Major players are investing in mobile photo bill pay as a natural next step to mobile deposit checking but the tool may have a long way to go to catch up with taking pictures of checks with smartphones.
In the past year, 600 to 1,000 banks have installed mobile RDC and less than a dozen have done the same with mobile photo bill pay, said Bob Meara, an Atlanta-based senior analyst for the New York-based research firm Celent.
“Mobile RDC is this wonderfully convenient invention and it scores highly on all the consumer surveys, but if you ask the same question about mobile photo bill pay, people just don't get as excited about it, for a variety of reasons,” Meara said. “It's just not as compelling.”
The idea is simple: Take a picture of a bill and use that image to create a payee, avoiding the hassle of punching in all that information on a smartphone or tablet. But a check has fewer moving parts than a bill, making the technology more demanding and expensive. And, how many consumers would bother using it, Meara wondered.
“How often do you set up billers to pay as a consumer? And you also might have to print the bill out to take the picture, which is awkward,” he explained. “And another problem is that every bill is a little bit different, unlike checks, so the exception rates are much higher.”
The possible costs versus rewards of offering the service also was cause for skepticism to Meara, as it was to Bob Roth, managing director of the Payment Solutions Group at the Cornerstone Advisors consultancy in Scottsdale, Ariz.
“Mobile photo bill pay is a ‘be careful what you wish for’ type of technology,” Roth said. “It could take off. However, without some tie back into revenue, a credit union would be paying out in cost for the service for a transaction that could effectively be replacing future debit card transactions.”
Roth questioned whether a credit union would really promote a solution that drains earnings per transaction. He said the danger is that people will confuse stickiness with revenue and without a payment scorecard in place, will not associate the drain in revenue with the increase in expenses.
Sam Kilmer, a Cornerstone senior director, said his company's research shows that only 17% of checking accounts at the median credit union in its studies are associated with active bill pay use. “(The) median credit union is only seeing three bill pays a month per enrolled bill pay user,” Kilmer said. “So, photo bill pay would currently benefit a small segment of the membership.”
By contrast, debit card use has five times the adoption and monthly transaction volume of bill pay, Kilmer noted. However, Cornerstone does not see mobile photo bill pay as a game changer on mobile adoption because there is less self-interest for the member such as the case with depositing money, and it would only reduce the friction for that small segment of members who are bill pay users, he said.
While sharing their skepticism about the business and consumer attractiveness of mobile photo bill pay, Meara, said, “Others might disagree with me vehemently, though.”
That could include product managers at heavyweights FIS and Fiserv as well as remote capture technology leader Mitek and some of its large and small partners who are all engaged in developing and deploying the offering.
In August 2013, the $763 million 3Rivers Federal Credit Union in Fort Wayne, Ind., became the first credit union in the nation to deploy the service in collaboration with Malauzai Software of Austin, Texas, and Allied Payment Network also in Fort Wayne, using Mitek mobile photo bill pay technology.
Kevin Schull, 3Rivers’ chief information officer, said about 6% of its 10,000 mobile banking members has signed up to use the mobile bill pay service in its first six months.
“We already had mobile RDC and felt we needed this to round out our mobile offerings,” he said. “And it's very easy for our members to use. As long as the picture goes through, Allied does the rest, including handling the exceptions, so the end users don't have to make any additions or corrections.”
Ralph Marcucilli, president of Allied Payment Network, said more than 20 clients have signed up for his company's Picture Pay service, including seven or eight credit unions and he anticipates having more credit unions than banks in the next few months.
Along with handling exceptions, a major part of the process is linking with payees. Marcucilli said his company already is linked with about 15,000 that it can automatically validate against. As for the demand proposition, Marcucilli said he's confident that it's there.
“We feel like overall use and volume will be higher than mobile remote deposits. I know I personally get paper checks once a month or every couple months. People pay bills many times a month.”
Product managers at industry giants Fiserv and FIS share his optimistic outlook. Each has massive biller ties with Fiserv's roster nearing 140,000. Fiserv said it has already gone to market with its solution while FIS is in the prep stage. However, their approach to the technology will differ some. Fiserv said it is using tools from Top Image Systems, which actually uses the video function on a smartphone or tablet to capture the image and also gives end users the choice of entering the biller data manually.
“You don't have to hold the camera as still,” said Daniel Steere, an Atlanta-based director of product management for mobile payments for Fiserv. “The app takes control of the camera and provides guidance to the user. Particularly for first time users, we feel this is a much better solution.”
As for its prospects for adoption, Steere said it's hard to predict the pace.
“You can take a picture of a check and that makes sense. Why not take a picture of a bill? We believe mobile RDC tees this up for good adoption as consumers more and more expect this kind of experience.”
Fiserv's research also shows reason to believe. The 2013 Fiserv Billing Household Survey revealed that 57% of U.S. online households own a smartphone and 16% have paid a bill on one. The top feature that would motivate them to pay bills or pay more bills using their smartphone is the use of an app and smartphone camera to take a picture of the bill, cited by 36% of the respondents, the company said.
At the Jacksonville, Fla.-based FIS, Doug Brown, senior vice president and general manager for mobile financial services, said a decision on what kind of mobile photo bill pay solution to roll out will be made this year. The company already offers a cloud-based mobile wallet and QR code technology for bill pay and is looking at photo bill pay, using Mitek tools, as another option.
“Mobile clearly is becoming the dominant channel for customer interaction,” Brown said. “(Bill pay) is not a common functionality on mobile right now, but it's very important that people have the ability to use any functionality they want.”