The value of an intelligent network: A bill-payment case study

Abstract

The successful development of a robust online bill-payment industry has delivered the promised benefits to all participants: consumers get control, convenience and payment velocity; bill-payment originators lower their costs and optimise relationships with their customers; and billers reduce costs and improve posting speed. Consumer adoption of online bill payment has been a key driver in the dramatic decline of cheque volumes in the USA. Critical mass has been achieved, and electronic volume will only expand. In fact, the share of payments made online at banks' or billers' websites is predicted to double from 14 to 28 per cent between 2006 and 2010. At the same time, however, this success has created an entirely new set of challenges that require an entirely new set of solutions. The sheer volume of electronic payments that has been achieved makes even a small percentage of error unacceptable. For originators and billers processing millions or hundreds of thousands of payments a month, the costs of even a 1 per cent error rate can be crippling to profitability. To maintain the hard-won efficiencies and cost-effectiveness of electronic payments, MasterCard RPPS, a division of MasterCard Worldwide, has chosen a strategy that employs intelligent network solutions to optimise the ever-growing electronic volume. As this case study demonstrates, an intelligent network whose capabilities have been optimised for the unique challenges of bill payments can bring the same level of efficiency and cost-effectiveness to preventing payment exceptions and resolving payment errors that the electronic model has brought to payments in general.