- Key insights: Truist is piloting bill pay with Zelle as Early Warning Services looks to expand use cases for its payments network.
- What's at stake: Zelle parent Early Warning Services has been looking for popularize new use cases for its payments network beyond its peer-to-peer roots
- Forward look: The pilot involved payments to a Truist credit card. Eventually, Truist will accept Zelle payments for all its consumer loan products, Chris Ward, head of enterprise payments at Truist, told American Banker.
Truist , one of the bank owners of Early Warning Services, is piloting bill pay that utilizes request for payment technology with Zelle.
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Charlotte-based Truist will present a bill using a Zelle alias so that it can interoperate between financial institutions, according to Chris Ward, head of enterprise payments at Truist, who added the payment is "real-time" to the biller, which provides confirmation back to the sender.
Truist wants to popularize request for payment technology and remove friction in the bill pay ecosystem. "This is going to enable us to provide our wholesale clients who have bills that need to get paid want them to be paid in a more automated, more real-time basis," Truist's Ward told American Banker.
For Early Warning, bill pay represents yet another potential use case to expand Zelle from its peer-to-peer roots, and supplements its focus on expanding its share of small business payments.
Bill pay is one of the "more compelling use cases" for Zelle, Tony DeSanctis, a senior director at Cornerstone Advisors, told American Banker. "If I can migrate people from paper to Zelle, assuming I've got my fraud controls in place, then I think it makes a lot of sense."
The pilot tested how consumers might use Early Warning's payment network Zelle to pay recurring credit card bills. Tests included Truist employees, and involved on-us transactions where the employees with a Truist credit card and Truist checking account were presented with a request for payment. They are then able to determine how much they want to pay and when they want to pay, before making the payment over Zelle.
Truist was also able to present the request for payment to Truist credit card customers that had checking accounts at other financial institutions, Ward said.
The pilot also involved The Clearing House, which Zelle uses for instant payments and settlement. Truist, Zelle and the Clearing House had to create a way to marry The Clearing House's request for payment technology and Zelle's request for payments capability and alias function to get bills to consumers without exchanging banking information.
Recurring credit card payments are the focus of the pilot, but Truist intends to open up bill pay on Zelle to any of the bank's customers' that have a consumer loan, Ward said, noting that rent, utilities and mobile services are also potentially well-suited for the technology.
Zelle and Truist will need to populate both sides of the market – consumers and billers – in order to scale it. Billers generally like instant bill pay because it means they get their money faster, and consumers also benefit from having payments leave their account at the time of payment because it allows for better budgeting, according to Ben Danner, a senior analyst at Javelin Strategy and Research.
But getting consumers to use the functionality will also require a re-wiring of old habits.
"Bank bill pay fell off," Danner said. "The direct biller experience is so optimized and it works for a lot of people – they don't even think about using bank bill pay."
Some billers too may also need some convincing to utilize the new technology.
"[The request for payment] also is a reminder to [consumers] that they're paying a subscription that costs $18 a month," Danner said. "There's a lot of people that totally forget about all of those subscriptions."
