At Silver State Schools CU, Expedited Payments Is Step to Real-Time Processing
The service allows members to make guaranteed same-day payments in return for a service fee of $6.95, an amount chosen because it's less than a typical late fee on a credit card or other payment and still provides an opportunity for revenue for the $966 million institution.
"A lot of the reason we did this was not so much the money we could make," said Mike Randall, Silver State Schools' vice president of information technology and chief information officer. "It's the realization that the economy we're in finds people holding their money until the last second more and more, waiting until the due date or maybe even afterward to pay their bills."
"As credit unions tend to do, we wanted to offer them a solution that will give them some hope and not kill them."
As it has been on other tech advances, Silver State Schools was a first adopter for the offering, which now is available to the 500 credit unions and other financial institutions that use Online Resources' bill pay services.
Randall said his credit union's pilot service launched in February and that 1% of its eligible payments was expedited in April, 2% in May and 2.8% in June, when the first online marketing about the service began.
"It's exciting for us because we've only just now begun advertising it, and we already had been seeing repeats, not just one-time users," he said.
Online bill payers at Silver State (www.silverstatecu.com) are offered a radio button that allows them to determine the date they want the bill paid by, ranging from next day to a check being cut and mailed and taking up to five days.
Of course, the biller has to be signed on to Online Resources' end-to-end payments network for the expedited system to work.
The company said it currently has relationships with several hundred billers, a number that continues to grow, including the recent addition of one of the largest mortgage bankers, said Diana Pineda, senior manager of corporate communications at the Virginia-based online banking and payments specialist.
The expedited payments service uses a real-time API interface that ties the biller to the financial institutions' existing banking and payments platforms. And it's another step in the decade-old evolution towards ubiquitous real-time payments and straight-through processing.
"We are definitely working on it," Pineda said. "On the front side, with online banking, members already can see their money being taken from their accounts in real time. Now we're working toward the real-time crediting of that payment on the other side.
"I can't say at this point when that will be, but we are definitely working on it."
Randall at Silver State Schools also senses the anticipation. He co-presented on the new Online Resources service at a recent NACHA conference and said "the big topic was, 'When is real time possible?' That question caused some whispering in the crowd because everyone wants to be ready, and nobody wants to reveal their hand yet."
Until then, he said, offerings such as the expedited service from Online Resources will have to do. "Strategically, we're seeing what looks like a saturation point with electronic services, where everything has to be free and available 24/7 in order for you to be competitive," he said.
Satisfied for now with the $6.95 per transaction next-day payment option with participating billers, Randall said, "We're not nickel and diming our members to death but offering them a service they expect at a charge that's minimal enough that we don't lose loyal membership."
"As a billion-dollar credit union, we may not be able to go head-to-head with Bank of America on everything, but I'll be darned if we don't have an obligation to provide these kinds of services to our members whenever it's at all feasible."