If there’s a universal experience in everyday financial life, it lies with bill payments.
And yet, although we’ve all gone online, most of us have written checks and measured cash flow versus what’s owed — and the experience is fragmented at best and friction-filled at worst.
Mastercard Senior Vice President of Bill Pay Manal Toukan told PYMNTS’ Karen Webster that convenience, choice and real-time data can remedy those pain points.
Along the way, they can also bring bill payments up to the standards and expectations that consumers have with other purchases.
“Compared to innovations with point of sale and digital checkouts, bill payments really have been lagging,” she told Webster.
That statement comes against a backdrop in which there are 15 billion bills that are paid every year in the United States — and about 60% of them are done digitally, up from 40% a decade ago. The remaining 40% are done mostly via check, which gives you a sense of the fragmentation that still exists.
Fragmentation even exists within digital channels, as two main conduits have taken root: aggregator-based bill payments and biller direct channels. In the case of the former, consumers go to their financial institutions (FIs) and set up billers to make payments. In the direct option, consumers go to merchants’ websites to pay their bills.
“We’ve seen the biller direct model gain in popularity over time,” Toukan said.
She contended that the aggregator model is relatively clunky; by way of contrast, the biller direct option gives consumers the peace of mind that their transactions will be completed in a timely manner (complete with confirmation numbers and assurances). The channel also gives consumers greater choice in how they make their payments versus having to pay through their bank account.
When paying through an aggregator, it can be hard to set up billers, she said. Individuals don’t get all their bills in one place and can pay through their bank, without necessarily getting payment confirmation from the biller.
No matter the channel, said Toukan, information is key — and yet information is sorely lacking when it comes to most online billing activities. The data can be spotty and may exist only in pockets, depending on the enterprise with which the consumer is transacting.
In fact, consumers, ideally, would like a one-stop shop for their bill payments. And there is reason for hope.
“For the first time in a long time, we’re seeing financial institutions looking to revamp their programs, with an eye on retention, loyalty, engagement and benefits,” Toukan said.
Digital entrants are also looking to add bill payment features to their offerings.
Along with real-time payments functionality, there’s the opportunity to leverage real-time data in a bid to keep consumers engaged and satisfied.
Toukan pointed to Mastercard’s own Bill Pay Exchange, which allows the consumer and biller to exchange information in real time (riding real-time rails) when payments are made through aggregators.
Real-Time Data and Ubiquity
“The availability of real-time data allows for enhanced consumer/biller experiences and greater ubiquity of eBill adoption,” she said.
Consumers care about seeing their bills and about having payment choice. The aggregators offering bill pay can expand their offerings beyond just giving consumers the opportunity to pay through their bank account. Now, when consumers pay through bank or digital aggregator channels, they can get real-time notifications, with confirmations tied to the payments.
“A real-time message can be sent back to me from my biller, which drives efficiencies for everybody,” Toukan said.
Flexibility means that consumers can also dictate how payments are made, the timing of their payments and the frequency, so they can budget more effectively.
Although there’s no one-size-fits-all approach (some billers need to mix in batch payments with real-time payments), having a range of solutions and options on hand is critical. Toukan added that real-time payments can be an especially attractive option for those consumers who are paying their bills late.
To get there, merchants, banks and billers need to overcome inertia and mobilize to begin to test and adopt new capabilities. Many might be waiting for a “perfect” solution to implement, but it’s not clear a “one-size-fits-all” answer exists, she said. Those who begin to “lean in,” take steps toward driving change, and ensure a range of choices and flexibility in their solutions will start to reap benefits faster for their customers.
Real-time data exchange is the glue that binds it all across multiple rails as banks choose to route payments however they’d like and billers opt to choose how they’d like to receive payments.
While Toukan said she is looking forward to the day when we have an Uber-like bill pay app, she is hopeful that now, more than ever, this is possible.
“Convenience, choice, flexibility — it’s no longer a nice to have; it’s a must have in the market that we’re in,” she said.
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