
Some bill-paying services -- namely, Paytrust, PayMyBills.com and StatusFactory -- allow you to view images of your bills online. They can do this because your bills are sent directly to the bill-paying service. Your bills are scanned as PDF files, and you can go online to view them and print them out (ah, yes, the irony of printing out a bill that has been sent elsewhere so you don't have to handle the paper). This allows you to see details such as who you made long-distance calls to and if the bill is from your phone company.

But you have to be willing to let someone you don't know open your bills and scan them. It's no coincidence that one of these companies is called Paytrust: Earning your trust is the top priority of these companies, so they offer privacy and security guarantees.

"Until there's a problem, I'll probably be naive about the security problems," says Craig Musni, who has used StatusFactory for seven months without unauthorized charges or perceived loss of privacy.

PayMyBills.com's service includes insurance that pays for any unauthorized transactions.

How much does it cost?
The cost of these services varies depending on a number of factors. Some limited services don't charge anything; others charge a base amount, plus a small fee per bill.

Is it secure?
All of these companies say they protect the security of your information from snoops and crooks. Because it's virtually impossible for a potential customer to judge the effectiveness of a bill-paying service's security, you just have to decide whom you trust.

-- Updated:June 12, 2002

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