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Review of Checkfree-based Billpay by Dave Hanson

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#1 markber


    1 billion bucks

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Posted 19 October 2005 - 08:06 AM

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Dave Hanson just posted an excellent review about Checkfree-based Billpay on FW (see below)

Several of the leading online banks among FW finance users (USAA.com, FirstIB.com, for example) use checkfree as their vendor for online billpay.

When you pay a bill using Checkfree, it travels one of three ways:

-Electronic Payment. Checkfree uses ACH or similar methods to ensure that the payment is received by the payee on or before the due date. (Generally, the payee must post it within a business day of such receipt.) Since it does not rely on the mail, this is by far the most reliable method. It is also cheapest for the bank. Funds for the bill payment are generally withdrawn from your account on the Payment Date. About the only potential disadvantage to this method is that payer potentially loses the "float" that he or she would receive by waiting for a check to clear.

-Check from Payer Payment. Checkfree sends Payee a check by US mail in the name of the account holder. It is generally sent three business days prior to the date it is to be received by payee. As with a conventional check, funds are withdrawn when the payee cashes the check. It is subject to both the uncertainty of the US mail, and the uncertainty of how recipients post their mail. The advantage is that there CAN be a "float" while the check is being cashed. Once the check is cashed, there is ready evidence that the payment is received (again as with any check.) If there are NSF in the account on the date that the check clears, it is generally returned, as any conventional check would be.

-"Guaranteed Funds" Check from Checkfree Checkfree sends a check in it's OWN name to the payee, again generally 3 business days prior to the date it is to post. On the day that the recipient is to receive the payment, funds are withdrawn from the account, REGARDLESS of when payee cashes the check. In this manner, checkfree keeps the "float" earned on any outstanding check. IMO, this is the WORST of the three methods. Not only does the account holder lose the float, but there is no indication of when the payee has received the payment without opening an investigation with checkfree. IME, they tend to be slow to answer these.

One of the major frustrations of billpay with checkfree is that one is often uncertain of which method will be used to make a payment. Generally, the following rules hold:

1. Small Fry get checks. Payments to individuals, local businesses, tiny businesses, and the like will almost never go electronically. They will go one of the two check-based methods, but it's anyone's guess which way. IME, usually very large checks tend to be Check from Payers. The more bills you pay, the more often modest bills are sent as "Guaranteed Funds".

2. Electronic Payees show nearer earliest payment dates. A next business day or two-business day window for billpay to a specific payee generally means it's heading electronically. HOWEVER, note:

3. Some Payees set maximum electronic payment levels. Until recently, I had been under the impression that the method for a billpay was predominantly a matter of what information Checkfree had available: i.e., if they had the routing info sufficient for electronic billpay, that's the way it would go. However, an email reply from the checkfree division of USAA explained to me that this is not true. Instead, many payees will only allow electronic payments below a certain dollar level. Above that cutoff, they only accept a paper check.

It's rule 3 that inspired this thread. For the third time this month, I've been suprised by payments that had previoulsy gone electronically going by paper check instead. Irritatingly, there was NO notice or warning that this would happen until the payment was pending, so that it was effectively too late to make other arrangements. This has caused various minor problems at DeepGreen Financial and Bank of America, because they weren't posted at the time they were supposed to be posted. Just about the only way to figure out what method it will go is to try to set up a billpay for the next business day (which can be immediately cancelled), and see whether it's accepted. (This can be a ridiculously tedious process, and I welcome any alternatives suggestions...)

I'd like to use the Quick Summary post to track information concerning these arrangements for major national payees. I'm suggesting the following format (but would welcome other suggestions):


So, for example, I would report my recent BofA personal CC billpay as follows:

BofA CC (Personal)
<$10K EPAY (tested via trying next-day payments)
$24.9K e-pay allowed 9/05 with no problems

In addtion to your data points on payees, please add any corrections, clarifications, etc. on the checkfree billpay system. Thanks.

Source: fatwallet.com/t/52/531611/