Definition and Examples of Electronic Bill Payment and Presentment
Electronic bill payment and presentment (EBPP) is an online billing and payment system used by companies and service providers. Bill presentment simply means delivering bills electronically to customers for their review. Companies (billers) use EBPP to send billing statements or invoices to their customers, subscribers, or clients using technology as an alternative to sending a paper bill by mail. Along with the electronic bill, customers typically receive instructions for submitting payments electronically. For example, your doctor might use an EBPP system to send you an email invoice for a recent office visit. The invoice allows you to view the charges for accuracy, and also includes instructions for paying your bill online.
How Does Electronic Bill Payment and Presentment Work?
Using an EBPP system allows companies to provide more convenient and efficient services to their customers, such as:
Offering the choice of paper bills or paperless billing statements Sending digital notifications and alerts to customers, such as by email or text message Allowing customers to pay bills online using ACH transactions, credit cards, or debit cards Accepting payments from a variety of platforms, including online, over the phone, and using mobile devices Providing the option to schedule payments using tools such as autopay or payment plans
Customer Protections
Consumers using EBPP have various protections under the federal Electronic Fund Transfer Act (EFTA) and Regulation E (Reg E), as well as state laws regarding electronic fund transfers. The EFTA and Reg E rules require that consumers receive an initial disclosure statement and periodic disclosure statements that outline the terms and conditions. These regulations also include protections that limit a consumer’s liability in the event of unauthorized transactions, and require financial institutions to investigate and resolve any errors.
Types of Electronic Bill Payment and Presentment
There are two main types of EBPP systems: biller-direct and consolidated.
Biller-Direct EBPP
In a biller-direct EBPP system, companies and customers interact directly. The company or service provider sends an electronic bill to the customer, typically via email. The customer then can follow the instructions provided with the bill to log into their account on the company’s website, review the bill, and pay online. For example, an insurance company might use the biller-direct method to notify you via email that your monthly premium is due. You can then visit the company’s website to make a payment.
Consolidated EBPP
The consolidated form of EBPP uses a third-party service provider to aggregate financial transactions. This third party is usually a bank, and consolidated EBPP is also known as bank-aggregator or bank-consolidator EBPP. The consolidator service collects billing data from one or more companies, delivers it to customers, accepts payments, then distributes the funds to the appropriate companies. Consolidated EBPP allows customers to use a single portal to view and pay bills for multiple accounts instead of signing into each account separately. For example, you might be able to use your online bank account to pay your credit card, cellphone, and utility bills. When a company uses a consolidator to handle presentment, it can share different amounts of information with its customers. “Thick” presentment means customers can view a detailed summary of their transactions. “Thin” presentment only includes basic bill details, so the customers must visit the billing company’s website for more information.
Pros and Cons of EBPP for Individuals
Pros Explained
Typically free: EBPP systems typically don’t charge customers a fee to pay online. Some companies may even offer a discount for choosing paperless statements or autopay.Convenient: Customers can view bills and make payments electronically at any time, from anywhere. Consolidated EBPP allows consumers to pay multiple bills from one place, such as their online bank account.
Cons Explained
Biller-direct EBPP requires logging into different websites: If a customer must pay multiple bills through biller-direct EBPP, they must log into a different website for every company—reducing the convenience factor.Consolidated systems may not show all bill details: For example, your cellphone company may allow you to pay your bill through your bank account, but you may need to log into your cellular provider’s website to see details of your usage.
Pros and Cons of EBPP for Businesses
Pros Explained
Receive payments faster: Companies and service providers (billers) benefit by receiving payments faster, rather than waiting for a check to arrive in the mail.Fewer missed or late payments: The benefits of EBPP for the customer, such as convenience and autopay options, can result in fewer missed payments for the biller.Reduces costs: Not having to print and mail paper statements can help companies save money. Consolidated systems may also help businesses save by outsourcing billing functions to a third-party service provider, such as a bank.
Cons Explained
Biller-direct systems can be expensive and complex: This type of EBPP system is more expensive to design, manage, and maintain. Plus, handling credit and debit card transactions requires companies to meet federal and state consumer protection standards.Consolidated EBPP systems remove direct customer contact: The lack of direct customer contact means lost opportunities for branding and marketing.
