Editorial Viewpoint Staying a Step Ahead of the Revolution Spotlight On iPay Technologies, LLC Spotlight On American Credit Alliance NEWS REPORT New MasterCard RPPS Reports Deliver Focused ... NEWS REPORT MasterCard RPPS's Value-Loading Network Helps... NEWS REPORT Survey Reveals Importance of Online Bill Payment to... NEWS REPORT Customers Value RPPS Update, Survey Says NEWS REPORT Online Biller/Creditor Directory Enhancements... INDUSTRY INSIGHTS Q and A With Aaron McPherson		INDUSTRY INSIGHTS Q&A with Aaron McPherson The Ascendency of the Consolidator Model and More About Aaron McPherson McPherson's research at Financial Insights focuses on the strategic implications of new technology for the retail payments industry. He writes and consults with clients on the future development of payment systems; prospects for new payment technologies, like smart cards, person-to-person payments, micropayments, and mobile payments; and the strengths and weaknesses of payment industry competitors. Q: Industry coverage has alluded to the fact that online bill payment has finally taken off and achieved mainstream status. What evidence have you seen that supports this? A: According to the 2001 Survey of Consumer Finances administered by the Federal Reserve, 40.3% of U.S. households have paid at least one bill electronically. More recent surveys have suggested the percentage may now be up to 50%. Q: What are the current trends you are seeing in the online bill payment space and what do you see as the “hot topics” for the coming year? A: I see a move back toward the consolidator model, as consumers seek to reduce the number of separate sites they have to visit to pay bills. Enough billers now support electronic bill presentment and payment to make it feasible for a consumer to pay nearly all of his or her bills electronically through one site. That said, I also think that consumers will continue to use a variety of bill payment methods, including writing checks, visiting biller sites, visiting consolidated bill payment sites, and scheduling direct payment using the ACH. Q: Marketing and consumer education by financial institutions is key to driving consumer adoption of online bill payment at financial institutions' websites. In your opinion, what have financial institutions been doing right in this area and where can they improve upon these efforts? A: Financial institutions have put more effort into promoting online bill payment now that it is seen as a primary customer retention tool. Several banks have now linked increased customer profitability to use of online banking, and online bill payment is one of the best ways to drive traffic to the online banking site. Cutting the fees for online bill payment is also increasing consumer adoption, and I think most banks will be offering the service for free in the near future. Q: The industry has yet to figure out the presentment puzzle. In your opinion, what will it take to get billers on board so financial institutions can get the information consumers need to view and pay their bills online through their financial institution's website? A: Consolidated bill presentment will move toward a “thin” model, where the customer “clicks through” to the biller site to actually view the bill and ask questions about it. Presenting rich bill images on a consolidator site is too complicated and expensive for the biller to work in most cases. Also, the consumer does not even need to look at many of their bills, particularly for utilities like gas and cable. Thin presentment will be perfectly adequate for these bills. Q: What do you see in the future for online bill payment (over the next three years)? What types of enhancements and functionalities do you think consumers will be expecting? A: I see greater coordination between banks and billers to eliminate some of the confusion that exists today when consumers are getting bills from two or more sources (mail, biller e-mail, and bank e-mail). Consolidators are adding the ability to make same-day or next-day payments with some billers, which removes one of the main disadvantages of the consolidator model for consumers anxious to avoid late fees. Now that so many billers are offering electronic bill payment to their customers, it will be more feasible for them to integrate with networks such as MasterCard RPPS, Metavante/Spectrum, and CheckFree. I think consumers will be expecting banks and billers to work out their differences and present a seamless bill payment system that supports whatever method they prefer to use to pay each of their bills. Printer Friendly Version Back to Top