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Mastercard launches Bill Pay Exchange

This story was delivered to Business Insider Intelligence "Payments Briefing" subscribers hours before appearing on Business Insider. To be the first to know, please click here. Mastercard debuted a new service, Bill Pay Excha...

This story was delivered to Business Insider Intelligence "Payments Briefing" subscribers hours before appearing on Business Insider. To be the first to know, please click here.

us billpay market

Mastercard debuted a new service, Bill Pay Exchange, that facilitates bank-based real-time bill payments.

The offering will be white-labeled into Mastercard issuers’ apps and will leverage infrastructure from The Clearing House (TCH) so that users can pay bills to over 135,000 billers in real time. It also includes some digital money management features, enabling users to see overhead views of all their bills in one place and receive notifications when bills are due. The service will begin testing in Q1 2019 and go live the following quarter.

Digital bill pay is rising, but consumers don’t like to pay through issuers. The share of bills paid digitally should rise from 56% in 2016 to 77% in 2022 — much faster than overall bill pay market growth — marking a major opportunity for payees, according to Business Insider Intelligence estimates. But when users are making digital bill payments, they typically favor biller websites — which represent over one-third of bill pay volume and value — over issuers, which only hold about 13% of the market. And issuers fare even worse among younger generations, which could make it harder for banks to grab share as millennials gain spending power.

Mastercard’s solution could help change that for a few key reasons.

  • It reduces some of the pain points associated with bank-based bill pay. Users tend to prefer biller direct in part because it seems more convenient — they receive reminders from billers that their bill is due with a link that prompts them to pay and receive immediate confirmation, Mastercard EVP of New Payment Flows Colleen Taylor told Business Insider Intelligence. Bill Pay Exchange helps bring these features to banking apps by speeding up confirmation times and offering reminders.
  • And it could add convenience. The average customer pays 6-10 bills monthly, and therefore has to keep track of multiple logins and due dates. By bringing customers a “consolidated experience” where they can pay bills from one place with a single set of credentials, Bill Pay Exchange can simplify bill pay across the board. That’s particularly true since the service is housed in mobile banking apps — which users already access regularly — at a time when many banks require bill pay enablement on desktop, although users increasingly prefer to pay via mobile.  

By growing engagement with its bill pay network, the move could also be a strategic play for Mastercard. Mastercard is amid a period of strong growth. But as the payments landscape shifts, the network has been working to broaden its sources of volume by investing in more bank-based or direct debit payments in the wake of its Vocalink acquisition, business-to-business (B2B) payments, and other sources. The US bill pay market is worth over $4 trillion annually, so bringing even a small fraction of that toward issuers could give Mastercard a meaningful boost and help it meet its growth goals.

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