What is Online Bill Pay?

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  • Written By: Ken Black
  • Edited By: Bronwyn Harris
  • Last Modified Date: 29 August 2019
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Online bill pay is a way to utilize the Internet to pay bills, normally through banking online. This service is offered for free by many banks. Those that do require a fee usually provide the service for a nominal charge. Many will find the convenience and money saved in postage worth any charges that may be incurred.

One of the keys to online bill pay is being able to set your payments as you want them. In some cases, the account holder may set a recurring payment, which is processed every month automatically. In other cases, this may be done manually. It all depends on the account holder's individual needs.

In some situations, the amount may change every month, but the date due never changes, or at least does not change very often. For example, a car payment is due, in the same amount, every month. An electricity bill may be due near the same time each month, but the payment could be based on usage during the prior month. In those situations, online bill pay systems may be able to send a reminder to the account holder that will allow him or her to log on and set the appropriate payment amount online before the payment is sent.


Most personal bankers will instruct new account holders in online bill pay when they open a new account. In many cases, it simply involves logging into the bank's online banking system and linking to the account. From there, all bills can be set up through a step-by-step process. Once completed, the account is ready for online bill pay.

Paying electronically through an online bill pay system offers a number of advantages over the traditional way of paying through the mail. Most online systems are a form of paperless bill pay, meaning there are no bills to lose, no addresses to keep track of, or dates to meet. It is all done over a digital medium. Thus, the convenience it offers is unmatched when compared to the traditional bill paying methods.

Further, online bill pay often offers an account holder a better record of when a payment was processed, just in case there are any doubts. Compared to sending a check through the mail, this is a definite advantage offered by the electronic system. There is no arguing about when a check was sent, when it should have been received or who processed it. It is all recorded for both parties by an impartial system.

While some people have security concerns about online bill pay, it should be noted that most online banking systems are very secure. It would be very unlikely that personal financial information could be taken by unauthorized individuals through an online banking system, but not impossible. However, sending checks through the mail has a number of inherent risks as well, including an account holder's account and routing number changing hands multiple times.


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