MasterCard to Bring Real-Time Payments to Mobile Banking

Finextra reported that:

"Mastercard is working on a new technology platform to support bill payments via mobile banking apps, created to help banks recover ground lost to multiple direct billing sites. The new real-time service, dubbed Bill Pay Exchange, will make it easier for consumers to view, manage and pay telecom, utility, rent, credit card, mortgage and other personal bills without having to set up accounts with different billers or remember multiple passwords and dates for payments each month."

If it weren't for the red, orange, and yellow leaves on the trees outside my window on this nice fall day, I might have thought this was an April Fool's joke.

Mastercard says its new service will "make it easier for consumers to view, manage and pay" a variety of bills. Really? How is making bill pay "real time" making it "easier"? Answer: It isn't.

If this wasn't an April Fool's joke, then it must be a reprint from 2006, in the days when banks tried to convince consumers (and themselves) that it was inconvenient to "hunt all over the Internet" to find a biller site to pay their bill, or remember when to pay the bill.

As if bookmarks and alerts--and emails from the biller--haven't existed for ages.

Banks' share of digital bill pay volume has shrunk steadily year over year, from 38% in 2010 to 27% in 2017. As a percentage of all bills paid (not just digital), those paid on a bank site or app account for just 15% of the total volume.

Is the declining volume because banks haven't offered consumers "real time" payments? I doubt it.

Real time bill payments are needed by consumers at certain times--but not all consumers at all times. Yes, it would be nice not to have to pay extra for that real time (or expedited) payment, but an offering based on the sole value proposition of real time isn't going to get consumers to change behaviors.

At one point, I believed that PFM-like analysis, insight, and advice around bill pay (provided by banks who would have a broader view of a consumer's, and all consumers' bill pay behavior) was the strategy for banks to get back in to the digital bill pay game.

Today, I'm not so sure.

If the engagement and data gleaned from consumers doing bill pay on their sites and apps is that important to a bank, than it should "pay" customers to do it, in the form of waiving monthly account fees (or part of them). Cuz real time ain't gonna do it. .

Ron Shevlin
Director of Research
Cornerstone Advisors