My recollection is that bill pay started out as an Accounts Receivable tool by the utilities to help accelerate the collection of outstanding invoices sent to customers in order to turn a soft asset line item in the income statement to cash. For retail, bill pay came about pretty much the same way as it did for the utility sector. Retailers also needed to accelerate bill payment and reduce check float. But it was different then, you did it because your payment was late and to avoid a late fee using your credit card number instead of your DDA number. I was initially apprehensive about recording my credit card information on the utilities website. If only the hackers knew then what they know now! At the time, I recall visiting my many multiple utility sites and experiencing frustration over completing the same repetitive task at each site I visited, whether it was the phone, electric or cable company. Wouldn’t it be novel for banks to offer this service as part of a personal financial management (PFM) service?
So how did bill payment become such a key topic in payments, and enough of a crucial service for both banks and new emerging companies to incorporate it into their offerings? Well, customers want a centralized location to manage their money and pay their bills. But bill pay, whether it is mobile or online, is only one piece of the pie! In the age of the “empowered digital consumer”, bill pay is becoming more robust and part of a PFM offering as consumers expect more from the financial brands they interact with. PFM is in a position to become “top of mind” for consumers as the model of banking shifts towards mobile and digital banking tools for customer engagement. But it takes some work and logistics to set up this one service, much less integrate into a bunch of other capabilities that make up a PFM suite of services. Regardless of the bill payment provider, there is some work required to set-up payees (identifying and setting up the biller in order for the consumer to send money via the web).
Will bill pay just be a bundled offering as part of a PFM product suite? Should it be a revenue generator? From a financial services perspective, will bill pay become a commodity service similar to what checking is today? Or is it one of the critically important PFM service offerings that will further drive disintermediation between banks and non-bank providers?
I’d highly encourage you to come to Money2020 and join my panel, “Online and Mobile Consumer Bill Payment” on Monday at 3:15 with industry leaders: Guy Goldstein form Check, Chuck Cordray from Volly, and Gordon Adams of Zumbox to get insight to these questions and more.
