It has been widely discussed that consumers are using their bank’s or credit union’s digital banking platform less and less to pay bills. An article in American Banker considers if a well-orchestrated, real-time payment option added to the available payment types for bill pay will help to bring consumers back to their primary financial institution to make these critical payments.
It may help, but there are two things (at least) to keep in mind. Many FIs offer instant or fast payment options today, they just tend to be expensive. Many often charge around $10 per transaction so it’s not just speed that needs to be considered but value. That’s not necessarily free, but an amount that makes the use of an immediate bill payment less of a hurdle.
Another consideration is the popularity of competing fintechs in this space that are offering faster and real-time options too. Here are some excerpts from the article:
The major downfall for bank-based bill pay is most banks’ inability to deliver real-time payments at a time when cash-strapped consumers who have come to expect streamlined checkouts demand more choices and visibility into their finances.
Banks may have optimized online bill payment for mobile devices, but the process still features limited payment choices and uncertain payment settlement times, as compared to the guaranteed experience of making a payment through a biller’s website or app.
Despite limp interest in bank-centered bill payment in recent years, Fiserv is betting on a renaissance in consumer bill payment services when real-time payments become widely available in the U.S. in the next year or two.
“With real-time bill pay ahead of us, the linkage between the bank, biller and the consumer is converging,” said Brad Jones, vice president, product management for bill payment solutions at Fiserv.
Another possibility is a company like Doxo, founded in Seattle in 2008. It sees neither the bank nor the biller as the hub for bill payments.
“We’ve unlocked bill payment from any individual biller or bank, because that’s how consumers are living and shopping—they want control and choices,” said Steve Shivers, Doxo’s chief executive.
Doxo last month eliminated all but a handful of transaction fees it charges on certain card payments. Consumers who sign up with Doxo share their various preferred payment credentials and account details once, along with information about their bills. Doxo has connections to 100,000 billers for payments via ACH, cards and Apple Pay.
Overview by Sarah Grotta, Director, Debit and Alternative Products Advisory Service at Mercator Advisory Group
