Question : How exacly does online bill pay work?
I use my bank's web site to pay bills using its bill pay service. I would like to know exactly how banks pay bills. I have read banks pay bills electronically if possible (using ACH I assume), or they mail a check if the payee does not accept electronic payments. To pay a credit card bill for example, I supply the bank with the following information:■ credit card company's name, address, and telephone number■ my credit card number■ amount to pay and whenThis is all the information I give the bank. I'm fairly confident the bank is paying my bills electronically and not by mail, because my credit card company usually gets the payment within a day of the bank's paying it.If I am correct by assuming they use ACH, wouldn't my bank need the payee's routing number and account number? If this is so, how does my bank get this information? Do banks have databases linking this information to company names and addresses? Creating and maintaining such a database seems difficult.I meant for the database I mentioned to be preexisting and to link remittance addresses to account numbers for every company (or at least attempt to). This does not seem like a trivial task.A database such as the one Trumania mentioned is more trivial. However, this requires a bank employee to do research every time a bank customer decides to pay a new payee. This may very well be the case. I would just be surprised banks would go to that much trouble, especially if they don't charge an extra fee for the service (my bank doesn't). It would seem more logical for them to require the bank customer to acquire this information and give it to them. That way bill payments could be handled without bank employee intervention.
- asked by Fleabag
All Answers:
Answer #1
i tried it once and they said they never receivedmy payment and charged me interest.
- answered by summerdaze
Answer #2
By providing the companies address and companyname the bank will either, call the company forthe information or they already have it in adatabase. It is not hard to maintain thatdatabase. Just think, if you had a word file thathad on one line, the company name, address, androuting number. To search through 100 pages inthat document all you would have to do is pressALT + F and type in the company name and you'll bedirected to that routing number. Of course thebank system is different but that is the basicconcept. If you CC company receives the payment inone day, it is most definitely sent ACH.UPDATE:While I don't work in the ACH services departmentI'm sure there is an existing list of allcompanies and their routing numbers if they wantto receive ACH deposits. The list is most likelyavailable to all banks. Also, while your bankoffers free bill pay, it's likely they don't evenrun the actual Bill Payment service. I know of afew banks who run the user interface part on theironline banking service and that information isforwarded to another company, such as CheckFree,which then processes the information and writes acheck or sends out the ACH transfer. While yourbank may not charge you for Bill Pay per se' it'slikely they are tacking the fee onto anothercharge, monthly service charge? ATM withdraw fees?Overdraft Fees? While it may not specifically say"BILL PAY FEE" the bank is accounting for itsomewhere. If you don't pay fees, then you reallydon't pay for it, but the profits the bank makeson other fees definitely cover any operating costsof running the Bill Pay or even having anothercompany such as Checkfree to process it.
- answered by Trumania
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