In the US, most consumer banks offer online bill paying. It's convenient for me, but what's in it for the bank? Many vendors take payment electronically, but some require a paper check sent via the post office. The bank does not charge either the sender or the receiver for this service. On a small $20 bill, they must be paying a few percent in postage!

Is it cheaper than processing the personal check that I would otherwise write? I might believe that they offer this service to compete with other banks for my business, but they actively encourage me to use it too. So there must be something in it for the bank as well.

(This is thinking from the bank's perspective rather than mine, so apologies if it's off topic.)

  • of course its cheaper than processing your personal check (which they need to keep in archives for your account for auditing for 7 years, scan it and present it online, and pay for your next free checking book when you write so many of them) – littleadv Sep 16 '11 at 6:32
  • might want to wait just a bit longer before choosing accepted answer. This went up at 2am EDT, and approved before most woke up. – JTP - Apologise to Monica Sep 16 '11 at 11:46
  • Sorry, seeing more answers come in shows you're right. I wasn't sure that I was going to get anymore and the first seemed reasonable to me. If another one is clearly better I'll change it, otherwise will remember for next time. – Mike Kale Sep 16 '11 at 14:43
  • Don't most banks charge for this service? That would be an upside. – JohnFx Sep 16 '11 at 14:57
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    I am not aware of any bank which charges for this service, and I am aware of several which don't. :) – user296 Sep 18 '11 at 23:18

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.

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    The real answer! Checking accounts to banks are basically a platform used to bombard you with solicitations for loans and other services. – duffbeer703 Sep 16 '11 at 12:34
  • I like this answer too. Though I'm sure both are factors. – Mike Kale Sep 16 '11 at 18:37
  • I can not find the word "sitckyness" in my dictionary. Do you mean "stickiness" or is it some other term? – Philipp Sep 30 '16 at 8:24
  • This is why I use a 3rd party bill payer service. It costs $10/mo, but the UI is great, and I'm not tied to any one bank. – RonJohn Sep 30 '19 at 19:49

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.

  • +1 for marketing plans. If you think that your bank does not use that data based on what you buy with your debit card and what bills you pay you are nieve. Your bank may not be able to give out your actual puchace and payment data but they can aggrate it and put your name into marketing pools it then resells to marketing companies. And you give them permission when you sign the agreement that they can share your name and information with their business partners to provide you with better service. – user4127 Sep 16 '11 at 15:57
  • And +1 for the fact that online bill payment is a service that people use to choose between banks. – Xalorous Sep 30 '16 at 14:28

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.

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    They're already using my money while it sits in savings/checking, but there's always a risk I'll withdraw it all in the next 15 minutes. With bill pay, they know that it's theirs for the next 24 hours at least. – mskfisher Sep 16 '11 at 19:26
  • Ooh, another good reason. I suppose there are lots of advantages for the bank. – Mike Kale Sep 16 '11 at 20:00

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.

  • OP specifically mentions cases where the payee does not accept ACH, and so the bank must print a check and mail it. – Xalorous Sep 30 '16 at 14:26

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