Fiserv Inc. is breaking down the barriers for small merchants to present statements within online banking sites, a service more commonly limited to high-volume billers.
The e-bill feature is part of coming enhancements to Fiserv's ZashPay person-to-person payments system, which the company is updating with a focus on the service's appeal to ultra-small-business owners.
Today, bill presentment "is just too costly and labor intensive … for the smallest of businesses," Erich Litch, Fiserv's senior vice president and general manager of consumer services for electronic banking services, said in an interview.
Adapting ZashPay to provide bill presentment to those small-business owners "is really about being able to provide the same kind of service that the largest businesses in the country get to the smallest businesses," Litch said.
Some technology vendors offer services that let small businesses send invoices to consumers via e-mail, but not to consumers' banking e-bill portal, which banks view as an important customer retention tool.
In combining e-bill presentment with ZashPay, the Brookfield, Wis., technology vendor is also making it easier for small businesses to quickly receive electronic payments from customers; consumers will be able to select ZashPay as a payment option in their bank's online bill-payment portal in lieu of having the bank write a check to the biller, which is how most bill-pay services handle payments to smaller billers.
About 400 financial institutions have agreed to offer ZashPay to their customers and about 100 are live with the service now, Litch said.
Whereas consumers can identify their relationships with large billers by account number, ZashPay helps match them with smaller billers by using that biller's address, Litch said.
"We can immediately match that against information that's already in our system," Litch said. "We have millions and millions of payees in our system today."
Fiserv isn't the only company looking to leverage a P-to-P payments network to electronify small-business payments.
The New York vendor CashEdge Inc. said last month that it is offering a small-business version of its Popmoney P-to-P service that will let them send invoices to and receive payments from consumers.
The service "enhances the ability for a small business to speed up their payments" and "have a cash management system that is integrated with the bank account," said Catherine Palmieri, the global head of product and marketing for CashEdge.
A business could send an invoice to its customer via e-mail and also to the customer's online banking site. However, to view an invoice through the banking site using CashEdge, a consumer would look at it through a special portal for the Popmoney service that may or may not be linked to bill pay.
The focus on business solutions makes sense because small merchants in particular still deal with a lot of paper and banks often struggle at attracting them as customers, said John Kraft, a senior research analyst who follows Fiserv for D.A. Davidson & Co.
"You're going to see banks increasingly focus on their business customers, and part of it is because of all the new regulations about fee rules on the consumer [side]," Kraft said, adding there is a need for more electronification of payments in the business world.
"It's one more tool in the tool belt for banks to be able to win over a business customer," Kraft said.
Fiserv plans to make the new ZashPay functions available by the middle of next year, Litch said. The features will allow a small merchant's bills to be delivered to customers in their bank's own site, just like they would with a bill from, say, Verizon Wireless or Time Warner Cable.
"Today we do this for larger businesses," Litch said. "We have millions of users getting electronic bills through us today through online banking. Most of the larger businesses in the country are receiving electronic payments today from us."
Babysitters, lawn-care providers and similar merchants could benefit from its new services, he said.
Edward R. Woods, a principal with the Mindful Insights LLC consulting firm in Portland, Ore., said the difference in Fiserv's and CashEdge's respective approaches to small business payments is subtle but important.
Fiserv's planned additions to ZashPay advance what CashEdge is doing by making the presentment of a very small business' bill uniform to that of a large biller. That could make the user experience more consistent for a bank's consumers.
"If I'm using bill presentment now, I'll have my AT&T bill and my gas bill and my lawn-care bill … all come to my online banking [site] and that's where the convenience factor comes in," Woods said.
Fiserv debuted its ZashPay service earlier this year. It allows people to send money to each other using their e-mail addresses or mobile phone numbers.
Because Fiserv is among the largest bank vendors for bill-pay software thanks to its 2007 acquisition of CheckFree Corp., it has a lot of existing relationships with banks that could make expanding the new ZashPay features easier.
"Fiserv has a large network capability," said Gwenn Bezard, a research director with Aite Group LLC in Boston. "It's a strategy that they can try because of their existing market share."
Both Bezard and Woods pointed out that other companies are targeting small businesses with invoicing and electronic billing services. They also said that banks often struggle to serve small businesses as customers because many use consumer accounts.
Small businesses often suffer from what Palmieri called the "Goldilocks effect."
"For most small businesses … the consumer [account] offering is too small and too inadequate," she said. "Whereas the commercial offering is too big and has too many bells and whistles and of course is too expensive."
