Card-funded Bill Pay: The Last Great Divide

Can’t we all just get along?

One of the most pervasive influences in bill payments today you will not see in print in American Banker or Payments News. Analysts don’t mention it in their comprehensive analyses and forecasts of the market. And bankers will most likely get fidgety and cold sweats when discussing the subject.

But anyone at a bill pay service provider or at a bank or issuer that has worked on bill pay knows what I am talking about.

It’s the dysfunctional relationship between the issuing side of the bank and the retail side of the bank when it comes to bill pay.

The credit and debit card issuer want their cardholders to pay their bills with their cards to drive interchange revenues, and the retail side of the bank wants their customers to pay through their traditional online banking bill pay. The problem? They are the same customers, paying the same bills but you can’t make an interchange generating card-based bill payment at your bank’s web site.

There, I said it… there’s no solution in market today that provides for both what the card issuer wants and what the online banking bill pay people want. And it’s not for a lack of trying. Two companies offer a work around solution here – Billeo and Yodlee. I won’t go into the details or sales pitch, and I’ll be the first to admit that neither solution is the perfect solution.

The perfect solution – that elusive, silver bullet solution seems so simple. Why can’t there be just a drop down list next to any biller from the bill pay payee list where the user can choose how they want to make the payment? Credit card debit card or ACH? The answer is that the Biller won’t accept a credit or debit card payment this way. Why would they – with ACH, the Biller accepts online banking bill pay payments for pennies and a card bill payment would cost dollars. And herein lies the rub – banks want one thing and the billers want another, and never the two shall meet.

So the dysfunction festers and the tension continues between Biller Direct bill pay and traditional online banking bill pay.

So who pays? The consumer. The consumer is left to navigate the disjointed offerings of the bank. The issuer marketing to the consumer that they should pay their bills with a card and the retail side marketing to pay through online banking bill pay. The consumer does both, of course, because each path provides a different end benefit. Traditional online banking bill pay allows for a seamless one-stop-shop user experience to pay any bill, but the payment can take several days to process. Whereas, paying a bill directly at the biller’s site is instantaneous but the consumer must go to multiple sites.

But some day, somehow that tension will break, because the consumer will demand it.