payments – the authorization, settlement and movement of funds from the sender’s
account to the recipient’s account within seconds, or in real time – opens a
number of opportunities for credit unions and their members. It allows payroll
to be available in an employee’s account immediately at the end of a shift or
for funds from an insurance disbursement to be spent within seconds after it is
approved, among other possibilities.
payments is most known for the immediate availability of funds, but another
feature gaining traction is Request for Payment (RfP). RfP gives credit unions the
ability to securely present a bill through online banking portals in real time
for both consumer billing (B2C) and business-to-business (B2B) billing and
payment, similar to bill presentment in the bill pay segment. Payees can see
and immediately pay bills in their real-time payment portal and/or bill pay app,
as well as schedule the payment at a later date. On the other side, billers are
notified their bill has been received by the customer and can match the bill to
the payment immediately upon receipt.
RfP is a
message shared over the same secure payment rails using the same data-rich
message set as the payments themselves. The message contains all of the details
needed by the consumer to understand the bill, as well as the information required
by the biller to associate the payment with the consumer’s account.
paying bills via the biller’s website (“biller direct”) is the channel of
choice for most consumers when making payments. In fact, 76% of bills were paid
via this channel in 2020, up 14% over the last decade, according
to an Aite report.
method is convenient, it does present some challenges: Utility, medical,
insurance and mobile phone service bills, among others, are sent either by mail
or email. Payments can be made through a financial institution’s bill pay or
directly on the biller’s website, meaning the request for payment (the bill)
and the actual payment are “out of band” from each other as the information
contained in the bill is not automatically transferred to or associated
A significant number of bill payment “exceptions” where the biller receives
funds but cannot post the credit to the consumer’s account. According to the National
Automated Clearing House Association (NACHA), a single year can produce an
estimated 130 million bill payment exceptions, costing the industry $720 million.
The same study found that 98% of these exceptions were a result of incorrect or
missing consumer account information.
reduces the number of exceptions and closes the gap between consumer
expectations for payments to be processed immediately and bill processing turnaround
time, while also moving the payment from email and web back to the financial
institution’s digital experience. The whole process, from bill presentment to
payment confirmation, is simplified through RfP.
benefit from RfP as they can pay their bills immediately, helping avoid late
fees, fines and disruption of services, while also getting assurance their
payment has been applied correctly. In addition, they gain more control over
when bills are paid, which can assist with cash flow management. Billers, on
the other hand, see cost savings and a greater potential for automation of
customer payment processing.
All the benefits
to credit unions of a traditional bill pay solution still apply here: Offering
RfP capabilities within real-time payments creates stickiness and provides the
convenience of online payment. Plus, credit unions gain a new revenue
opportunity and a modern rail to replace existing bill pay, all while keeping
members on their website or in their app. RfP also comes with the additional
benefits of real-time payments and immediate posting to the account,
eliminating a major source of exceptions.
deliver on the promise of a better payment experience and financial outcome for
credit union members, businesses and credit unions – a true win-win-win for the
financial services industry.
Lou Grilli is a Senior Innovation Strategist at PSCU. In this role, Lou is tasked with building and shaping a superior payment and member experience capability for PSCU and its Owner credit unions. Lou’s long career in payments includes product management, product development and thought leadership in credit, debit, loyalty, mobile payments and digital wallets. Lou has spent the last six years in roles dedicated to the credit union industry.