Innovations and Payment Systems

Real-time bill payment should help avoid late fees


Mastercard announced a system coming in 2019 to pay bills almost instantly using new bank-to-bank payment infrastructure.

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Making instant payments to your credit card, phone company, mortgage lender and other businesses is coming a step closer – helping reduce the incidence of late fees.

Mastercard announced a near real-time bill payment platform, called Bill Pay Exchange, with 185,000 billing companies on board, will start in 2019.

“Mastercard is accelerating its vision of digitizing all forms of payments to make life simple, seamless and secure,” said a statement from Colleen Taylor, executive vice president for Mastercard New Payment Flows, North America.

“Consumers will have access to the faster payments technology if it’s offered through their bank or credit union,” she said in an email interview.

See related: Credit card payments: How quickly they should be reflected on your account

Speeding up payments is a priority for the U.S. Federal Reserve. Other nations have leaped ahead of the U.S., increasing transaction efficiency and reducing costs for consumers and businesses.

According to research by Deloitte, Mexico, Sweden and the United Kingdom are already on the road to enabling payments in real time, particularly from consumers to businesses and peer-to-peer.

Mastercard said that partnerships with ACI Worldwide, Aliaswire, Inlet and Transactis will help connect consumers to companies that issue bills. The payment platform will streamline setup, so consumers don’t need to enter billing addresses.

“The ability to present bills in real time and transform the speed of payments opens up doors to create a better experience for banks, billers and payers,” Hoss Mohsenzadeh, President and CEO of Aliaswire Inc., said in a statement.

How real-time payments work

The fast payment system is moving to the “credit-push” model, where consumers authorize and send payments to companies from their bank account. Existing “debit-pull” models, initiated by companies, are more vulnerable to fraudsters who obtain consumers’ account information, Deloitte’s study said.

See related: Can you make a card payment and a purchase on the same day with no interest?

Near real-time payment expands on the same-day ACH batch processing of transactions. Participating banks and credit unions can set up faster bill pay that completes transactions in minutes instead of days. Messaging systems confirm the account exists and has funds available, while the Automated Clearing House payment “rails” complete the settlement of funds between banks.

Speeding payments should help businesses as well as consumers increase efficiency and reduce costs, according to Deloitte’s study.

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