Metavante Corp. has introduced an online bill payment reward system that lets banks offer their online customers the same perquisite they provide to credit card users.
The system is an expansion of the Milwaukee company's credit and debit card reward program, Points2U.
Metavante, a unit of Marshall & Ilsley Corp., said the system can be used for any combination of those products. Combining rewards with online bill payment could improve customer retention, it said.
"We were seeing a demand in the marketplace for an integrated rewards program that was more expansive than strictly debit card or strictly credit card," said Dave Fortney, Metavante's senior vice president of e-payment solutions.
Some banks will begin offering it this year. Metavante has been talking to Points2U customers about the expansion and is planning to pitch it to its other customers.
Since banks do not want to cannibalize card use by encouraging people to pay bills online, Mr. Fortney said that many banks might offer rewards points in smaller increments online.
For example, though card rewards are typically tied to dollar amounts, bill payment rewards could be connected to the number of bills paid online rather than their value, making it more rewarding to the consumer to keep using the credit or debit card, he said.
Still, banks have the flexibility to manage bill payment rewards exactly as they do for card payments if they so desire, he said.
Many companies have been talking about improving the online bill payment system to attract new customers and keep existing ones.
Online Resources Corp. in McLean, Va., said it would offer a way to use cards to fund online bill payments as an alternative to paying from a checking account, a method that is the only option at many banks.
CheckFree Corp. has been working on something similar as an element of an expedited payment service. It is also planning to better integrate its software with the online banking software made by Corillian Corp., a company it bought Tuesday.
Metavante also has allowed card payments for online bill payments through a deal it struck last year with the banking software vendor Yodlee Inc.
Mr. Fortney said the Yodlee deal complements the upgrading of Points2U — a bank could offer both without having to worry about a customer double-dipping on rewards points if rewards for bill payments are handled as he suggested.
Jennifer Roth, a senior analyst in the global payments practice at TowerGroup Inc., a Needham, Mass., independent research firm owned by MasterCard Inc., said the Metavante offering averts the need for an attached credit card to earn rewards points.
However, she said, most banks would want to attach a card to it anyway. The advantage of starting customers off by offering rewards for bill payments without a card is that "it could be a cross-sell opportunity," she said. Customers may apply for a card to increase the amount of points they earn.
"When banks are looking at a credit card as an option on online bill pay — at least the ones I've spoken to — they want you to use the one that they issued," she said.
If banks offer rewards points for online bill payment, they can expect more use of the service even by people who already pay bills online, Ms. Roth said.
"They'll probably have more conversion from biller-direct" payers who go to biller sites so that they can use a card to get reward points, she said, "and I think the existing users might pay more bills."
