Credit union deploys faster bill pay to generate more income, cross-sales

Goldenwest Federal Credit Union is taking another crack at bringing home an underperforming revenue stream, hoping support for due date payments can spur more members to use the service.

“We tried to get our members several years ago to put their card numbers in the biller sites. We got a few people to move but not a lot, and there are still a ton of members going through ACH and not bill pay,"said Louise Hilliard, the senior vice president of the Ogden, Utah-based credit union.

In its latest effort, Goldenwest has launched a feature that enables it to support near-instant card-funded bill payment using credit or debit cards for its 29,000 members.

Goldenwest joins a growing number of credit unions using faster payments in an attempt to gain more non-interest fee income, as well as cross-sell to members by tying bill payment to incentive marketing. It’s also a key play for Goldenwest’s technology provider Jack Henry.

The bank technology company’s JHA Payment Solutions launched iPay CardPay, a “real-time” card funded bill pay option, in December. Goldenwest is one of the early adopters of the new program, which Jack Henry is releasing as its largest competitors — such as Fiserv and FIS — spend heavily to merge with major payment processors.

Jack Henry has not been involved in the multi-billion-dollar merger wave, but it has taken steps to stay competitive by improving transaction speed.

“There is a broader strategy for real-time payments that’s underway here,” said Tede Forman, group president for consumer and commercial products at Jack Henry.

In the spring, Jack Henry debuted a hub that offers a single integration point for The Clearing House’s Real Time Payments network and Early Warning’s Zelle transfer service. More than a dozen Jack Henry community bank clients recently joined The Clearing House's RTP.

The bill pay service enables financial institutions to offer flexibility for recurring bills given the near real-time processing. “Consumers can wait for the last minute, or can pay a bill if they have forgotten to,” Forman said.

Goldenwest is promoting “last minute” bill pay flexibility but is also relying on incentive marketing. In the past three months has offered “triple points” for card-not-present charges and extended these incentives for all transactions for November and December.

It’s also doing an email campaign and plans more publicity for the bill pay option in early 2020 to improve on prior attempts to push card-funded bill payment, Hilliard said.

The majority of bills are paid directly between the consumer and biller, and less through financial institution bill pay applications, according to Sarah Grotta, director of the debit and alternative products advisory service at Mercator Advisory Group.

“Some banks and credit unions would like to return to being more central to their customers and members important bill pay activities so we will see more financial institution bill pay providers add features such as greater payment choice, as Jack Henry has done,” Grotta said. “Also, we find that most consumers are waiting until the very last minute to pay bills.”

Credit unions in general are warming to real-time payments and other faster payment services. Corporate One, which owns a credit union service organization with more than 800 other credit unions, was an early mover in 2017, using a cloud-based environment from DH Corporation to add specific payment types to faster processing.

More recently, credit unions in the U.K. have collaborated with technology companies to access faster payments and other digital transactions, a trend that's gotten a boost from consolidation within the U.K. credit union market.

In November, FedNow, the Federal Reserve's planned option for faster payments, picked up support from the National Association of Federally-insured Credit Unions. Other CUSOs such as CO-OP Financial Services have built a network to share the resources and costs for faster payment initiatives.