Surcharges for Online Payments

My utility companies charge extra for online payments (& I’m referring to bank transfers, not credit card payments). So do some of the mortgage companies I’ve dealt with (unless you make a monthly automatic payment plan).

Why is this? I would think it’s easier for them to deal with an online transfer of funds than to have to deal with depositing your paper check. I understand they want to make money and like the idea of fees for things, but it must have some underlying business rationale. (Maybe they pay something to the bank? If so, why?)

They have made the calculation that their customers like the convenience of online payments more than they hate paying fees. There doesn’t have to be any other motive besides profit.

Bank of America: Costs $6 to pay a mortgage online.

Maybe Automated Clearing House fees coupled with a Because They Can tax?

Whether it’s to cover their own e-banking costs, to subsidize the increased fraud that comes with digital transactions, or any other reason… the ultimate reason is because enough people put up with the fees that they make more money with them than without them.

Credit card providers, on the other hand, usually don’t allow merchants to charge extra for credit card payments (with the caveat that “cash” payments may be discounted, and a physical check might or might not count as “cash”, I forget).

I think it’s “because they can…”. People will pay, or maybe a lot don’t realize it.

When my (Canadian) bank went form unlimited online transactions to 50 cents each, one of my wife’s co-workers suddenly found the monthly bank service fees went to $56. They used to use debit for everything. OTOH, I ted to take out $300 at a shot and use cash for anything small enough. It will stay that way as long as this is how the banks want to run things.

I suspect a lot of extra fees are simply cash grabs. Look at the bank reaction to being told by congress to limit their debit transaction fees. It seems to be a case of killing the goose that lays the golden eggs - instead of lowering fees and encouraging more activity, the companies raise the fees and don’t understand when they hand competitors an opeing while driving away customers. After all, American business is not about long-term planning but about driving the current quarter’s bottom line, future be damned.

They could be wrong about that, because Maybe They Can’t Tax. In the news just today, Verizon scrapped its planned $2 per on-line payment fee, just one day after announcing it, as a result of customer blowback. And let’s recall that Bank of America dumped its planned debit card usage fee likewise a few weeks ago.

In the user comments to the above-cited Yahoo news article, a fair number of people suggested the obvious: Any company that does this, just go back to paying with an old-fashioned paper check in the mail. It will cost you a postage stamp. From the comments also, this is a common problem with utility companies in particular. My electric bill works this way. I pay with old-fashioned dead trees in the mail.

I often wondered why companies don’t do this more often. After all a 10¢ surcharge is still less than a US postage stamp

Could be worse. The company I have my auto loan with charges $12 to make a payment online.

While I would like to think it was a result of customer feedback, it is more likely investigation of Verizon by the FCC that caused them to drop that fee.

We really need some protection against all these fees, it is really criminal to charge someone a fee to pay what they own.

I pay my BOA online every month with no fee? I thought they just add fees if you’re paying late.

I pay my Chase credit card online with no fee, and my cable and utilities are all automatically deducted (different than a one-time online payment) with no fee. I hope they don’t start charging.

'User Fee’s, as profit stream, are now all the rage, and will continue to be so until someone decides to actually protect consumers from such exploitative practices.

I wouldn’t hold me breath, if I were you.

Think about PayDay Loans for a minute. There are usury laws in the country that are supposed to protect people from loan sharking. And yet, somehow these places are effectively charging people unbelievable interest rates (100’s of per cents!) all by cleverly disguising the ‘usury’ as account fees and service charges.

They sprung up like mushrooms, are now seemingly everywhere, and target the most vulnerable in our society, effectively served up on a silver platter to predatory capitalists by an uncaring government. But we didn’t care, because it wasn’t us being exploited.

But now, it’s our turn. Every bank, every utility, every industry now recognizes that new rules apply. It’s open season on consumers, as long as you name it ‘fee’ or ‘charge’, it seems.

If there were true consumer protection, no business would be allowed to use such ‘fees’ as a revenue stream. There ought to be legislation created to deter this very profitable and exploitative practice. Such as, if you’re charging an account or service fee, it cannot exceed your actual costs.

As in, if it costs the bank .05 cents, per transaction, for the ATM, then they are not allowed to charge $.95, etc. Profits so generated could be taxed at 120 %, say, to discourage this.

I wouldn’t hold my breath though. The robber barons are in charge and hold all the power, have no doubt. It’s just that it’s now the middle class’s turn to be served up for fleecing, that’s all.

You know it’s a new world when a presidential candidate won’t even tell you, when asked, exactly how many homes he owns! When people believe such nonsense as, ‘Just help us be more efficiently exploitative, get even richer, and some of our wealth will surely trickle on down to you!’ As long as people are stupid enough to believe this tripe, I don’t foresee any change.

I pay my BoA mortgage online each month with no fee.

Me as well.

Is this a factual assertion or an opinion? :confused:

I pay all my bills online thru my credit union, but only earthlink charges me ($2).
Seems odd to me that an internet internet service provider would penalize customers for paying over the internet.

I had a mortgage with BOA until fairly recently. They do not charge fees if you either have a BOA bank account or set up a monthly prescheduled payment plan. If you don’t have a BOA bank account and make a one-time online payment, they charge a fee.

Perhaps, but I have a hard time thinking that the FCC moved so quickly between Christmas and New Years. The article in the Times about this said that the rapid outrage fueled by social media and other online outlets was more responsible, though the FCC investigation might have gotten more coverage given the controversy. The real question is how they retreated so quickly. Perhaps they had some inkling about the possibility of blowback, and were ready to retreat.

This is the third instance of this kind of thing happening - Netflix, BofA, and now this. Looks like a trend to me.

I don’t mean to nitpick, but I don’t have a BOA account, nor is my payment scheduled. I go online and schedule my payment sometime the last week of the month. There is a window of a few days where I can make that payment without a fee. Mine is due on the first, the fee usually kicks in around the 5th or 6th. I have mine come out on the first, or the next closest day. (i.e. this month’s will hit tomorrow, the first business day after the first.)

ComEd (electric) does this in my area, but there is a work-around. If I go to my bank’s website (Chase) and use their Pay Bills feature, it sends an electronic “check” to ComEd with no fee. If I go to ComEd’s site and click “Pay My Bill”, it will send me to a third party site which charges me somewhere between $5-10 (haven’t looked at it in a while, so I don’t recall the exact amount.)

So see if paying your bill from your bank’s website works; there may be no fee (for the moment) with that route.