Why does it cost more to process a bill online than to mail it with a stamp?
In: 6
Typically this is because the organization started out processing such bills only through mail because they had to. When they wanted to allow online processing of payments for whatever reason they didn’t want to take on the cost of doing so themselves; usually this is because they are connected to the government where prices are fixed by law. Your utility company for example may not be allowed to raise their rates overall to offset the cost of outsourcing online payment processing, so instead the processing is paid for by a tacked on extra fee.
Even though online processing is overall easier and less costly, the bureaucracy in certain cases makes billing it that way easier.
Online payments often involve some sort of fee (usually somewhere around 2%) to the business to use the paymemt processor. If you mail something in, the business receives 100% payment.
It’s like the difference between using PayPal instant transfer or waiting 2-3 days for the standard transfer.
In many cases credit unions have FREE online bill pay.
* When banks profit they are required by law to pass that profit on to shareholders. They are also legally required to try to profit if they can. This leads to lots of small fees on everything.
* Credit Unions answer to the members (anyone with an account) and therefore do not require fees for things like overdraft, or bill pay or whatever.
* not all banks have fees for online bill pay.
* **If what you mean is why is there a charge for credit cards** That is a different situation all together.
I’d just like to point out that it’s often the opposite in my country. Online bill is usually free of extra charges and paper bill will have 1-5€ paper bill fee.
Depends on your country.
In France it’s cheaper online because you save the cost of the post office, and additionally the State and most companies gives you a discount if you do it online.
As an ex it project manager, I know that it’s because the process is “cleaner” (for audit), more data available for marketing, …
Credit card companies charge fees for processing, something like 3% or more*, and the businesses don’t want to eat the fee.
*Amex charges more than the others, which is why fewer merchants accept it.
Latest Answers