In the 1970s the federal government had a National Commission on Electronic Fund Transfers to examine the future impact of electronic value transactions. One of the commission members was from the U.S. Postal Service.
Because half of first-class mail volume is bills and bill payments, the Postal Service became concerned about the potential loss of significant revenue.
The Postal Service submitted a bill to Congress that would have required any electronic bill payment to be confirmed with a mailed receipt. It became known as the Postal EFT Relief Act and was quickly dispatched to oblivion.
It is two decades later and the quasi-autonomous Postal Service has never been more profitable. The amount of electronic value transactions has never been greater. Wire transfer and automated teller machine operations, to take two examples, are measured in trillions of dollars and billions of transactions, respectively.
In this history there are several important lessons.
Both of the now-institutionalized processes are relatively new products of technology. Both activities are nearly transparent to their customers. Users of electronic services are notorious for wanting several basic process steps:
Minimize screen reading.
Minimize key entry. (Plastic cards limit the need to enter IDs.)
Simple but effective security. (Personal identification numbers are very adequate and well accepted.)
Full user control of transaction amounts.
Easy recourse if at any point the user is not happy with the transaction, for example, ATM "cancel" or "exit" buttons.
Avoid the need to deal with any other account, transaction, or balance information, its reading, entry, or confirmation.
The latest push to electronic billing and payment raises questions that were historically addressed about basic processes. How are consumers' needs handled? How are they integrated with what consumers now know how to handle, namely the ATM transaction?
The mass acceptance of ATMs has changed, if not revolutionized, retail banking and branch operations. There has been a significant trend to self- service, higher-productivity branch designs, transaction interchange, and off-premises branch transactions.
The current press releases about billing services read like a bank protection act. The industry participants and their goals for developing future practices need to reflect on the real consumer world.
Why not add a bill payment option to an existing bank transaction account? It would provide customer bill-paying information with a simple ID number.
Consumers could then provide their ID number to any biller with whom they want to deal. And why not make this the same ID number found on an ATM or credit card? It identifies the card issuer and the account number. The biller could then send the bill transaction through an existing system. Consumers could be offered a simple process and time period in which to cancel the transaction-for any reason.
This would open a new type of transaction for ATMs and credit cards. It would not be subject to the credit card transaction discounts that merchants pay, although it could yield a bill-payment fee.
Because the industry does need to move to a more generalized value transaction process, why not build on the existing structure to let consumers play a bigger role in this important evolutionary process?