All your bills are belong to us

Why can't all our vendors and billing services just get along?

Well, this wasn't exactly the way I wanted to start the new year. I had hopes of perhaps enjoying a little less excitement in 2009, since 2008 was chock full of significant happenings, intrigue, and general craziness. Apparently it was not to be. I am destined to fall through the cracks in one way or another.

I had the audacity to pay my bank $25 to stop payment on an erroneous automated checking debit on New Year's Eve. Everything fell apart after that. It's a simple story, really.

I've used PayTrust to handle my paper and electronic bills for over a decade. Yep, 10 years. Their service allows for paper bills as well as electronic bills to be processed and paid, either by check or direct debit. Over the years the service has changed a bit, the price went up slightly, Intuit bought them, but overall it's always been stable and secure. In all that time, I've never called their support services, at least not that I recall. That was until last Saturday.

Two weeks ago, I discovered that the automated payments to my power company had stopped. Apparently there was a detection issue with their paper bills and instead of being paid normally, the bills were ending up as unassigned and sitting there. This has happened from time to time with PayTrust, and as soon as I figured out the issue, I assigned the bills and scheduled an immediate payment of a substantial sum of money to the power company. That payment went through the next day and all was well. At least, all was well until an automated payment for the identical amount left my bank account five days later, also destined for the power company. I had paid them twice, for some reason.

My online statement clearly showed that the power company was the recipient of the payment and that it had left my account. All this was complicated by the holidays, and so on New Years' Eve I called the power company and the bank several times. Both originally told me there was nothing they could do, but eventually the bank said that the payment was actually pending (even though my account showed the debit) and that a stop payment could be issued for $25. I opted for that and sure enough, the money didn't leave my account that evening. All was well.

At least, all was well until I got an e-mail from PayTrust informing me that all my upcoming bill payments, including my mortgage, car payment, and utility payments had been canceled and both of my funding accounts had been placed on hold. The reason? The stop payment I had issued for the power company. As I soon discovered, even though the listed destination of those funds had been the power company, and even though they were represented as already having left my account, and I had a payment confirmation code, PayTrust was still in the middle of this transaction. It paid the power company, and tried to debit the second payment from my account, which was refused due to my stop payment. Thus, PayTrust locked my account down. Not only that, but it canceled all my other bills -- six of them. My attempt to correct an error and not pay a bill twice had resulted in the inability to pay any bills at all.

For the first time in a decade of patronage, I called PayTrust. Of course, it had placed my account on hold on a Friday night, and thus I was calling on a Saturday morning. I spoke with a rep and explained the issue. His response was basically "too bad." If I wanted to, I could call another division on Monday, but no one there was around that Saturday. No supervisors were available, and "Even if we wanted to, there's nothing that can be done about this." I carefully explained to him that that wasn't an option, and that if my mortgage and car payments were late because of this, I was going to *&$!.

Because the crux of the issue was the fact that PayTrust was behind the scenes of this transaction, it had wound up out the money. I offered to have PayTrust pull an equal amount out of the account to satisfy its accounts and then deal with it on Monday. At least then I could pay my bills. Apparently, that wasn't an option either, at least until Monday, and even then I'd have to wait five business days before my account would be reopened. I had no recourse whatsoever. None. Essentially, this company was holding my finances for ransom, and giving me no real options to deal with the problem other than calling each payee and arranging for emergency checks by phone and the like. Instantly, I had an emergency on my hands.

Of course, if I'd had any idea that PayTrust was in the middle, proxying the payment, I would have called it instead of my bank. When PayTrust sends a paper check in my name, that check is written against my checking account, and the funds are transferred as if I'd written the check myself. Perhaps naively, I had assumed that electronic payments functioned in the same way. They do not. In this case, PayTrust paid the power company, and then debited my account for the same amount displaying the source of the transaction as my power company. From my point of view, the money went from my account to the power company, and not to a middleman. Of course, later that day, PayTrust sent its monthly service bill. I wonder if that one will get automatically paid.

When you see the debit on the account with a destination of the power company, it's certainly not obvious that you'd have to call anyone else. As it stands now, I've had to reimburse PayTrust for the entire amount, then try to coordinate with the power company to get the double payment refunded to me via paper check. This presented another issue, since PayTrust sent the payment. I had to call PayTrust and the billing department at the power company and conference the two together to get a payment confirmation sent, which will take at least another day to process, and then it'll be another week at least before I receive the refund check. It all seems very fragile and poorly implemented. I wasn't aware, for instance, that it was so easy to masquerade the actual destination of a payment. Hmmm.

The main problem here is that the systems in place to handle electronic transactions of this nature need major reform. The current reality of receiving an assortment of paper and electronic bills, problems with mailing vs. billing addresses, and the ever-present issue of identity theft presents a challenge to anyone who dares put down the accordion file and try to manage their finances electronically -- which was one of the primary goals of the computer in the first place.

Most bill-paying services like PayTrust and finance tools like Mint.com are still scraping pages to get the data they need, which is highly error prone and a poor way to achieve the goal of data collection. As far as the back end of these tools go, we're still in the dark ages.

I want an electronic billing address -- basically just an email address like <accountname>@<billingservice.com>. Any service provider, credit card, bank, or anyone that needs to send me a bill is given that address, not my mailing address. When bills are created, they're simply POSTed to a standard server URL over SSL, like 'https://incoming.billingservice.com/accountname', parsed, confirmed, and everything is handled from there. No need to scrape pages, scan paper bills, or anything of the sort. Payment information for the bill would be included with the bill itself, and confirmation of payment received would function in the same way, with another POST. Human-readable bills would be sent to a standard e-mail address as they are now, and everyone's happy. Payments to that vendor would be handled in the same manner, destined for an address contained in the original billing XML POST.

It all seems very simple, and perhaps there are initiatives to do something similar to this, but I haven't seen anything like what I've mentioned here. I would think that there's an opportunity here for a clever company to provide this service for other companies, which would seem like a win for everyone.

Something like this is sure to happen in the future, and it's certainly technically possible to do this now, but perhaps we haven't reached a critical mass of electronic billing users to come to a consensus and really make it happen. Of course if enough people run into the problems that I have, that might take some time.

If anyone has more insight on this subject, I'd love to hear from you.

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