Vocalink, TCH aid Mastercard's push for bank-supported 'instant' bill pay

Mastercard's using acquired technology from Vocalink and The Clearing House's real-time payments network to power its new bill pay service.

Called Bill Pay Exchange, it will power instant bill pay for consumers from their bank or credit union accounts in a matter of seconds versus days when using the traditional bank bill pay ACH network. The service will also shorten the time required for a payment to be reflected in a consumer's balance.

“Consumers today want the flexibility of paying when they want and how they want, and Mastercard’s Bill Pay Exchange addresses this need,“ said Colleen Taylor, executive vice president of new payment flows at Mastercard.

Adam B. Auel

Mastercard will begin testing in Q1 of 2019 followed by partner integration and commercial availability starting in Q2 of 2019. Bill Pay Exchange will use Mastercard’s RTTPS network of 135,000 billers and is designed to streamline consumer experience. The service will also allow billers to request a payment from a consumer and provide confirmation of the payment.

The new bill pay solution comes as the Faster Payments Taskforce is pushing the payments networks to improve collaboration. The Taskforce is also asking for a governance framework to be in place by 2020 to establish guidelines for adoption and trust across the payment ecosystem.

Banks could offer the real-time bill pay option fee service for last-minute or same-day payments, and would also enable banks to win business back from biller direct sites, which have been consumers’ primary option for making same-day payments, said Emmett Higdon, director of digital banking at Javelin Strategy.

"It’s a bit of a double-edged sword for banks, though, as they might prefer the interchange revenue that comes from biller direct payments made with their credit and debit cards,” Higdon said.

Mastercard is hoping banks will adopt the service because consumers are increasingly paying bills at a biller website instead of using their bank’s bill pay feature. A key factor behind this trend is how current bank bill pay platforms work and their limitations.

“Consumer bill pay hasn’t been touched in 20 to 30 years yet consumers are paying 15 billion bills annually. It can’t confirm that a bill has been paid or if a biller has updated an account,” said Taylor.

Mastercard will offer the ability to use multiple forms of payment in the service to provide the customer with the flexibility including real time payments via TCH’s real time network, traditional ACH payments, debit card and credit card payments. However, not all billers are willing to accept card payments, especially if it comes directly from a bank, or may charge a consumer a convenience fee. Consumers wishing to use a card to pay a current are forced to visit the biller’s website and pay directly in this case.

ACI Worldwide, Transactis, FIS and Inlet have all signed up to develop the Bill Pay Exchange and offer it to their clients. These and future partners will be integral in the process of facilitating real time payment messaging and payment receipt confirmation.

The new service could tap into the growing demand for voice payments, which has been noted recently, as being not quite ready for prime time. Since the Bill Pay Exchange won’t actually be live until mid-2019, it could be the service that kick starts voice-based bill pay in a major way and drives significant volume to The Clearing House’s RTP network.