With a One-Two Punch, Discover Endorses Alternative Payments, E-Bills

Discover Financial Services on Tuesday found itself at the center of two announcements signaling increasing interest in the payments industry in alternative payments and electronic billing. Ebillme, an online-payments service offered by Rye Brook, N.Y.-based ModaSolutions Corp., said online merchants that accept Discover cards will be able to accept eBillme payments through an arrangement that uses the Discover network and a platform offered by Mentor, Ohio-based CardinalCommerce Corp.

Separately, Fiserv Inc. said Discover has started sending e-bills to cardholders who use online-banking programs supported by Fiserv. The Brookfield, Wis.-based banking processor provides online-banking services to some 3,000 banks and credit unions. Approximately 1.5 million Discover account holders use online banking at these institutions, according to Fiserv.

Discover’s decision to open its network to eBillme follows on the heels of its move last fall to participate in Isis, a mobile-payments venture formed by AT&T Mobility, Verizon Wireless, and T-Mobile USA. While Isis is not yet operational, Discover has agreed to route transactions for the venture over its network. Marwan Forzley, chief executive at eBillme, says his company will be looking to strike similar arrangements with other payments networks. Networks like Discover, he tells Digital Transactions News, “are opening themselves up to alternative payments. Any network that has a relationship with merchants is a network we’d like to work with.” Officials at Discover were not immediately available for comment.

What especially appeals to eBillme is Discover’s direct links with major online merchants, Forzley says. The arrangement announced on Tuesday, he says, “is really aimed at those direct relationships.” Currently, eBillme processes payments for more than 800 online merchants, including Tiger Direct and Sears.

Under the new arrangement, Discover merchants will be able to accept eBillme payments from their customers through their existing Discover network links. With eBillme, consumers can pay online merchants from their checking accounts by authorizing an online-banking transfer in response to an e-bill from the merchant. In the Discover arrangement, eBillme forwards funds to the merchant via Discover’s network. Merchants are liable for both eBillme’s processing fee and a network fee to Discover.

CardinalCommerce’s Centinel platform, a product online retailers use to gain access to multiple payment services, translates eBillme protocols into a format that can be read by the network. The only work required of merchants, says Forzley, is to add the eBillme bug to their checkout pages and to be able to call eBillme’s application programming interface (API) to trigger an e-bill. In this way, “you essentially tag along,” he says, as a Discover merchant.

In the other news, Discover is delivering e-bills to its cardholders who use online-banking programs that rely on Fiserv technology. Given that Discover is one of the largest billers in the country, the move represents a major endorsement of e-billing, a technology that has been overshadowed in recent years by online bill payment. Many billers and processors are trying to quash more paper—and paper-related costs—by pushing consumers not just to pay bills electronically, but to receive them online as well.

Almost 400 companies now offer e-bills on Fiserv’s bill-pay network. \”The time is right for companies to expand their customers\' billing options with e-bills,\” said Jardon Bouska, division president for biller solutions at Fiserv, in a statement. \”Fiserv research shows that one-third of online bill pay users now receive at least one e-bill, and that consumer interest has increased over the past two years.\” To exploit the growing interest in e-bills, startups like Doxo Inc. have created services that not only allow consumers to receive and pay bills electronically but also to organize a wide range of paper documents in so-called electronic filing cabinets for ready reference.

With the new Fiserv service, a Discover cardholder who pays her bill at her bank’s Web site will see an icon on the site indicating an e-bill from the card company is available. She will be able to sign up for the e-bill service at that moment, Fiserv says.