The Bill Payment Experience of the Future

Posted by Wayne Brown on 01 Mar 2016

future of bill payments

The financial sector has increased focus on disruptive technologies such as real-time payments, blockchain, and alternative lending in recent years. However, the average consumer is still seeking improvements in the bill payment experience. Millennials in particular want a real-time experience and will do anything to avoid sending a check. Although banks and their treasury clients continue to develop ways to improve the overall consumer bill payment experience, there remains little movement from the consumer standpoint.

In fact, there remains a segment of consumers that is still comfortable with sending paper checks— all the hype around the digital payment experience does not hit their radar. However, bill payment service providers and banks continue to seek ways to improve the bill payment experience for these consumers in hopes that they will adopt more efficient payment methods. For example, earlier this year, one payment technology company conducted a household survey about the consumer bill payment experience. Over one thousand households were contacted, and results revealed that consumers want payments to be routed through digital channels. Imagine using your bank’s online services and bill payment products to send payments to a provider who still cuts paper checks; it takes away from a positive user experience.

Last year, NACHA held the ACH Payment Directory Summit at their headquarters in Washington, D.C. Both bankers and technology providers attended the event. The ACH Payments Directory is an Automated Clearing House (ACH) Network for bill payment operated by The Clearing House in partnership with NACHA. The ACH Payment Directory provides a key routing and account validation utility for standardizing bill payments made through online banking/bill payment platforms using the ACH network in accordance with NACHA Rules. The purpose of the directory is for banks to use it to drive down bill payment expenses and reduce exception items. The reality is that the banks that use the directory also use the MasterCard RPPS Directory.

There was a time that most payments were routed via paper checks, but things have changed in the past few years. There has been much effort made towards providing connections between billers and their banks in order for payments to be routed in a secure electronic format. In fact, whether it is through MasterCard RPPS, the Fiserv Network, or NACHA’s ACH Payment Directory, more payments are being routed electronically, creating an improved user experience for consumers.

The Fiserv Biller Directory is a closed loop Biller Directory, for those banks are their network.  This proprietary network benefits the Fiserv client banks but is not an open network solution. Therefore, the market remains fragmented and the race to achieve high numbers in consumer satisfaction with remote banking and bill payment remains open.

The three parties that dominate the segment— Fiserv, MasterCard RPPS and NACHA/The Clearinghouse— should collaborate to provide banks with a superior product offering for their customers. This is unlikely, however, and the war will continue without a single entity declaring victory. Consumers lose in this battle because depending on what bank they use to for remote bill payment, they could face a growing list of check billers and exception items. The Bill Payment Service Providers (BSPs) should continue to challenge the industry, strive for collaboration, and educate stakeholders about the ramifications of the turf war so the consumer can benefit.

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Wayne Brown Director of Business Development Wayne develops and manages business relationship at Alacriti. He brings over 25 years of financial services experience and worked with Metavante Corporation, Deutsche Bank, and MasterCard Worldwide before joining Alacriti. Wayne holds a B.B.A in Finance from Baruch College.

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