Bill payment service agreement

This article is written by Ansari Qamar Zarfishan, pursuing a Diploma in Advanced Contract Drafting, Negotiation and Dispute Resolution from


With the new pace and modern technology, standing in a queue for payments can be hectic and time-consuming, the online payment method is the rescue for those lazy days and busy days where you want to pay your bill and are not able to do so due to busyness, pandemic or some other pre-occupation. Bill Payment Services is an online banking service that allows you to make direct payments to the third party through the internet at any time and anywhere. There are various online payments services such as; Paypal, google checkout, amazon payments, Braintree, Wepay, Bharat Bill Payment Service, and many more.

Bill Payment Service Agreement is an agreement entered into between the person who wants to make payment (Biller) and the bank through which online payment is being made (Service). A person shall be held liable under Section 25 of the Payment and Settlement Act 2007 and Section 138 of the Negotiable Instruments Act, if the person fails to make electronic payment or credit card bill payment due to insufficiency of the account balance.

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Bill payment can be scheduled to one -time payment or recurring payment. In one -time payment, you can make a payment on that day itself when you enter payment details or you can schedule a payment for a future date; as the case may be. In recurring payment, payments can be made weekly, bi-weekly, semi-monthly, monthly, quarterly, semi-annually, or annually.

Scheduling payment

Under this clause, the payment is scheduled for a date that is designated to pay online within four or fewer business days, as may be agreed between the parties. The scheduled date should not be less than or prior to the designated date, except where the due date falls on a non-working business day.

Service guarantee

In this clause, the service guarantees that it will bear responsibility for any late payment and will compensate the billers or financial institution for the same. 

Security of access credentials

Under this clause the Service does not guarantee or take responsibility where the password or means of access of account\credentials is given to an unauthorized person or any third person (family member or co-worker). The liability will be of the person who grants such access. However, where such access is made without its knowledge, then that should be brought to the Service’s notice immediately.

For example, if A gives his password to B to make hotel bill payment and B uses that password for his own benefits also, then the bank will not be liable for B’s action.

Your liability for unauthorized transfers

Under this clause, the Service clearly states that any access credential that has been lost or stolen or some unauthorized transfer has been made without the person’s permission, then it should be brought to the Service’s notice immediately within the stipulated time.

For example, if A has lost his credit card and a huge amount has been transacted from the card, then A should notify the bank about such loss, so that the bank can stop the transactions. If A fails to notify the bank about the lost credit card, then the bank will not be liable for any transactions made.

Bill payment authorization and payment remittance

This clause states that all the people who want to authorize the Service to make payment to any person or entity, then all information related to name and address should be provided. The Service will make payment accordingly. In the case where the address of the biller has changed or is not valid or accurate, then the Service will alter the data and make payment according to the biller’s directives. The Service can also be authorized to debit payment account and remit funds on your behalf so that the fund is given prior to the scheduled payment date as designated by you. The Service can also be authorized to make debit or credit entries to your payment account and to bill holders to make adjustments and corrections. The Service shall not incur liability for the following instances:

  1. Where the payment account is closed or does not contain sufficient funds to make transactions.
  2. The payment has been rejected by the biller.
  3. Where you know before making payment that the payment processing centre is not working properly.
  4. Information about the biller such as; name, address, phone number, account details have not been provided accurately.
  5. On occurrences of circumstances beyond Service’s control such as: flood, fire, the act of God.

The above exception shall not be valid if the Service has removed the incorrect amount of funds from your payment account and returned all the incorrect or improper transactions to your payment account.

Expedited payment 

This clause states about accelerated payment, which can be cheque sent overnight, or same day electronic payment.

Electronic bill (e-bill) delivery and presentment

The Service also includes a feature that electronically presents you with e-bills from select billers.

Only if you have designated the company as a biller to the Service and the Service has arranged with its third-party service provider to deliver e-bills. The Service will then present you with e-bills from that e-biller if either; you elect online within the Service to receive e-bills from that e-biller or that e-biller chooses to send you e-bills. 

Once you agree to e-bill presentment then you also agree to; provide all information to the biller on behalf of the Service, receive billing information on activation,  authorization to obtain bill data, receive notification of e-bill, cancellation of e-bill notification will be solely done by Service, hold Service harmless for any non-delivery of e-bills, accuracy and dispute of e-bill will be dealt with on your own.

Disclosure of information to third party

All information given is confidential however, the information regarding accounts and transaction can be disclosed to a third party in the following situations:

  1. For activation of additional service.
  2. To verify accounts to a third party.
  3. By the order of the court.
  4. To complete the transaction.

Service fees and additional charges

All applicable fees, financial services, charge for additional transaction and other optional services will be charged whether or not such service is used during the period.


This clause contains any changes made by the Service such as update, add, delete, or revisions in this agreement, or other changes like applicable fees and service charges will be notified through electronic communications or as may be provided under this agreement.

Address changes

This clause states that all contact information should be up to date and accurate. If any changes are made relating to name, address, phone number or email address, it has to be brought to Service notice immediately.

Service termination, cancellation, or suspension

This clause mentions the grounds of termination, cancellation or suspension and the consequence of termination. 

For example, the Service may terminate the agreement upon giving fifteen (15) days’ notice on the occurrence of the following events:

  1. Where the Biller fails to comply with any obligation under this Agreement,
  2. Where the Biller has used the Service in any unlawful, unconscionable, or improper manner,
  3. Where the service is not used or logged-in for a period of 120 days.

Upon termination, all the recurring payments will not be processed, and any payments that are under process before cancellation will be completed by the Service. All liability or obligations under this agreement will continue even after the termination or suspension of the agreement.

Information authorization

Under this clause, it states that all the necessary information including identity should be verified by the Service in order to get the enrollment. If your information is not verified you will not be enrolled. Through enrolling oneself to its Service, one authorized the Service to use or share information with its service providers. Information such as; personal information, financial information and transaction history regarding payment account. This information is used for everyday business purposes, to access service, to send information about the transactions, verify transaction limits, to perform fraud screening, lawful court orders, or instruction from government agencies, to troubleshoot problems, to customize, measure and improve services, and in order to enforce this agreement. Such verifications will be conducted at the expense of the Service. 


This clause states about indemnifications for all loss, damages, caused due to the third party, including attorney fees.

For example, the Biller shall release, indemnify and hold Service harmless from and against all liability, claim or damages by any person arising in any way from: a) the collection of the customer’s payment by Service on behalf of Biller where such liability, claim or damages do not result from negligence, misconduct, fraud or dishonesty of Service and its employees; b) the non-payment of the fees by Biller, c) a failure by Biller to comply with any obligation owed to Service under or in connection with this agreement; d) a failure by Biller to provide correct information; e) a claim that a payment, obligation transaction or transfer in connection with a service fee is void or voidable under any law relating to insolvency or bankruptcy.


This clause states the manner in which the dispute, if any shall be resolved, who will appoint the mediator and the place where the dispute would be resolved. It also states which court’s jurisdiction and law that will be applicable in the matter of dispute.

For example, any controversy arising out of or in relation to the terms of this agreement, including but not limited to its enforcement, arbitration or interpretation shall be submitted to final and binding arbitration, to be held in Delhi, India, before a single arbitrator, in accordance with Arbitration & Conciliation Act, 1996. The Parties shall select the arbitrator through mutual agreement, or if the parties cannot agree, then the arbitrator shall be appointed by the court. The attorney’s fees and other expenses shall be shared equally between the parties.

Case laws

In Bengaluru-560 025 vs Sri. K. Ramamanohar Reddy, in this case, the electronic fund transfer was returned dishonored, and the accused did not reply to any legal notice served to it by the complainant. Thus, the accused was convicted for an offence under Section 25 of Payment and Settlement Systems Act, 2007 r/w Section 138 of the Negotiable Instrument Act. The Accused was held liable to pay a fine of Rs, 1,95,000/- or undergo simple imprisonment for a period of five months.

Other general terms 

Other general terms include a severability clause, enforcement clause and survival clause. 

  • Severability 

Under this clause, if the portion of the agreement is held invalid or unenforceable for any reason, the remaining terms and conditions of the agreement will be valid enforceable. For example, If any provision of this Agreement is determined by a court or arbitrator to be invalid or unenforceable, such determination shall not affect any other provision of this agreement, each of which shall be construed and enforced as if invalid or unenforceable provision were not contained herein.

  • Enforcement clause

This clause states that, where any dispute arises out of your account or services, you will be held liable for any loss to the Services. 

  • Force Majeure

This clause states the events that are beyond the control of the party that makes the performance of obligation impossible.

For example, i) If a party is prevented, hindered or delayed from performing obligations under this Agreement (other than the obligation to pay money) by an Event of Force Majeure (occurrence of an event or circumstances beyond the reasonable control of the party such as an act of God, war, strike, storm, fire, flood, tempest, earthquake, etc,), then as long as that situation continues, that party shall be excused from performance of the obligation shall be extended accordingly, but if time is of the essence of this Agreement, time shall continue to remain the essence, ii) a party affected by an event of force majeure shall immediately notify the other party of its occurrence.


The Bill Payment Service Agreement is an agreement where the person wishes to retain the service of the bank to make online payment or transactions. The Agreement covers how the payment is scheduled, what services are guaranteed by the bank, security of various information and access credentials, what are the grounds of termination, how a dispute is resolved in case of any dispute, indemnity clause and various other clauses that can be included under this agreement.






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