Mastercard is acquiring Transactis to deepen its bill pay play (MA)

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Mastercard announced that it will acquire bill pay platform Transactis for an undisclosed amount. Transactis’ technology is used by bank and nonbank partners to enable businesses to streamline their bill collection digitally — including firms that typically don’t support digital bill pay, like property owners.

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Here’s what it means: This acquisition can help Mastercard further develop Bill Pay Exchange ahead of its full roll out.

Mastercard debuted Bill Pay Exchange last year — and it’s slated for a full launch later this year.The offering facilitates bank-based real-time bill payments: It is integrated into Mastercard issuers’ apps through APIs and will leverage infrastructure from The Clearing House (TCH) so that users can pay bills to over 135,000 billers in real time.

It also includes digital money management features, enabling users to see overhead views of all their bills in one place and receive notifications when bills are due. Access to Transactis’ technology will allow Mastercard to streamline bill payments in digital banking platforms and biller websites.

The bigger picture: Digital bill pay is on the rise, but consumers often don’t prefer to pay through issuers. Mastercard’s solutions can allow it to realize volume that might otherwise go through biller sites.

Biller websites are often perceived as more convenient for bill pay. Biller websites represent over one-third of bill pay volume and value, while issuers only hold about 13% of the market, according to a study from ACI and Aite. That’s especially true among younger generations: Just 9% of millennials used digital banking channels for one-time bill payments in 2016, compared with 16% of seniors, which could make it harder for banks to capture share among millennials as they gain more spending power. Biller direct payments often seem more convenient as these providers send reminders when a bill is due with a link that prompts them to pay and receive immediate confirmation information, Mastercard EVP of New Payment Flows Colleen Taylor told Business Insider Intelligence.
But Mastercard can reverse that by bringing a comparable experience to digital banking platforms. The average customer pays 6 to 10 bills monthly, and therefore has to keep track of multiple logins and due dates. Through Bill Pay Exchange and Transactis’ technology, Mastercard is bringing a convenient experience to banking apps by speeding up confirmation times and offering reminders, which can allow it to move in on a significant opportunity: Business Insider Intelligence expects the share of bills paid digitally to rise from 56% in 2016 to 77% in 2022.
The acquisition can allow Mastercard to keep broadening its sources of volume. Mastercard has been pursuing new growth areas by investing in more bank-based or direct debit payments through its Vocalink acquisition, business-to-business (B2B) payments, and other areas. The US bill pay market is worth over $4 trillion annually, and effectively capturing even a fraction of that volume could give Mastercard a meaningful boost.

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Source: Business Insider – feedback@businessinsider.com (Rachel Green)