Online bill pay is a method that allows you to create electronic payments to pay the bills you pay online. The service is usually set up by your Bank or directly with service suppliers. For example, you could establish online bill payments with your bank or service provider to pay for your electric and gas bills.

How Online Bill Pay Works

For setting up an online bill payment, you’ll need to set up an account on your online service provider or Bank and then establish your account to accept payments.

Banks

The bank model is where you inform your financial institution about the recipients who owe you money, whether they are other banks or companies, and the Bank will transfer cash to them. Based on the beneficiary, the Bank will either make an electronic payment or a check in paper format that is drawn from your account several days following the date you have scheduled the bill payment. Some banks don't limit the number of bills you can pay using this feature.

Service Providers

The bill pay system online is similar to the bank system but in reverse. You will provide telephone companies, mortgage companies, utility companies, or any different service providers with your banking account details to allow them to withdraw funds from your account to pay for their services.

How to Set up Online Bill Pay using the Bank

To make online payments through your Bank, go to the website of your Bank, and navigate through the Bill Pay section. Select the appropriate link to create a new payee. After that, you'll need to input your name and the address of the company receiving the payment. You'll require a copy of an invoice issued for you from a service company so you can print the address, your account number, and any other information that is essential from the invoice.

Enter the amount you want to pay, schedule, and finish the setup process. Then, whenever you're ready to pay, you simply need to add the amount to the bill and make your payment schedule.

How to Set Up Bill Pay With a Service Provider

To establish an online bill payment through a service provider, it is common to need details about your bank account, such as your account number and routing numbers that are associated with your bank account you're using, whether on the authorization form or in separate for each company, to authorize the one to take money from your account. In certain instances, you might be able to provide the details of your debit card instead of an account with a check.

You will also be required to provide your payment amount and the timeframe before completing the bill pay setup. The most common date for payment is the date of due payment for the business, but it is important to verify that your payment will be credited timely. When everything is operational, your payments will be transferred directly from your account to the service provider.

Automatic Online Bill Pay

If you like automatized processes that don't require constant attention if so, then an automated bill payment, which allows the payment of one-time or regular payments regularly through an institution or service provider, could be the right choice for you.

Automating one-time payments and allowing companies to withdraw cash from your account for unplanned, one-time expenses without effort. You can, for instance, let your Bank automate payments on a credit card each time the card has a balance of less than zero.

If you automate recurring payments using your online bill, a payment service will pay your monthly phone bill or your quarterly insurance bill. Automating bill payments online for routine costs is a great method to make payments on time and avoid paying late charges.

In both instances, the service provider directly solicits the bill-paying service online for the necessary payment, while the transaction is processed without your involvement. If you can authorize such payments, make sure you have the money within your accounts to be able to handle these payments.

Online bill pay is a great way to make life easier, save time, reduce the paperwork and help you manage your life. However, if you schedule withdrawals greater than the balance, it can cause a negative balance and associated charges. A smartly planned budget and keeping track of your balance will help you get the most value from this banking convenience.