Electronic bill-paying services like Paytrust and PayMyBills.com offer an amazing array of services. Often called aggregators because they consolidate bill paying in one place, the services communicate with a consumer's bank and bill collectors. They send scanned copies of the bills to the customer via the Internet. The consumer can view and pay anytime, day or night, with a few mouse clicks.
Banks have been offering similar services to their customers for several years, but they still have to sort through paper bills at home before authorizing payment online. With these new services, there is no paper to deal with.
Generally aggregators charge a monthly fee (most are under $10 a month). Paytrust can send payment to anywhere with a U.S. mailing address. Most aggregators offer secure access to an online bank account so a customer can check the balance. Only the consumer can authorize payments, amounts and payment dates.
Security and privacy are the biggest issues when it comes to any form of online banking, says Geer. These services are not glitch-free, and problems may not be easy to spot. It may look like your payments are going smoothly because the money is leaving your bank but a error may have occurred between the aggregator and the bill collector, resulting in late fees. The leading aggregators offer varying guarantees for rectifying late-payment situations, but the trick may be catching the glitch before a credit-damaging situation arises.
The leading services offer guarantees for security and privacy and promise not to divulge any personal information. They also provide information on their insurance policies. Geer says some consumer groups have raised the point that anyone can claim to run a bill-paying service. When using a bill aggregator, consumers are trusting a company with personal financial information. A hacker or a rogue employee could misappropriate that information.
The perception for some is that paying bills online through a bank is safer than using a third-party aggregator. A bank can be FDIC insured, but in terms of privacy, a consumer's personal finance information is just as safe when he or she signs up with an electronic bill-paying service, Geer says.
Geer points out some hidden costs. If you want to see statements from a previous year, you must buy a CD with the archive. The sites don't hold more than the current year online. Also, most aggregators do not regularly supply paper records. This could be a problem when you need to show a canceled check to the IRS or another company. Whether the IRS accepts a printout from an aggregator remains untested.
Geer wonders if these third-party sites will become obsolete dow the road. If all companies begin billing customers electronically, consumers may be able to e-pay directly and bypass the aggregators.