First Virginia First in Bill Presentment

With little fanfare, First Virginia Banks became the first to offer its customers bill presentment via the MasterCard Remote Payment and Presentment Service (RPPS) network.

Its pilot last fall, which consisted of only a half-dozen customers and one biller, was a momentous step for MasterCard, marking completion of the electronic bill payment and presentment loop.

Those first live transactions from billers to consumers were made possible through Billserv and Online Resources, two of the leading participants in the electronic bill payment and presentment (EBPP) industry. First Virginia connects to the network through Online Resources, its online banking vendor.

RPPS has its roots in MasterCard's Remittance Processing Service, which began processing electronic payments in 1987. Over the years, services were added to automate other labor-intensive transactions, such as credit counseling payments, walk-in payments, and balance transfers. In March 2000, Remittance Processing Service was renamed Remote Payment and Presentment Service, as the company announced its expansion into electronic bill presentment.

RPPS delivers remittance data and funds from institutions offering consumer bill-payment or credit counseling services (consumer service providers) to organizations performing collection and processing functions on behalf of billers (biller service providers). MasterCard itself remains a neutral third party in the transactional process.

MasterCard's strategy is to connect CSPs and BSPs to the network through the Open Financial Exchange (OFX) messaging standard. RPPS currently processes more than 16 million payments per month. "We're connected to more than 95 percent of the providers on both sides of the hub," said Cathleen Conforti, vice president, MasterCard RPPS. "The reason we have that many connected is because of the efficiencies gained by being able to get payments to the most players, and vice-versa, being able to connect one place to receive the most."

With the initial pilot a success, $10 billion First Virginia is planning an expansion of the service this spring. "It works. We're just waiting to see how the public adapts to it," said Jeff Tansill, senior vice president of e-commerce at First Virginia Services. "What we have is one biller out there right now. For this next phase, we'll go ahead and roll it out to all of the users who have this particular biller. After that, we'll be waiting for the next biller to come on."

But in order to get consumers clamoring for bill presentment, the industry needs to attract a critical mass of billers. "We have to get enough billers out there for it to gain enough acceptance," Tansill said. "We don't want to get people hyped up and then only be able to give them one out of their 50 billers." To succeed, RPPS must attract national billers and regional utilities. "It's not going to work for us unless we've got a good majority of them on there."

MasterCard is making progress on that score. Billserv currently has 96 signed billers and Online Resources distributes bill payment and presentment services to more than 525 banks, thrifts, and credit unions. Both are working to bring additional clients online. In addition, several other BSPs and CSPs are expected to go live by mid-year.

"We need critical mass on both sides of the equation," said Susan Foulds, managing director of product management for retail online banking at McLean, Va.-based Online Resources, adding that bill presentment through the RPPS network will snowball in the coming months and years. "Once you get a few of the major billers out there and they see the response, others will start coming onboard pretty quickly. We think they have a winning model."

Independent observers are bullish on RPPS. In November, Forrester Research predicted that RPPS will be the dominant provider of EBPP hub services by 2006.

Still, MasterCard has a long way to go to reach critical mass. Not only do more EBPP players need to come onboard, but also consumers.

Earlier this year, MasterCard launched a nationwide consumer awareness campaign. However, much more work to be done. "We're giving them a solution for a problem they don't see," Conforti said.

"We can't say presentment is the killer application that's going to give us critical mass," she continued. "We need to make it easy for the consumer. We have to make consumers understand the service by giving them accurate detailed information, and customer service has to be flawless."

In addition, bill payment needs to evolve beyond just the ability to receive and pay bills electronically.

"A service that is able to give you all of your account information and a lot of the account functionality that you need to manage your finances in addition to getting your bills and paying them will really make it a valuable service," said Conforti. "If we have all that, we will get much more adoption."