Specialized remittance processing companies are benefiting from growth in electronic bill payments, and perhaps none more than MasterCard International's RPS unit.
RPS-for Remittance Processing Service-is celebrating its 10th anniversary, having recently surpassed the $20 billion mark in payments processed.
Last year alone the service handled $9.9 billion; transaction volume was up 46%, to 16.4 million.
"As fees come down and consumers become comfortable that their bills are paid on a timely basis, we expect to see" more bill payments made electronically, said Michael A. Tempora, MasterCard vice president of deposit access.
RPS is the largest network for sending and reconciling electronic remittances between consumers' banks and merchants' banks.
It is used by the largest of bill-payment processors-including Checkfree Corp. and Visa Interactive-and by more than 600 merchants.
Other operations, including Visa U.S.A.'s E-Pay and Princeton Telecom Corp., also are adding to remittance processing volumes.
The potential transaction pool targeted by the remittance processors is staggering.
About 16 billion recurring bill payments occur each year in the United States, and if a majority turn electronic, the market for processors could become more lucrative than even certain segments of credit card processing, observers said.
Part of the recent surge in volume may have something to do with service enhancements.
MasterCard, for example, has rededicated itself to eliminating data errors and operating inefficiencies. (MasterCard officials said RPS' error rate is less than 0.001% on the 52 million payments that have flowed through the system since 1987.)
Visa's E-Pay, meanwhile, also is working to improve its efficiency. About 250 merchants affiliated with 14 banks have signed for the remittance portion of Visa's system since it began operating last year, said Visa spokesman Gregory Jones.
Princeton Telecom, an aggressive nonbank participant in remittance processing, began offering bill-payment services for utilities and other companies in 1985 and serves 550 billers.
The New Jersey company handles about 1.5 million bills per month, at a cost of 10 cents each. RPS charges 3 to 4.5 cents per transaction, and Visa's E-Pay 2 cents.
Officials at Princeton Telecom said head-to-head price comparisons can be misleading. Princeton said it provides several services that others do not.
Princeton also is considered a mover in electronic bill presentment, which lets merchants deliver bills directly to computers. The computers can then be used to initiate payment.
Electronic bill payment "was designed to include payment and presentment," said Gary Craft, analyst with San Francisco-based Robertson Stevens & Co. "That is where we will see the market go."
