From Mobile Bill Payment to Mobile Wallet

Over the last year, media attention and overall interest in mobile payments has surged dramatically. While point-of-sale (POS) payments and mobile wallets have grabbed most of the headlines, the real story may be the growth of mobile bill payments. Consider these finding from the 2011 Fiserv Billing Household Survey:

  • Almost six million U.S. online households make a mobile bill payment each month;
  • Bill payment via mobile banking increased by 33% in 2011 from 2010;
  • Fifty-eight percent of smartphone owners are interested in paying bills on their mobile device and cite the ability to make expedited payments as a top reason.

Accessing a bank or biller site via the mobile web browser and using downloadable apps from a bank or biller are the most popular ways consumers pay bills with a smartphone. Other methods include texting and using third-party services. According to a Fiserv survey, all but one of the top 10 financial institutions – representing a third of U.S. deposit accounts – now offer mobile bill payment. The service is also offered by hundreds of smaller financial institutions.

Why the increasingly ubiquitous commitment to mobile banking and payments? Let’s go back to the early 2000s, when billers, financial institutions and online portals raced to engage their customers online. This represented a critical time for banks to establish and redefine their role in the emerging Internet age and electronic bill presentment and payment proved one of the most effective ways for them to perpetuate digital interactions, deepen customer relationships and encourage the use of the low-cost self-service channel. This is true for mobile bill presentment and payment today.

The prevailing habit is for consumers to keep their cell phones on and within reach at all times, which brings a new level of interactivity to the customer relationship. Part of the interactivity comes in the form of e-bill delivery, intelligent alerting and reminders of upcoming payment due dates and amounts to help customers avoid costly late fees. These helpful mobile services add value to the customers’ relationship with their financial institution.

Offering such services through an integrated mobile banking platform promotes a financial institution-centric payments model and helps defend against third-party providers that seek to disintermediate banks from transactions. By increasing adoption and usage of mobile bill payments now, financial institutions can help foster the consumer habit of conducting payment transactions through financial institutions. This will establish a foundation of trust so that when POS mobile commerce becomes more widespread, consumers will naturally turn to their trusted and comfortable source of mobile transactions – their banks.

Mr. Leiserson is senior analyst with Brookfield, Wisc.-based Fiserv and discussed this topic in more detail at BAI Payments Connect 2012 Conference & Expo on March 12 in a session entitled “Mobile Bill Payment on the Rise: New Trends and Consumer Demands.” He can be reached at [email protected].