Establishing an Electronic Payment Relationship with a Bank

If my understanding of your question is correct, you own or plan to start a business that will be receiving recurring payments from customers, and many of your customers are expected to send payments through their bank's online bill payment service. This guide aims to provide you with the necessary steps to set up this electronic payment relationship.

Understanding Bill Payment Service Providers

Many smaller banks and a few larger ones use bill payment service providers rather than running their own proprietary system. While this means dealing with fewer companies, it shouldn't significantly complicate the process, as each service provider is interested in reducing operational costs. Sending out paper checks is the most expensive payment method, so bill payment service providers aim to redirect payments to electronic methods via the ACH network (in the US) or equivalent electronic funds transfer services in other countries.

Initiating the Process

If you are receiving a sufficient number of check payments from a bill payment service provider, you can expect a call or letter asking for your banking and required customer account number information for all subsequent payments. This is particularly relevant if you have a high volume of transactions.

Tips for Starting a New Business

If your business is just getting started and you don't have enough volume to attract the attention of these service providers, or if you prefer to take action immediately, here are a few suggestions:

Prepare Detailed Documentation

Your customer account information: Include the length (number of digits) and format of the customer account number. Your bank account information: Bank Name Branch Name Branch Address Bank Phone Number (for reference) Bank ABA Routing Number Account Title (how your company name appears on your bank statements) Account Number Request to Send All Future Payments Electronically: Customer Name and Account Number: For each paper check payment received, customize a letter template with the bill payment service name and address, and the specific customer name and account number.

Communication with Your Bank

It's crucial to discuss with your bank how electronic payment information will be provided to your company. While receiving electronic payments requires no effort on your part, you'll need a way to record each payment against your customer records. This can be done manually or ideally with an automated system. There are several methods available, but since I don't know the specifics of your business, I'll refrain from suggesting particular solutions.

Conclusion

By following these steps and preparing the necessary documentation, you can establish an efficient and cost-effective electronic payment relationship with your bank. This will streamline your business processes and improve customer satisfaction. Good luck with your business!