Bill Pay Industry 101

What is the bill pay industry? Bill payments are ubiquitous. Every adult and every business pays bills of some kind. However, the bill pay industry is often overlooked by the banking industry, even by those in the payments field. Nearly four trillion dollars in bill pay transactions are conducted annually in the U.S. Why doesn't this massive market get due attention or investment? The short answer is that financial institutions do not make money outright on bill payment services. Money changes hands during bill payments without incurring fees or accruing interest. In fact, bill payment management and technology loses money [...]

By Adam Winograd|2022-04-14T10:25:39-04:00November 22nd, 2021|Tags: , , , |

A Requested Clarification of Regulation II Could Change Prepaid and Challenger Banks as We Know It

Within the crevices of the Federal Reserve Board website there are sometimes some fascinating documents detailing conversations industry leaders undertake with the Fed.  One such document appeared in December 2020, which, if acted upon could turn the business model for prepaid card program managers and challenger banks completely upside down. The Clearing House (TCH) met with members of the Federal Reserve Board to convey what they believe to be an unfair application of the small issuer exemption to the debit card interchange caps as applied under Regulation II, the outcome of the Durbin Amendment to the CARD Act. Most prepaid debit cards [...]

By Sarah Grotta|2021-07-16T18:33:39-04:00January 27th, 2021|

CFPB Provides an Opinion on Earned Wage Access, Raising More Questions

On Nov. 30, 2020 the Consumer Financial Protection Bureau (CFPB) issued an Advisory Opinion on whether or not an Earned Wage Access (EWA) program is an extension of credit to the participating workers, and as a result must comply with the protections and requirements of Regulation Z. I will save you the suspense, these programs don't have to comply with Regulation Z as long as they meet the criteria that the opinion outlines. While this opinion helps to provide clarity for employers, EWA providers and state legislators who are considering their own set of rules, a host of new questions arise with the issuance of this [...]

By Sarah Grotta|2021-07-16T18:35:51-04:00December 3rd, 2020|

Separating Hype from Reality of Contactless Payments Through Data

You have read the headlines: contactless payments in the U.S. are skyrocketing, booming-insert your favorite hyperbole here-due to consumer concerns during the global pandemic about the hygiene of the point-of-sale (POS) terminal that every preceding individual has touched during checkout. After reading these headlines, one could come away with the impression that consumers in the U.S. are madly tapping and waiving their cards to the exclusion of all other payment types, with the exception of the disenfranchised of course, who are still using cash. But there is a reluctance to share the actual number of contactless transactions. With what data [...]

By Sarah Grotta|2021-07-16T19:01:54-04:00August 28th, 2020|

COVID-19 and Debit and Alternative Payments Products

The rapid spread of COVID-19 has affected nearly every individual on the planet in some way. In the United States, where one-quarter of the population is currently under orders to “shelter in place,”i commerce and banking have certainly been altered. In this blog I take a look at the early indicators suggesting the level of impact the pandemic will have on products covered in Mercator Advisory Group’s Debit and Alternative Payment Products practice. The full impact will not be known for several months, so the projections and insights provided here will certainly be adjusted at a future date. In the words [...]

By Sarah Grotta|2021-07-22T13:28:07-04:00March 31st, 2020|

Approaches and Priorities for Fighting Faster Payments Fraud

The concept of faster and real-time payments has evolved in the United States, resulting in the launch of several networks, platforms, and products constituting a growing part of the payments system. This trend is driven in part by consumers, who have come to expect speed and convenience in shopping, transportation, and banking. Merchants, too, have been pushing for faster payments, which they believe offer faster cash flow and increased customer satisfaction. At the same time, advancing technology is making faster payments capabilities more widely available and economically feasible. Faster payments are in use or being planned in over 50 countries [...]

By Sarah Grotta|2021-07-22T13:45:54-04:00January 21st, 2020|

Skirmish Between Banks and Fintechs over Financial Planning Apps

In November 2019, Google announced in an article in the Wall Street Journal that it would be getting into the retail banking business through Citigroup and Stanford Federal Credit Union. The reaction from the banking industry was resigned acceptance that this day had come. “Big Tech” (firms like Google as well as Amazon, Apple, Facebook, and the like) and fintech have been making investments in banking and money management solutions, offering their customers opportunities to improve the flow of a variety of payment transactions with the objective of acquiring and retaining clients while gathering a wealth of data they can [...]

By Sarah Grotta|2021-07-22T13:58:44-04:00December 16th, 2019|

The Enduring Use, for Now, of Cash and ATMs

The United States has seen a slow decline in the total number of cash transactions during the last two years, but the decline has not been dramatic. The resilience of cash is noteworthy in the midst of many payment alternatives that have been introduced with the purpose of replacing the use of cash. Consumers are drawn to cash for low-value transactions. Cash is used 49% of the time for payments valued at less than $10, and it is still used for 35% of transactions of any value conducted in person. Mercator Advisory Group surveyed U.S. consumers about their use of [...]

By Sarah Grotta|2021-07-22T14:03:36-04:00November 29th, 2019|

Debit Card Issuers’ Search for the Most Motivating yet Cost-effective Loyalty Reward Options

Rewards for debit card users are alive and still available through traditional banks and credit unions, the financial institutions (FIs), although they are not as plentiful as they were prior to 2010 when debit card interchange was unregulated. Large and small FIs still offer these rewards, although rewards are increasingly likely to come in the form of a discount on a specific purchase funded by a merchant and programs based on points accumulation now require consumers to spend more dollars to earn a single point. The reality of declining product profit margins has debit card issuers thinking about how to [...]

By Sarah Grotta|2021-07-22T14:25:24-04:00June 4th, 2019|

Debit and Prepaid Cards: Are There Any Remaining Differences?

At the current state of product maturity for general purpose reloadable (GPR) prepaid cards, it’s difficult to find a meaningful difference in convenience and functionality between GPR prepaid cards and traditional debit cards issued by financial institutions in connection with an individually assigned checking account. The two products, debit and GPR, even look the same since both are required by law to have the word “debit” printed on the card front. Some GPR cards are also being issued now with EMV chips, which makes the distinction even harder to detect. The Consumer Financial Protection Bureau (CFPB), in its Frequently Asked [...]

By Sarah Grotta|2021-07-22T15:36:21-04:00December 17th, 2018|


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