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#86986 - 06/10/03 11:46 PM Why aren't eBill Payees paid instantaneously?
Milburn Drysdale Offline
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Milburn Drysdale
Joined: Jun 2003
Posts: 15
Southeastern PA
Can anyone explain to a non-banking professional, new to this site, why eBill payees are not paid in a few short seconds, as opposed to a few days, ... even the payees who get their payments electronically?

It seems that the technology is out there, such as ATM networks and Debit cards that can and do deduct a withdrawl instantly, ... even check for sufficient funds in real time.

Why isn't this real-time turn around applied to eBill payments?

Thanks

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eBanking / Technology
#86987 - 06/11/03 01:30 AM Re: Why aren't eBill Payees paid instantaneously?
Richard Insley Offline
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YOU'RE Milburn Drysdale & YOU have to ask? Watch for more competition in this area in the years ahead.
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#86988 - 06/11/03 03:24 AM Re: Why aren't eBill Payees paid instantaneously?
JacF Offline

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You mention ATM and debit cards- which in their early stages did not generate instant postings either. Bill pay will evolve just as plastic did- give it time.

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#86989 - 06/11/03 03:37 AM Re: Why aren't eBill Payees paid instantaneously?
Milburn Drysdale Offline
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Milburn Drysdale
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Southeastern PA
> YOU'RE Milburn Drysdale & YOU have to ask?

It's just a name I picked, ... appropriate to this site don't you think.

Would appreciate some details and / or opinions as to why this isn't occuring sooner rather than later (years away?), ... regulations? competition? markets? technology? software?

Does the banking industry see the two, three, five day delay as something that discourages widespread use of eBill payment? For instance, there's not much time savings over sending a check by snail mail, yes?

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#86990 - 06/11/03 03:43 AM Re: Why aren't eBill Payees paid instantaneously?
Andy_Z Offline
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There can be a savings and convenience to the customer. Many, no I think most companies don't receive e-payments yet. They only receive checks.

Eventually they will see the efficiencies and the process will speed up as they adopt new technologies. But for today, the answers will vary from company to company.
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#86991 - 06/11/03 02:02 PM Re: Why aren't eBill Payees paid instantaneously?
Skunk Boy Offline
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Andy is right. You would need information to move from the payee, to the bill pay company, to the bank, to the core processor, and then back again.
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#86992 - 06/11/03 03:44 PM Re: Why aren't eBill Payees paid instantaneously?
NotALawyer Offline
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Joined: Nov 2001
Posts: 455
Quote:

Can anyone explain to a non-banking professional, new to this site, why eBill payees are not paid in a few short seconds, as opposed to a few days, ... even the payees who get their payments electronically?

It seems that the technology is out there, such as ATM networks and Debit cards that can and do deduct a withdrawl instantly, ... even check for sufficient funds in real time.

Why isn't this real-time turn around applied to eBill payments?

Thanks





It appears you are asking about two completely different processes. ATM's and debit cards push or pull information to or from financial institutions. There are many starting points (merchants, etc.), but these starting points are set up with the necessary equipment and processes to be able to access the ending points Ė the FIís. This system has evolved to be able to connect in this fashion.

With eBill payees, there are fewer starting points but many more ending points. eBill payees can be anyone from a hairstylist to a major utility company. They may or may not be set up to be able to receive "electronic" payments in this fashion. For many businesses, revenue comes in as cash, money orders, cashier's checks, traveler's checks, personal checks, credit cards (MC, VISA, Discover, Amex, Diner's, etc), in-store credits, debit cards (and the myriad of processors), and, and, andÖ Adding electronic payments will come, it just needs an infrastructure that is cost-effective for the merchant. EBill payees, if set up for it, can receive electronic funds. Otherwise, the payment goes through as a check.

I still remember how neat it was the first time I learned you could drop a utility payment off at a local grocery store. Saved me a stamp!

Hope this helps.

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#86993 - 06/11/03 05:34 PM Re: Why aren't eBill Payees paid instantaneously?
John Burnett Offline
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For the nonce, many people are finding that starting the payment at the other end is more efficient. Either one-time or standing authorizations for the biller to initiate ACH from from the payer's bank account are easily set up with many billers, particularly those who do e-billing via the Internet. In these cases, the payment can be scheduled for the date the bill is due rather than worrying about checks in the mail, etc.
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#86994 - 06/11/03 06:18 PM Re: Why aren't eBill Payees paid instantaneously?
1111 Offline
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1111
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Quote:

Can anyone explain to a non-banking professional, new to this site, why eBill payees are not paid in a few short seconds, as opposed to a few days, ... even the payees who get their payments electronically?





The short answer is, as noted above, most entities on not on the automated system for payment - a check is mailed. In addition, depending on the entity that is handling payments, float (the time between when your funds are debited from your account and when the payment is actually paid) helps pay for the service, so there is no rush to make the payment.

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#86995 - 06/11/03 06:48 PM Re: Why aren't eBill Payees paid instantaneously?
Anonymous
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I think the original questioner may be wondering why when the payment is made via ACH (as many are), why that takes several days as opposed to an immediate transfer. And an American Banker article just a few days ago asked the same question I believe, since overnight ACH transactions are technically conceivable. But I think the answer boils down to what many of you have stated: the business case/volume at this point just doesn't dictate a radical overhaul of a process (ACH transactions) that have worked very effectively for a long time. At some point consumers (or more rightly so, the payees) will increase the demand, and someone will step in the fill the need. Just hasn't happened yet.

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#86996 - 06/11/03 09:58 PM Re: Why aren't eBill Payees paid instantaneously?
1111 Offline
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1111
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Quote:

I think the original questioner may be wondering why when the payment is made via ACH (as many are), why that takes several days as opposed to an immediate transfer. And an American Banker article just a few days ago asked the same question I believe, since overnight ACH transactions are technically conceivable. But I think the answer boils down to what many of you have stated: the business case/volume at this point just doesn't dictate a radical overhaul of a process (ACH transactions) that have worked very effectively for a long time. At some point consumers (or more rightly so, the payees) will increase the demand, and someone will step in the fill the need. Just hasn't happened yet.




You have a good point - customers, at this point, are not actually originating an ACH entry as they may be doing down the road - there are security issues, good funds issues - it will, in the future, be the same level of payment as a wire transfer - immediate and no turning back.

In addition, someone is making money on the slower process that is now in place, so big changes may take awhile when money is being made through the current system.

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#86997 - 06/12/03 01:20 AM Re: Why aren't eBill Payees paid instantaneously?
Milburn Drysdale Offline
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Milburn Drysdale
Joined: Jun 2003
Posts: 15
Southeastern PA
Quote:

I think the original questioner may be wondering why when the payment is made via ACH (as many are), why that takes several days as opposed to an immediate transfer.




I was asking independent of the vehicle used to carry the transactrion(s). I donít understand why anyone, or any business, having a bank checking account (hair stylist to regional utilities, corner bar to credit card company) can't receive incoming payments in real time? I would think large business, such as utilities, would create 'in coming deposits only' account, which is simply a routing number that a bank maintains for their utility / customer.

I've read where in Europe the consumer banking system is setup to do most consumer-to-businees payments (what would be pay-by-check here) using electronic transfers. The consumers pass authorization notices to the banks, the banks are the bill payers, and the business receive their payments in short order.

Quote:

set up with the necessary equipment and processes to be able to access the ending points Ė the FIís. This system has evolved to be able to connect in this fashion.




Being a non-banking professional, I assume there are reasons to not use the public internet to carry transaction traffic, assuming appropriate encryption, security, safeguards, etc.?

Thanks for the info, I've learned a lot so far.

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#86998 - 06/12/03 02:12 PM Re: Why aren't eBill Payees paid instantaneously?
Lestie G Offline

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Just off the cuff here - what strikes me about the real-time issue is the fact that, at some point, the merchant is going to have to provide his bank name, routing number and account number to the customer to initiate this payment. May not be a big deal to a large business or utility, but to small businesses - that seems a little risky. Lot's of nasty things can happen if the wrong person has that information. They could probably get it some other way, but I wouldn't want to make it that easy on them.
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#86999 - 06/12/03 08:50 PM Re: Why aren't eBill Payees paid instantaneously?
John Burnett Offline
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Cape Cod
The plain and simple answer here is that we don't as yet have the infrastructure in place to provide for the instant payments that Mr. Drysdale seems to want.

His reference to Europe is an excellent one. The European "giro" system of electronic payments is highly sophisticated, well accepted, and firmly entrenched. It is light-years ahead of our ACH. Europe evidently saw the light on the paper payment crunch a lot earlier than we did.

Of course, our banking system is still rather unique. We don't have a government-owned central bank, and we have far more banks per person than our European cousins.
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#87000 - 06/12/03 09:30 PM Re: Why aren't eBill Payees paid instantaneously?
1111 Offline
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1111
Joined: Jan 2003
Posts: 580
Quote:

The plain and simple answer here is that we don't as yet have the infrastructure in place to provide for the instant payments that Mr. Drysdale seems to want.





What Mr. Drysdale wants may put us out of business as I believe he wants real-time transactions at the individual/business level - each entity would be an ACH originator with possibly one entity (one huge bank) minding the store. The people are not ready for that as assistance is needed and necessary, so bankers are needed to help people shuffle their money around and provide options to support their selected shuffling ways - for a small fee.

Perhaps next century will be different, who cares as we all will be dead!

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