The Check's in the Email: A Look at Online Bill-Paying Services

Online bill-paying services have never really caught on. Until recently, they offered little more than electronic check writing -- not enough incentive for anyone to put down the pen in exchange for the keyboard. In fact, Forrester Research, a Cambridge, Mass., consulting firm, projects that these services will have attracted just 630,000 customers by year-end.

But a new generation of check-writing services offers some interesting features that can be particularly useful for frequent travelers and chronic late payers. If you don't fall into one of those categories, you still might find these upgraded services useful, though not necessarily worth the cost -- anywhere from $3.50 to $30 a month.

Nowadays, instead of getting a bill and going online to tell your bill-paying service how much to cut a check for, you have the bill sent directly to the bill-paying service. That enables the service to add on a variety of bells and whistles, including scheduled payments, email notifications and sometimes checkbook balancing.

You also can view your bills online, which accounts for some of the added cost -- workers have to open your bills and scan them into digital format.

Among the leading providers of these services are MyVesta.org, Paytrust.com, PayMyBills.com and Statusfactory.com. Prices start at $3.50 per month for up to five payees, and they range up to $29.95 for an unlimited number of payees. Most of the services will waive their fees for the first few months.

Post No Bills These bill-paying services will take delivery of your bills, present them to you online and pay them according to your instructions.
Name	Cost	Features Include
Paytrust.com	$8.95/month up to 25 transactions; additional transactions 50 cents each.	SmartBalance, a self-balancing online checkbook. Email alerts when bills are due or when expected bills don't arrive.
AllPaid by MyVesta.org	$3.50/month up to 5 active payees; $0.75 each additional payee/month. $8.95 /month up to 30 active payees $29.95/month unlimited payees.	Email alerts for insufficient funds can prevent bounced check fees.
PayMyBills.com	$8.95/month up to 25 transactions; additional transactions 50 cents each.	Online analysis tools generate charts showing how you're spending your money. Insurance covers up to $100,000 in per loss from unauthorized transactions
StatusFactory.com	$3.50/month up to 5 active payees; $0.75 each additional payee/month. $8.95 /month up to 30 active payees. $29.95/month unlimited payees.	Overnight payment available with $29.95/month option (shipping charges apply). Get up to $1,000 worth of tax service from a StatusFactory.com accountant if a mistake is made in your account.
Source: The Companies

Here's how they work:

Sign up, either online or by phone, and hand over your various billing account numbers along with your checking account numbers (you can pay bills from more than one bank account). You'll need to change your billing address so that your bills are sent to the bill-paying service rather than to you. The services can help you do this.

Then, depending on the service, you can either go online and write an electronic check, have the service automatically pay some or all of your bills as they come in, or have the service pay bills once you give your approval. You can, for example, specify that a particular bill can be paid as long as it is below a certain amount, or you can ask to be notified if it is above a certain amount. You also can opt to receive email each time a bill arrives. Or, if you're not having bills paid automatically, you can be reminded by email when a payment is due. And if the bill you were expecting doesn't arrive, you'll be alerted to that, too. It's like having a personal assistant around the clock.

You can track your payment history online or download it into personal finance software such as Quicken or Microsoft Money or into a spreadsheet. You can also get -- for an extra fee -- a yearly CD containing all of your scanned bills to hold for future reference.

A couple of the services will help you avoid bounced checks and overdraft charges. MyVesta.org's service, called AllPaid, will send you an email alert for insufficient funds if you attempt to pay a bill for more than what you have in your account. Paytrust.com has a self-balancing online checkbook, called SmartBalance, which allows you to keep track of your available funds without checking into your bank's Web site.

Avoid Late Payments

Bill-paying services can save you money if you pay your bills late because you can't keep track of due dates or if you have to travel for weeks at a time. Just one late payment or bounced check can set you back as much as $35 in fees, says Robert B. McKinley, CEO of CardWeb.com, a credit-card rate publishing site. And that one late payment can affect the interest rate you get on your next loan, adding insult to injury.

Bill-paying services also can be time savers and stress reducers for people who want to make sure their elderly parents are paying their electric and phone bills or their kids away at college are paying their credit card bills.

MyVesta.org's AllPaid and Paytrust.com appear to have the most features. Several are especially useful if you travel: You won't have to miss payments when you are away for long periods of time, and you can view your actual (scanned) bills online. You also don't have to come home and start sifting though the mail to find your bills.

Plus, there's an added bonus that will protect you while away or at home: Since your paper bills are sent directly to the service, your chances of being a victim of identity theft are reduced. Your bills are no longer in your mailbox or trash for the taking by sticky fingers attached to big spenders. (The bills go to a secured lock box and they're shredded immediately after they're scanned.)

Not Completely Paperless

One note of caution: The bill-paying services have electronic payment arrangements with a variety of businesses, including credit-card companies and utilities. But if there's no such arrangement, the billing service has to cut a check and mail it. So you'll need to remember to arrange for bills to be paid at least five- to seven-days before the due date, just to be safe. If a bill is late because of a mistake by the bill-paying service, it will reimburse you for the late fee. But if the mistake is yours, you eat the added charge.

For busy people who want to keep their stress levels down and their finances in order, these services may very well fit the bill. Forrester Research sees the number of online bill payers tripling to 2.1 million by the end of next year and soaring to 20.7 million by 2004. Yes, it may seem strange to pay a fee in order to pay your bills, but the money may be well spent.

"Think of how much time it takes to open a bill, file in somewhere on a desk, fish it back out, write a check, enter it into the check register or into Quicken, address the envelope, then mail the bill," says John Roberts, a financial planner at Denver investment Advisors. "Maybe two minutes. Not a lot. Multiply that by 12 months. Now we are talking 24 minutes. Multiply that by the number of bills you have every month. Suddenly people realize how much time they can save by paying the bill with a click or two of the mouse. That's time that can be better spent elsewhere."