When making a purchase online, there are a variety of methods that can be used to complete a payment transaction.  Two of the most common used are credit and third party billing to a telephone bill.  These two methods are similar in some aspects but vary in several.

Applying a purchase to a phone bill works similarly to credit card transactions in that the customer chooses the bill to phone payment option then is prompted to enter their telephone data much in the same way credit card information is entered to be verified and accepted.  There is information obtained that is unique to the bill subscriber that is used strictly for verification purposes.  The information is then communicated from the merchant over a secure gateway to a processor, or third party biller (also known as third party clearinghouse). Next, the data is authenticated by the processor or clearinghouse.  Once the identifier information is authenticated, the clearinghouse sends confirmation back to the merchant.  The merchant then sends the EMI record for billing to the clearinghouse for processing.  The clearinghouse in turn sends the EMI record to the Local Exchange Carrier (LEC) for inclusion in the next billing cycle. The LEC is responsible to remit payments received less processing fees to the clearinghouse, which then is remitted by the clearinghouse to the merchant, much like credit card payment flow as follows (courtesy of Bank of America).

Credit Card Flow (courtesy of Bank of America)

In the credit card world, the flow of information and money between the merchant, the acquirer, card association and issuer is known as the interchange, and it consists of a few steps:

Authorization

The cardholder pays for the purchase and the merchant submits the transaction to the acquirer. The acquirer verifies with the issuer—almost instantly—that the card number and transaction amount are both valid, and then processes the transaction for the cardholder.

Batching

After the transaction is authorized it is then stored in a batch, which the merchant sends to the acquirer later to receive payment (usually at the end of the day).

Clearing and settlement

The acquirer sends the transactions in the batch through the card association, which debits the issuers for payment and credits the acquirer. In effect, the issuers pay the acquirer for the transactions.

Funding

Once the acquirer has been paid, the merchant receives payment. The amount the merchant receives is equal to the transaction amount minus the discount rate, which is the fee the merchant pays the acquirer for processing the transaction.

Bill to Phone Method

The bill to phone method is different from credit card purchases in that the consumer is not offered a credit line, but has the ability to charge services to their home phone bill by the phone company.  Payment in full is due during the next billing cycle. In general, with this form of payment merchants are not paid until the consumer pays the bill.  However, there are instances and companies that forward monies to the merchant upon receipt of the bill in expectance of compliance by the subscriber, which is direct billing.

There are benefits to applying a purchase price to an existing telecommunications account.  Being that the account is already established, minimal identifier information is necessary to complete the transaction.  This means that your credit information is still safe and secure and not across the internet for the public to see.  Let’s face it; the internet is not the most secure place to display personal information.  This method of alternative payment is not only more secure, it is easy to do.  The ease of use coupled with the security is what sets this method apart from credit card transactions.

Cramming is the placement unauthorized or misleading charges on a telephone bill. We strongly condemn and do not participate in “cramming”, so if you feel you’ve been crammed or you simply do not recognize a charge, please call us at 800-637-4009 or send us an email to askild@ildmail.com.

Like any bill, it’s important to closely review your phone bill each and every month because whether it’s your phone bill, credit card statement, electric or cable, sometimes charges end up on your bill that you should question. Your phone bill should be treated like any other purchase you make, so take a few minutes each month and closely review all of the charges, just like you do with your bank statement and credit card statements.

Here’s some great advice, courtesy of the FCC, on how to protect yourself and save money.

· Ask yourself the following questions as you review your telephone bill:

1) Do I recognize the names of all the companies listed on my bill?

2) What services were provided by the listed companies?

3) Does my bill include charges for calls I did not place and services I did not authorize?

4) Are the rates and line items consistent with the rates and line items that the company quoted to me?

· You may be billed for a call you placed or a service you used, but the description listed on your telephone bill for the call or service may be unclear. If you don’t know what service was provided for a charge listed on your bill, ask the company that billed the charge to explain the service provided before paying the charge.

· Make sure you know what service was provided, even for small charges.

· Keep a record of the telephone services you have authorized and used – including calls placed to 900 numbers and other types of telephone information services. These records can be helpful when billing descriptions are unclear.

· Carefully read all forms and promotional materials – including the fine print – before signing up for telephone or other services to be billed on your phone bill.

· Companies compete for your telephone business. Use your buying power wisely and shop around. If you think that a company’s charges are too high or that its services do not meet your needs, contact other companies and try to get a better deal.

Actions You Can Take if You Suspect That You’ve Been Crammed

If unknown or suspicious charges are listed on your telephone bill then immediately call the company that charged you for calls you did not place, or services you did not authorize or use. If the charges appear on the ILD Teleservices page of your phone bill, then call us at 800-637-4009 and we can help to explain the charges. You can also request an adjustment to your bill for any incorrect charges.

Ever wonder how phone billing works? This post will take you through the 9 steps at a high-level.

1. Someone orders a service from a merchant (web hosting, ISP service, music, movie or software downloads, etc.).
2. The merchant offers the “bill to phone” payment option from ILD to charge for the service (just like charging to Visa or MasterCard).
3. The merchant delivers the service to the consumer.
4. The merchant processes the charges for the service to the telephone bill through a billing clearinghouse like ILD.
5. ILD then submits the charges to the Local Exchange Carrier (also know as your local phone company).
6. From there the consumer is billed by the phone carrier.
7. The consumer sends the payment to their phone company.
8. The phone company sends the payment to ILD.
9. ILD sends the payment to the merchant.

Click here to view how it works.

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