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Electronic payments save time, money, hassles

Suddenly, even though you vowed this never would happen again, the scramble is on. You find yourself running–for the checkbook, the stamps–only to discover you’re out of stamps (or worse yet, checks). And wait, the post office is now closed. To boot, it’s likely Monday morning’s mail pickup will be too late to get that mortgage payment in before the grace period expires. Ruefully, you wonder if this time a late payment puts your good credit rating in jeopardy.
Sound all too familiar? Today, an increasing number of flexible and convenient electronic-payment options can eliminate the need to track what bills get paid when and relieve you from worrying whether payments will be received on time. You need only decide who pushes the buttons and how much control you want to sacrifice for convenience. Even better, most automated bill-payment services are free.
Many major companies offer hassle- free automated withdrawal from individual checking accounts for making bill payments, at no charge. Make automatic payments for the mortgage, utility and telephone bills, and loans. Even invest in mutual funds this way. An application and a voided check or deposit slip are all that’s required to sign up.
Payment timetables are flexible. For instance, Rochester Gas and Electric Corp. offers three payment options so withdrawals occur at the beginning, middle or end of the month to meet your budget needs. A monthly statement goes out at the time of billing so you can subtract the amount from your banking record. Various additional options can apply. With RG&E, for instance, you can pay your Rochester Telephone Corp. and RG&E bills together.
In general, companies offering automated payment services have few security and privacy risks. Bank-account numbers are fed into a centralized location that is inaccessible to personnel or computers handled by account representatives. Security and privacy matters are subject to federal banking laws and guidelines.
The obvious advantage to automation is you never forget to pay. Your bills will always be paid on time, even when away on business or vacation. Create a flawless credit record. Automation also saves you money by eliminating single-item checking fees.
The one big disadvantage is that billing errors do occur (although rarely, officials say), and there is the possibility that the wrong amount will be debited from your account.
Other hidden benefits sometimes apply. Institutions sometimes reward customers who use electronic payment. M&T Bank, for instance, gives a discount on home-equity products and installment loans by giving subscribers to the bank’s QuickPay service a quarter to a half-point rate advantage. “(QuickPay) is a highly regarded payment option,” says Richard Gold, administrative vice president for retail marketing at M&T Bank in Buffalo.
M&T Bank also offers a comprehensive touchtone telephone-payment service. Orders are taken over the phone to pay anyone, anywhere–a feature designed especially for paying those without the capability of receiving automated payments. Private individuals, for instance, would be sent a check in the mail upon authorization.
If controlling the handling of your money is important and your lifestyle is simple, Wegmans Food Markets Inc. Shoppers Club offers a free utility-payment service that lets you pay bills when you want to. Pay utility bills by inserting your Shoppers Club card in any Wegmans automatic-teller machine. Payments are deducted from your checking account by “electronic check” and protected by a personal identification number for added security.
The big advantage is real-time credit to your account, until 11:59 p.m. for same- day credit, says Melissa Dandrea, a Shoppers Club customer-service representative. Further, most Wegmans’ ATMs are 24-hour accessible.
For computer buffs, Citibank (New York State) has incorporated paying bills electronically into its complete line of online home-banking services. Best of all, unlike some PC home-banking services that carry a fee, Citibank PC banking is free.
M&T Bank also offers free PC banking to its relationship-banking customers.
Citibank PC banking features an attractive, state-of-the-art, virtually risk-free environment for users to conduct online banking transactions over the computer.
First, it bypasses the Internet. “We’ve got something we feel is better,” explains Tim Tahney, a vice president at Citibank’s Pittsford branch. Instead, Citibank establishes a direct link between itself and the customer.
Citibank uses its own proprietary software that is unrestricted by–yet is compatible with–personal-finance software programs such as Intuit Corp.’s Quicken and Microsoft Corp.’s Money. For the customer, this means Citibank’s PC banking offers a wider range of services than those available through third-party programs.
“It’s as safe as an ATM in security. Access is the same as using an ATM and a PIN number. Then, enter an additional encrypted code to conduct transactions,” explains Tahney. “We believe that once customers use this technology, by providing the means to do this, customers will develop a full relationship with Citibank for additional banking services.”
Citibank PC banking allows you to set up a pre-established list of recurring bills–car payment, mortgage and the like–to be paid automatically on a schedule. Or, it cuts a cashier’s check to anyone directly. There is no limit to the number of vendors–i.e., payees–it will pay and there is no charge per transaction. Citibank’s ATMs also are linked to its PC banking system.
Direct PC banking has distinct advantages over going through private computer networks or Internet-access providers. Dial-up busy signals and online glitches are less of a problem. Security is tighter. “There is very little issue with security with direct PC home banking through your bank,” says Brian Hickey, president of the Rochester Division of M&T Bank. “It’s when it gets out over the open airwaves that security becomes a bigger concern.”
Still doubtful about whether paying bills electronically is a privacy risk, safe or even worthy of examination? In the future, you may not have much choice.
According to a June 16 article in the New York Times Magazine–titled “Dead as a Dollar”–Citibank figures the average American signs 270 checks a year compared with 10 checks for the average German, a burden Citibank would like to eliminate. As such, electronic payments are a real convenience over writing checks.
“People are catching on. (Banking online has) been much better received over the last 12 months. There’s more familiarity with dial-in procedures and it’s much more accepted,” elaborates Tahney. For the future, “we really see this is the way banking is going to go, rather than building more branch offices.”
Toward this end, Security First Network Bank of Pineville, Ky., has taken the lead as an upstart competitor, having no physical in-person branches to visit, just an Internet outpost. All banking is done electronically. Deposits are mailed in.
PC banking will follow the same trajectory as ATMs and become common over a period of time, affirms Gold.
An article in the June 17 edition of the Wall Street Journal–titled “Banking on the future … Again”–seems to confirm this theory. It discusses the formation of INET, one of the largest online ventures yet, formed by 10 major banks and IBM Corp. to offer complete home-banking services sometime next year. Further into the future, INET looks to provide the capability to speak to tellers over a video link, as well.
(Cynthia Brone is a Rochester-area free-lance writer.)


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