Depending on the financial institution and the type of online payment method used, fees for online payments can differ for customers, financial institutions and retailers. For example, wire transfer payments often cost customers more than online bill pay services, both of which are offered by banks.
Online payments on the other hand, can be made to merchants, individuals, creditors and government departments such as he Internal Revenue Service (IRS) for no direct cost to the client, but at a potential cost to the payment recipient. A number of electronic payment systems exist which are used by various organizations and facilitate online payments.
Types of payment systems:
• Electronic Fund Transfer System (EFTS)
• Federal Reserve Wire Network
• Clearing House Interbank Payments System (CHIPS)
• Electronic Federal Tax Payment System (EFTPS)
• Debit card networks ex PLUS
I: Banking online bill pay
Online bill pay services are usually free and are offered by financial institutions in collaboration with corporations such as utility providers. Online bill payments require the entering of billing account numbers and address information in order for the money to be correctly sent to the right biller. Automated withdrawal payments and recurring payments are also often no cost to the payer.
II: Online credit card payments
Online credit card payments are used by merchants who seek to facilitate customer payments for products ordered over the internet. These merchant accounts allow the buyer to enter in their credit card information to pay for their goods at no cost to the customer. The merchant on the other hand, is usually required to pay a fractional percentage for each sale made using an online credit card payment.
III: Wire transfers
Incoming and outgoing payment fees may vary for wire transfers as may international wire payments according to Bank of America’s fess structure. At Bank of America, customers pay $12.00 for an incoming wire transfer costs and an outgoing wire transfer costs $25.00 whereas outgoing international wires cost as much as $45.00.(5) In contrast, Western Union charges $5.00 for an outgoing wire payment transfer under $50.00.(4)
IV: Online Debit card payments
If a customer makes a payment with a debit card, the merchant may be charged a flat fee instead of a percentage of the sale.(3) The customer may also be charged a $1-$2 fee for using a debit card depending on whether or not payment is signed for or a pin number is used. Using the credit option for debit payments is more expensive for retailers but more profitable for financial institutions and sometimes cheaper for buyers.(1)
V: Pay check payments
Some employers may choose to pay employees by making an electronic payment to an savings or checking account. This type of payment may be performed using an online Automated Clearinghouse System (ACH) and is free to the employee.(1) Other institutions may prefer to make free online payments to a debit cards as this reduces the cost of checks and check services.
Sources:
1. http://bit.ly/aYsJ87 (FFIEC)
2. http://bit.ly/ckFlYT (IMRF)
3. http://bit.ly/bfXeFs (Creditcardtrans.com)
4. http://bit.ly/h1UGR (Western Union)
5. http://bit.ly/cyToX0 (Bank of America)