Spoonfeed me.
So I arrange with my bank to send payments to the vendors when I want, specifically:
After reviewing statements, I go online and tell them XY$ to Acme Widgets etc etc x150. Presumably there is some considerable time arranging to get Acme's e-address to the bank, so they know where to send payment.
This is correct so far, except for the "considerable time" part. All you have to enter into the website usually is Payee Name (individual or business), address, and a phone number in case they pay someone and they later say they never got it. In my CU's system you also get a field that you can type anything into to "tag" the payment on your statement which could be used for anything... A little code you made up for Payees, a line number on your ledger, it's free form.
They handle hunting down the electronic stuff starting right at first entry. They do a search and say, "Is this the right company/payee?" and if they have it in their database, the payment goes out electronically, bank to bank.
If not, they send a check and presumably there's some munchkins in a back room who do a manual search. The difference is in how few days in advance you can pay that payee. All start out as 7 business days and switch to 2 or 3 in the system after they're electronic. Payees like Utilities and other big company stuff usually start out right at the beginning as "We found this payee in our system" at the initial Payee search and they're 2-3 days from the very beginning.
Here's the neat part -- as someone mentioned, there's another service the back-end processors do... They can ask larger companies to send your bill electronically to them. You log into the system it will say, "You have a new bill from X, would you like to see it/pay it now?"
Then, the bank remembers Acme next month, I select that vendor and enter an amount, ba-ding. Hopefully I get a transaction number to record on the statement so when the vendor does not receive payment I have something to reference. I will write the TN on the statement before filing. Then I go to my bidniz software and enter the payment.
Yup, you got it. The transaction number is actually either a number for the electronic transaction or an odd-ball high numbered check number, depending on how they ended up paying the payee.
There will still be a need to write checks, just less of them.
Something like that?
Actually depending on the bank, they may write those and mail them for you for free or charge you a small fee (less than your $96 in postage) to send a lot of them. At my CU, I've never paid a fee.
Other nifty features are scheduling payments or reminders via e-mail or even automatically paying the amount on the ones where the bank receives your bill if you choose to allow that much integration. I have a few bills sent to them but I set it not to pay those bills until I log in, review them, and click the payment button myself. Little too automatic for me to just let it auto-pay. But I could see that feature being quite handy if someone traveled a lot and just wanted to make sure the bills got paid while they were away.
Every bank and CU is slightly different on the user interface in your web browser but my understanding is that there's really only two or three companies that actually enable all of this "magic". They sell the service to the banks and CUs. I believe the very largest banks may be doing their own code/servers for some of this (B of A has an incredibly detailed and relatively organized website, as much as I otherwise hate them -- one of my loans was purchased by them), but smaller institutions are using the big clearing houses. My CU is medium sized and couldn't build such as system if they wanted to. When you go through their website you're redirected to the "Bill Pay" website which is run by another company.
Hope that helps. Sadly all of this is ultimately possible because of the move to have banks send digital images of checks ten years ago. No freight dogs flying the checks around at night hardly anymore like many pilots used to do to earn hours. The banks don't even have to print a real check, they just send an image of one to the other bank. Fake money at its finest.