Why do banks encourage me to use online bill payment?
Another reason for banks to push this is sitckyness.  Once you have all of your bills setup, its more trouble to change banks.  This reduces the customer turnover rate, which lowers their costs. Most transactions that the bank performs for you are electronic ACH transactions, so the costs to them are minimal in the long run.  Most banks do it now to keep up with the competition.  Almost every bank does it now, so they have to do it to attract new business and keep existing customers. Also, the more you rely on the bank and use them to pay bills, the more they learn about you over time and can use that data in overall marketing plans.  It's easier for them to record it into their system if it is all electronic to begin with. The paper check method also allows the bank to use your money while the check is in the mail.   My bank debits my account immediately, so while my $100 utility bill is traveling the U.S. Postal System for two days, they can make use of my $100 in whatever slush fund they like. "One other aspect of this is that the bank will plan to eventually approach the merchant that they are sending paper checks to and say ""why don't you sign up with us and give us your ACH info, and we won't send you checks?""  And a lot of merchants will say ""sure"", because someone has to open those checks and take them down to the bank, and that isn't free.  And that time while the money is in the mail, or sitting on someone's desk to be deposited, that is money that isn't working for you.  So everyone wins." It’s more convenient for both you and the bank; its much simpler to handle things electronically than it is to go through paperwork. Also, its eco-friendly and by saying that they care about the environment, banks earn brownie points with environmentally-conscious customers.
That's how my power company does it. You authorize them to direct debit recurring monthly. If they screw up and withdraw $1000, you're out until it gets fixed.   But it varies from company to company. Not everyone's situation is like your online banking. Agreed. I use online banking for everything I can. The only thing that holds me back is when there are insane fees on using online payments. So really it's the companies with these fees that are slowing us all down... And the older generation that refuses to try to understand debit/credit cards and online banking. My grandma will only use cash and checks. First, they don't have an obligation to provide a service for a non-customer.  In theory, the could even refuse this service to account holders if that was their business model, although in practice that would almost surely be too large of a turn-off to be commercially feasible.  Non-account holders aren't paying fees or providing capital to the bank, so the bank really has no incentive or obligation to tie up tellers serving them. Maybe as importantly, they have a legitimate business reason in this case as stated.  The fact that the bill passed whatever test the teller did does not, of course, ensure that the bill is real.  They may (or may not) subject it to additional tests later that might be more conclusive.  Making you have an account helps ensure that, in the event they do test it and it fails, that (a) they know who you are in case the Secret Service wants to find you, and (b) they can recover their losses by debiting your account by the $100.  This isn't foolproof since any number of bad things could still happen (identity theft, closing account before they do additional tests, bill passing later tests, etc.), but it does give them some measure of protection. Something you may want to consider if you are still choosing a bill-paying service is the contingency policies of the service.   I just suffered an extended stay in a hospital and my officially (in writing) designated Power of Attorney was NOT granted access to my PAYTRUST account.  Thus they could NOT take care of my finances easily.  After my discharge, I contacted PAYTRUST and they had canceled my account and would not reactivate it.  This is after over fifteen years of loyalty.  Needless to say there was much financial chaos in my life due to their negligence.  They were staunch in their policy and said officially that if they need to acknowledge a Power of Attorney, the ONLY thing they will allow the POA to do is close the PAYTRUST account.  How's that for customer service?!  Caveat Emptor. I am now seeking another service and will be asking about their POA policies. I know of websites that do this, but I don't know of banks that do. Is there any reason you want to do this at a bank rather than use a service?  My main concern with using a bank for this would be the risk of overdraft fees While it's wise, easier and safer to check your transactions online a few times a month, I opt to receive and file paper statements as a hard copy back up of account history. Any reconciliation I perform is a quick glance to make sure the numbers sound right. It's probably a small waste of time and space, but it settles some of my paranoia (due to my training as a computer engineer)  about failure of electronic banking systems. If someone tampers with bank records or a SAN explodes and wipes out a bunch of account data, then I will have years worth of paper statements to back up my numbers.  Having years worth of statements printed on the banks stationary will have better credibility in court than a .pdf or printout thereof that could have been doctored, in case I ever needed to take my bank to court. A little piece of mind for the price of a letter opener, a square foot file box and a couple of minutes a month. Lower risk of having to fight to get their money back, obviously. That's what credit rating is supposed to predict. Paying your bills on time, and paying off the balance in full every month, are different questions. They want to know that you will make the minimum payments at least, and that you will eventually pay back the loan. Compare that with subprime and/or loan sharks, where the assumption is that being late or defaulting is more common, and interest rates are truly obscene in order to make a profit despite that. "I don't see how this concept takes off. First and foremost, BankSimple is NOT a bank but a tech company masquerading as one. BankSimple leaves industry regulation and treasury management -- the CORE of banking, to outside parties.  Call me old fashioned, but I prefer to have as few stops between me and my money as possible. If not for a fear of losing it in a robbery and inability to earn interest, I'd shove it under a mattress. So why would I want to bank with an intermediary, who admittently doesn't understand how the process works? How is that ""looking out for my interests""? And how is your security better than other institutions that offer 128-bit encryption and multiple security questions to test a customer's identity?  I'd like to add that not charging overdraft fees and providing lines of credit to help customers out in the event they spend more than they have is nice in concept, but what happens when those same customers do not make deposits to cover their shortfalls? When it comes to money, people will take advantage of any opportunities they have to circumvent the system. Especially if funds are tight." Using the bank's bill pay always seemed like a hassle to me. There are lots of mistakes to be made by me that can result in late payments and not too many benefits other than some convenience, and being able to pay bills online for accounts that require paper payment. (Although the banking systems often screw up those payments) Plus, there is usually a fee associated with bill pay, at least to some extent. I generally use the websites of my credit cards or other entities to pay bills.  Then again, maybe I'm a bit of a weirdo here... I don't see mailing a check 3 days ahead of the due date as a particular hassle. I use online banking and bill pay for all accounts where I can control when and how much is paid, where I push the funds out.  The bills from those companies that want to be allowed to reach into my account and pull money automatically (e.g. my Chase mortgage) I simply will not enroll - they get a paper check in the mail. There is no way I am giving these cocksucker criminals *permission* to take money out of my accounts. Even for those of us who aren't at risk of over drafting, direct debit is a less-than-stellar option. Direct debit is a great way to begin ignoring how large your bills are. By explicitly paying them through my bank's online billpay, I notice immediately when a bill is larger than it ought to be. This is often caused by a billing error. In which case I've found it far easier to resolve disputes when the money is still in my hands. It's significantly harder to convince an internet provider, cell phone service, or utility to reverse an incorrect charge after it's been paid than it is before. The other times, it's because I've been using the service more than normal. For example, sending text messages more frequently or using more electricity. Explicitly paying these bills makes me realize upfront that there's been a change in my behavior and I can either reduce my expenses or accept the higher cost for higher service. My own experience leads me to believe that paying your bills automatically every month is a great way to ignore these events, and leak money like a sieve. Online bill pay makes doing this as trivial as I could hope for, and the risk of missing a payment is essentially nil. "From the bank's perspective, they are offering a service and within their rights to charge appropriately for that service. Depending on the size of their operation, they may have considerable overhead costs that they need to recoup one way or another to continue operating (profitably, they hope). Traditionally, banks would encourage you to save with them by offering interest growth on your deposits. Meanwhile they would invest your (and all of their customer's) funds in securities or loans to other patrons that they anticipate will generate income for them at a faster rate than the interest they pay back to you. These days however, this overly simplified model is relatively insignificant in consumer banking. Instead, they've found they can make a lot more profit by simply charging fees for the handling of your funds, and when they want to loan money to consumers they just borrow from a central bank. What this means is that the size of your balance (unless abnormally huge) is of little interest to a branch manager - it doesn't generate revenue for them much faster than a tiny balance with the same number of transactions would. To put it simply, they can live without you, and your threatening to leave, even if you follow through, is barely going to do anything to their bottom line. They will let you. If you DO have an abnormally huge balance, and it's all in a simple checking or savings account, then it might make them pause for thought. But if that's true then frankly you're doing banking wrong and should move those funds somewhere where they can work harder for you in terms of growth. They might even suggest so themselves and direct you to one of their own ""personal wealth managers""." "From the banks point of view the point of a current account like this is to get you as a regular customer. They want to be your ""main bank"", the bank you interact with the most, the bank you turn to first when you need financial products and services, the bank whose advertising you see every time you log into online banking or walk into a branch. The bank knows that if they just offer the unprofitablly high interest rate or other perks with no strings attatched that people will open the account and dump a bunch of savings in it but won't actually move their financial life over, their old bank will still be their main bank. So they attatch strings like a required minimum deposit, a minimum number of direct debits and similar. These have minimal effect on people actually using the account as their main current account while being a pain for people trying to game the system. Of course as you point out it is still possible to game the system but they don't need to make gaming the system impossible, they just need to make it inconvianiant enough that most people won't bother." I don't know, ask the various companies I'm forced to do business with why in the hell they want me to stop by their office so I can drop a check off vs just using some means of digital payment.  I would fucking LOVE to ditch paper checks. There is a reason - your credit score. If you ever take out a mortgage, you might pay dearly for your behavior. The bank where you have the credit card reports the amount on the bill to the credit rating agencies. If you pay before the bill date, they will always report zero. You should wait at least till the day after the billing cycle ends, and then pay off (you don't need to have the paper bill in your hands - you can see online when the cycle closed). Depending on your other financial behavior, this will have between zero and significant effect, on the percentages you get offered for car loans, mortgages, etc.