BPAY is one of the great time-saving innovations of modern banking, but most of our clients mistakenly believe it’s always a free service.

BPAY may be costing you more than you think.

BPAY is a handy way to pay bills, but you should never assume that it is always free.

Sometimes it can burn a hole in your pocket depending on the number of bills you pay each month and how fees are structured on your transaction account or credit card.

Heart has researched the fee schedules of 15 financial institutions and we discovered a wide and varied range of pricing policies.

Most banks and credit unions accommodate a set number of free BPAY transactions each month, while others levy fees on all bill payments.

Some banks offer unlimited access to BPAY on certain accounts.

Our main finding was that that there is no uniform price or fee for BPAY transactions. And there are a number of traps for unsuspecting users of the system.

Avoid using credit cards

Paying bills with a credit card might seem convenient but it can be messy and expensive if you try to do it through BPAY. Some billers, such as Telstra, do not accept credit card payments made through BPAY because they might incur higher fees and charges from banks for the privilege.

GEM Visa charges you $2 each time you pay a bill in person at Australia Post.

If you try and make a credit card payment to a biller who doesn’t accept credit card payments via the BPAY system, many banks and lenders will convert the transaction request to a cash advance. While the bill will be paid, the credit card holder will attract an additional fee for the cash advance (usually $3 to $4 at the big banks) and incur penalty interest on the value of the bill payment.

You can get stung paying bills with some types of credit cards using payments networks other than BPAY. You’re really dicing with trouble if you use the GEM Visa card issued by GE Capital Finance to pay bills. The GEM Visa card levies a $2 “handling fee” each time cardholders pay a bill in person at an Australia Post outlet.

The way around such fees is to only use your credit card for direct payments to billers.

You can do this by establishing a direct transfer arrangement on your credit card with recurrent billers.

Transaction accounts that charge for using BPAY

BPAY was originally designed for paying bills using transaction accounts, but that doesn’t mean all bill payments are free using these accounts.

Here’s are some examples of transaction accounts that charge fees on all BPAY payments:

• Queensland Country Credit Union – All Access: $0.25

• Australian Defence Credit Union Access Savings Account: $0.60

• Bankwest – Internet Banking Accounts – $0.20

• Bendigo Bank – Ultimate Everyday: $0.40

• Defence Bank – Salary Saver: $0.50

Most everyday transaction accounts offered by banks do not levy fees on BPAY transactions, but some will slug you if you exceed monthly activity limits.