Since we launched version 1 of our bill pay solution, people have been asking why we chose checks as the settlement mechanism over other ways of settling bills. Here are our reasons why:
It’s not a check
Well… it is a check, but not really. The way we are using checks is not how people are used to thinking of checks. Usually, banks mail customers checkbooks which then are used by customers to pay bills.
In our case, we are not mailing customers checkbooks, but rather issuing on-demand (good fund) checks.
Here is why that is important:
Since our checks are on demand, everything is printed on the check instead of handwritten. Which accounts for any OCR issues. Fonts used on our checks are optimized for improving OCR performance, thus removing any exception handling due to illegible type.
Since these are on-demand checks, we can also verify the address before issuing a check, which helps reduce any bad address exceptions.
Since we know the user’s balance when writing a check, we deduct the amount from their Synapse deposit account in real-time, thus eliminating any insufficient fund exceptions.
In a nutshell, due to the nature of our business, we are able to do on-demand good fund checks. Which helps us eliminate most of the manual exceptions that plague the check industry and makes it as good as an ACH — I will argue even better because you can use autofills for addresses but not for account numbers.
Checks are ubiquitous
Checks are accepted by all services and utility providers. This is important, because this helps us ensure that our bill pay platform has ubiquitous coverage¹.
Checks are inexpensive
Checks cost anywhere from 50 cents to a dollar, regardless of the amount. This is ideal because some utility providers charge customers processing fees if they use credit or debit cards to pay for a bill. Checks help eliminate that.
Though checks have these merits, there are also some drawbacks to using checks:
They are slow
Checks go as fast as USPS would let them and can be delayed due to bad weather. So in instances where people are taking too long to pay a bill, and only paying it last minute, checks are not ideal.
This has less to do with checks, more to do with our current implementation. Currently we have no bill account visibility. So if the user needs to pay $500 to a utility provider this month and $600 next, they would need to ask us to send a check to the provider every month.
Here is how we plan to eliminate both issues:
Once we have our virtual card issuance APIs live, we will also add one-time cards as a way to be able to pay bills. We then will tie our card issuance stack with our account aggregation stack. This will help us automate bill payments for all major providers. Then users would just need to log into their utility account with our APIs and we will automatically pay their bills month over month with our our card issuance and account aggregation stack.
Our check based bill pay product is now in public beta. If you wish to integrate this into your existing products, please feel free to reach out to us at firstname.lastname@example.org.
 The truth is when a bill pay provider is unable to fulfill your bill via their “custom” methods, they always issue checks to fulfill the payment. So what we are doing here is not that radical.