How to pay online? All truth about online payments

The Internet has taken its place beside the telephone and TV as an important part of our lives. You can use it to find information, communicate with friends or make purchases. Whether you won eBay auction or just want to buy a nice bag at an online store, you need to pay for your purchase. Why pay bills the old-fashioned way when you can save time and hassle (and sometimes money) by making payments online? 

Basically, you have three choices when it comes to paying your bills online: 
•    Sign up for a bank's online bill payment service.
•    Use a third-party service. Some of them collect bills for you and send e-mail alerts when you need to make a payment.
•    Make payments directly through a merchant's website by entering a credit card number or authorizing a withdrawal from your bank account.

Bank's online bill payment service 

Nowadays the majority of large financial institutions in the U.S. provide an opportunity to manage your account over the Internet through a secure bank or credit union website. With online banking, or ‘Internet banking,’ you will be able to pay your bills online and make money transfers between different accounts.

Some banks, for example Citibank and Bank of America, offer online bill pay service for free if you open a bank account. Other banks will charge a fee of $5-$10 per month or offer the service for free to customers who maintain a minimum account balance. 

Electronic bill payment service (direct deposits, e-checks, electronic funds transfers) is an excellent way to move money electronically. You don't have to mail or sign any checks over to the bank, and your money will typically move more quickly. 

To set up a payment with your banking account, go to the bill payment section of your online banking page and fill out the information about the merchant. First of all, you need the ABA number of the receiving bank.

An ABA number (it is also called a routing number) will identify the bank uniquely within the electronic funds transfer system. Its principle of work is similar to a telephone number: when you want to call somebody, you use telephone number, when you want to move money to somebody’s account, you use an ABA number. 

The next information you need for an electronic bill payment is the account number, the name and address of the receiving institution. This may seem strange that you will need to enter the merchant’s address because the money is sent electronically but this is a typical requirement. 
Typically, online banking lets you arrange your recurring payments, such as your mortgage or credit card payments. They will be sent automatically each month. You can also schedule payments in advance to make sure that you will not miss any due dates and incur late fees. 

A third-party service

Another way to pay your bills online is by using a third party service. You can send money from your credit/debit card or bank account. These services typically allow users to make instant payments, provide buyer and seller protection and give buyers a piece of mind because the identity of a seller has been verified. 

Typically, if you have a bank account, you can link it with a debit card. You can also apply for a credit card and use it for online payments only. Plastics are a perfect way to make purchases online. Many people think that they are "less safe" than checks or money orders, but for several reasons, it is not so. 

First of all, nearly all of the major card issuers offer buyer protection in some form or another. If you do not receive an item for which you have paid, or you are not satisfied with a purchase, you can "dispute" the charge by contacting your bank and having the payment reversed. 

There are many third-party services that process online payment. They verify the card or bank account information and pay the seller after deducting a commission. Not all third party payment systems are created equal. The most popular services are:
•    PayPal 
PayPal is the most commonly accepted form of payment used online. It is safe and secure for both sellers and buyers. You can make payments using your credit card, debit card and bank account. 
•    MoneyBookers
Moneybookers serves as an electronic alternative to traditional paper methods. It performs payment processing for websites, online auctions, and other corporate users. You can send money via email from your credit/debit card or bank account. 
•    BidPay
BidPay, not to be confused with the old BidPay.com, which was owned by Western Union and generated money orders for sellers through online credit card payments, is a service similar in operation to PayPal. It has fewer members and fewer features, but may be attractive to people who want a PayPal alternative with similar functionality.
•    CheckFree 
CheckFree is the company that powers payments for hundreds of billing companies on the Internet. They provide CheckFree with your bill information at your request. After you sign up, you can select the companies whose bills you want to receive and pay online. 
•    Bill Me Later
Bill Me Later, (formerly known as I4 Commerce) is a payment method offered on the websites of many well-known merchants, for example Wal-Mart and Hotels.com. This service allows makes purchases online without using a credit card.
•    Google Checkout
Google Checkout is an online payment processing service provided by Google. It is aimed at simplifying the process of paying for online purchases. Users fill out their credit or debit card number and shipping information in their Google Account, so that they can purchase at participating stores at the click of a button. With Google Checkout, your card number isn't shared with sellers. 

A merchant's website 

Some sellers, usually larger volume sellers or power sellers, accept credit and debit cards through their own website. There are many types of merchant accounts: Merchant Plus, PaymentMax, Chase Paymentech, GoEMerchant, Intransact, GotMerchant.com, Paynet Systems, Authorize.net, Merchant Warehouse, Charge.com, Total Merchant services, Electronic Transfer, Merchant Account Express and others. 

While with this type of online payment you can get all advantages of shopping with your plastic, there are some risks to take into consideration. The seller will receive your credit or debit card number, CVV, expiration date, and name. They would not get this information with a third party service.

Paying your bills online makes it a much easier process. It can free up your time and save money. A lot of people use a combination of various options to pay their bills online. For example, you can pay via merchant account on well-known and reputable websites and use PayPal for purchases on Ebay.