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Direct Payment What is Direct Payment? Direct Payment is the use of electronic payments authorized by the consumer to pay recurring bills, such as utility bills, insurance premiums, membership dues, and loan repayments. Funds are withdrawn from the consumer’s checking or savings account and credited to bill account. Companies offering Direct Payment must obtain a signed authorization form from the customer. Signing this form permits the company to collect funds for the amount of the bill from the consumer’s checking or savings account on a specified date. The customer determines the account from which the payment will be made. Companies with bills that vary in amount, such as utilities, must send you a monthly statement ten days prior to the date that your account will be debited. For fixed monthly payments, such as mortgage payments or insurance premiums, you should be notified of the payment date and amount prior to the first transaction. The amount will be debited on the same day each month. Because the amount stays the same, you may not receive a monthly billing statement unless there is a change in the date or amount. You are always provided with the details about these payments on the monthly statement from your financial institution. In fact, you receive more information on your statement for electronic payments that you do when writing a check. Direct Payment saves you time and money. You save time not having to write and mail checks, and you save money buying fewer stamps and checks. You may even save money on late fees and interest charges. No matter how hectic life gets, you know your bills are paid on time. Amazing Facts about Direct Payment
Direct Payment simplifies your life by taking the hassle out of paying your bills. Types of Direct Payment Internet-Initiated payments are activated by the consumer to make a purchase or pay a bill. Using your customer account and other security information you provide, the company website will verify your identity when you enroll via their website. Companies must follow certain security procedures in order to offer this service, including secure Internet sessions. Once enrollment is complete, you will log in to your account using a username and password. To make a payment, you will be asked to supply your bank’s routing number and account number. To make the system easier to use, most sites will remember your account information under your secure login. Each time a bill is due, you must return to the company’s website to make a payment. Because these payments usually vary from month to month, you will receive a statement to remind you of the amount due. This statement may be delivered via US Mail or by e-mail. Using Internet-Initiated payments allows you to pay your bills from anywhere there is an Internet connection, even if you don’t have your checkbook handy. Telephone-Initiated Payments allow a company to use the telephone to obtain verbal authorization to debit your checking or savings account. These entries are for one-time debits to pay for goods or services. It is a convenient way to make a payment at the last minute and avoid late fees. There are restrictions under which companies may debit your account using a telephone authorization. You may call any company and authorize them to debit your account. Companies may only initiate calls if you have purchased goods or services from them within two years of the call or have a written agreement. This means that a company you have never heard of cannot call you and ask for your account information. Each of the above circumstances requires the company to record your authorization or send you a written notice of your authorization before initiating the debit. The merchant’s representative must state clearly the amount of the payment, date of the payment, and your name. The authorization must also include the date of your authorization and a telephone number where you may reach the company if there is a problem. Point-of-Sale and Debit Cards allow consumers to pay a merchant electronically when making a purchase using an ATM or Debit Card. When making a purchase, you present the card to the merchant and authorize the payment by use of a personal identification number (PIN) or signature. The ATM or Debit Card electronically accesses your account and you receive a receipt when the payment is complete. ATM or Debit cards can also be used to make bill payments at some ATM locations. Where this option is available, the customer selects the bills to be paid from the menu of companies and indicates the amount of the payment. The customer receives a receipt as confirmation of the payment or transaction. The customer’s financial institution reports the withdrawal on the customer’s monthly account statement, along with information regarding the location where the payment was made. Point-of-Sale and Debit Cards provide consumers with a substitute to writing checks or paying cash for purchases. These transactions are completed faster than purchases made by check. For many consumers, Point-of-Sale and Debit Cards provide an attractive alternative to carrying large sums of cash to make purchases. |