Tuesday, May 15, 2012

How may I pay thee

Today we received a letter from City of Bloomington Utilities, where we get our water. They are changing their billing system.

Great. I've been waiting for paperless statements... Oh, that part isn't ready yet. (But it's coming. Sometime.)

Hmmm.... They are adding the option to use a credit or debit card for one-time online payments. Wonderful! I love having choices. Except that online payments to bank accounts won't be accepted, except through Aqua Pay, their automatic payment option. So really, they aren't adding options, just exchanging them. 

Now, for us, these changes aren't a big deal. So I have to use the debit card number rather than our account number. Or I could sign up for Aqua Pay, because we always have money in our account when the bill comes. But I did note on Twitter: 

So now we can pay our water bill online via credit/debit card but can't via bank account (ACH)? That's not improving, just changing.

Which started a discussion about the unbanked, the minimally banked, and people for whom this is a big deal. Because this could be for some people. And water is not a luxury. It's not like someone who has a problem with the payment options can go somewhere else for their water.

If you are able to pay your bills, if you have a checking account with debit card, and credit cards, you may be asking why this is a big deal. 

First, my experience: I used to work in a credit union. I processed electronic payments, which included credit and debit cards, ATM transactions, Automated Clearing House (ACH*) transactions, and, yes, check clearings. Because checks clear electronically these days. 

It was a fairly small credit union, with about 20 employees. The CFO was my immediate supervisor; I processed payments for the collections side (a 1-person department); the accountant was my backup if I was sick or on vacation. Yep, back office was a whole 3-person department. Which meant I handled my fair share of account closings, as the person responsible for clearing or bouncing checks. 

The lending and member services departments were responsible for credit checks, opening accounts, determining if someone could have a credit or debit card. But I was responsible for letting them know if accounts were regularly overdrawn.

Now, this is probably getting tedious, but I want to show a little bit of what happens behind the scenes at your credit union or bank. Because not everyone has plastic. Not everyone has a checking account.

When I tweeted about the changes, it was more just a gripe that they were advertising this as an improvement, which it may end up being, but were not actually increasing the options. And then I got responses. So let me answer some of those responses in more than 140 characters. 

1) Aqua Pay: It's wonderful that Aqua Pay is an option. But consider someone who might not have a credit or debit card. Someone who might barely make ends meet. Having a payment debited from your account automatically isn't always an option - because maybe the money won't be there until the day after, and the return payment fee sure takes a chunk out of that already overdrawn account.

2) Doesn't everyone have a bank account? Actually no. There are actually quite a few people who don't. One reason can be the fees that banks increasingly charge for low balances. If you don't have much money, it's awfully hard to maintain a minimum balance. There are many people who have a poor history. Have you ever seen a notice at a store that checking accounts are verified? Just like the credit bureaus collect information on credit histories, there are companies that collect information on bounced checks (yep, problem accounts get reported). Try opening a checking account if you've had one closed for too many bounced checks. If a bank or credit union does open an account, they probably will require a secured account (which means you need to have extra money to leave in savings to back up your account).

3) Everyone has a credit or debit card! Once again, not everyone does. Many, many people get denied due to poor credit history. Have you paid attention to the news lately? Consider all the people out of work, deeply in debt, declaring bankruptcy. Even if you have a bank account, you may not have a debit card because that increases the risk of being overdrawn. (This doesn't even take into consideration the questionable idea of paying your bills with a credit card, thus increasing your debt.)

4) But you can still mail your check. Ok, yes, you can. You can spend 45 cents on a stamp and mail it in. You can also find time, during business hours, when you are probably working, to take it to the office. Are you working hard, trying to make ends meet? I suppose the price of a stamp isn't too high. It just wasn't something you had to budget for back when you could do an ACH payment from your bank account.

Here's the kicker: the people making these decisions don't have to worry about how to make a payment, so it often doesn't occur to them that there are people for whom this could cause problems. Just like me, the people making the decisions can just shrug and figure they will pay another way. They don't have to think about how they will do it. They don't have to worry about late payments. Sadly, it's all too easy to see the letter through the lens of middle class privilege.

*ACH, or Automated Clearing House, is how payments are made electronically directly to your bank account. Any time you enter your bank account information for a bill to be paid, it most likely is being sent via ACH. Sometimes you may even see a check you have written converted to ACH during processing. 

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