Gone are the days of mailing your cheque off to the electricity company to pay for 3 months of usage. It’s common practice to use BPAY or your debit card to pay the bills. In fact, using your debit card to pay the electricity, gas, water or phone bills, has several benefits for you. You’ll get the main benefit of convenience, but also security.

Debit cards are becoming increasingly popular in Australia as a preferred payment method. According to the Reserve Bank of Australia (RBA), debit cards accounted for 44 per cent of the total number of consumer payments in late 2019, compared to 30 per cent in 2016. COVID-19 accelerated the shift to debit cards and other forms of electronic payment, with the Australian Banking Association (ABA), the use of debit cards rose by 17 per cent in 2020, while cash withdrawals fell by 10 per cent in the same period.

Advantages of using debit cards for utility bills

Debit cards are a convenient way to make sure your bills are paid in full and on time. But there are both the good and the bad elements to consider. One of the main advantages is that you can pay your bills online. This saves you having to go into the shop and pay in person.

Debit card payments are processed immediately, unlike BPAY which can take a few business days to clear into accounts. With an immediate payment you could potentially avoid late fees and charges.

If you choose, you’ll also be able to sign up to recurring automated payments on a debit card, so even if you forget a bill, it will be paid anyway.

The reason why debit cards weren’t accepted for utility bills was the merchant fees that are charged for processing debit card payments. These fees are usually from 1% to 2% of the transaction value. Such percentages amount to considerable costs for merchants with relatively low margins, including utility providers.

Disadvantages of using debit cards for utility bills

As debit cards get processed on the same network as credit cards. the merchant pays fees for the transaction. They may pass that onto you as a 1-2% surcharge on top of your bill. If this is the case, you might be better off paying via BPAY.

If you give your debit card number to a customer service representative over the phone, someone might overhear and write your card details down. Be sure to only ever say your card numbers in a private and secure space. If possible, use your phones keypad. You’ll also need to make sure that you have sufficient funds in your account to cover the bill amount.

How to pay your utility bill with a debit card

1. Check your utility bill for the amount due and the payment options. You can usually find these details on the front or back of the bill. If you’re paying by debit card there will usually be a link you can type in
2. You can use your debit card to either pay online or over the phone. Make sure you have enough money in your bank account to cover the payment and avoid overdraft fees.
3. To pay online, visit the utility provider’s website and look for the “Pay your bill” or “Make a payment” section. You may need to create an account or log in with your customer number and password. There may even be a QR code you can scan on your phone. You should receive a confirmation email or receipt once the payment is processed.
4. If you choose to pay over the phone, call the phone number on the bill and follow the voice prompts. You may need to enter your customer number, bill number, or reference number. Don’t worry, these will be listed out on your bill. When asked for your payment method, choose debit card and enter your card details using the keypad. You should hear a confirmation message once the payment is completed.
5. Keep a record of your payment. To be eco-friendly save the online receipt as a PDF, or write down the confirmation number from the phone call. For certainty, you can also check your bank statement to see if the payment has been processed.

Benefits for the utility company

There are still a number of advantages for utility companies in accepting debit cards. If a customer pays by debit card, the money is transferred directly into the utility company’s bank account. If the customer’s payment isn’t honoured, the utility company learns this immediately rather than waiting as they would with a cheque. Another great advantage of accepting debit cards is that a customer can pay immediately if prompted by phone or email. There’s also the fact that most householders now have debit cards. For all these reasons, some utility companies now not only accept debit cards but don’t tack on a surcharge.

Make the Most of Your Debit Card for Paying Bills

Debit cards are an easy way to pay for your utilities and their use is steadily on the rise. Did you know using a debit card to pay for your bills could also reduce your environmental footprint. By going completely digital you reduce the need for a paper trail of your transactions.