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Mitek Systems Inc., the pioneering developer of remote deposit capture software for mobile devices, is now moving into mobile capture for bill payments. With San Diego-based Mitek’s new Mobile Photo Bill Pay application, a consumer could take a picture of a paper bill with his camera-equipped smart phone, and then upload the image to his bank or credit union for payment through the institution’s bill-pay service.
“Because of the success of mobile deposit, the aptitude, acceptance, and desire to enable bill payment is very high, comparable to mobile deposit,” Mitek Systems chief executive James DeBello tells Digital Transactions News. “We think we are on a very significant trend of mobile for financial services.”
Indeed, after doing the grunt work on mobile remote capture for several years, Mitek’s applications are finally getting traction. PayPal Inc. recently became the highest-profile user of Mitek’s Mobile Deposit app, though the company has more that it can’t publicly identify. Mitek’s stock price has nearly tripled since June 30. The company says it is in talks with “a number of leading banks” to offer the bill-pay service but has not announced any users yet.
To implement mobile bill pay, a bank or credit union would need to offer a separate application for mobile phones or add the bill-pay feature to its existing mobile-banking app. The process for the customer is relatively simple: open the app, snap a photo of the bill, follow the prompts for entering the amount to be paid and when, re-shoot the photo if prompted, and then hit “pay.” The app currently works for Apple Inc.’s iPhone, but versions for the BlackBerry and smart phones running on Google Inc.’s Android and Microsoft Corp.’s Windows operating systems are under development. The customer needs to be enrolled in his bank or credit union’s online bill-pay service.
Under the hood, the software corrects distortions and lighting problems and uses optical character recognition and intelligent character recognition technology to capture the bill or invoice’s amount, account number, invoice number, biller address and other data, according to DeBello. George Peabody, who heads the emerging technologies practice at Mercator Advisory Group Inc., says the risk of imaging errors is higher with bills than with checks. “The layout of a check is comparatively simple compared to the layout of a bill,” Peabody says. “An invoice is way more complex.” But DeBello says the image failure rate is very low. “Because of Mitek’s extensive R&D, patented image analytics and experience, the incidence of success with Mobile Photo Bill Pay is comparable to that of Mobile Deposit, or nearly 100%, in capturing the pertinent data, even under less-than-optimal conditions regarding lighting, wrinkled paper, etc.,” he says.
The image data are converted to XML (Extensible Markup Language) files that facilitate data exchange and sent to the financial institution. The institution, however, has access to the images if needed. Mitek says the app is template-free and supports numerous bill formats.
While an automated clearing house debit would seem to be the most likely payment method between biller and bank, DeBello says it’s up to the financial institution to determine the actual rails over which the payment will ride. Payments would be sent electronically to the biller if the bank has the biller’s routing/transit number and other account data, as it likely would if the biller belongs to the bank’s existing online bill-pay program. If the bank doesn’t have that information and does not obtain it after receiving the consumer payment, it would then need to cut a paper check, according to Mitek.
If they can clear the hurdle of obtaining billers’ account data, financial institutions using Mitek’s software might generate new business for their online bill-pay systems, according to Nancy Atkinson, senior analyst at Boston-based Aite Group LLC. “One of the challenges for ACH remains the sharing of bank-account information,” she says. But she notes that, “Assuming it all works, it’s something that could be very interesting for consumers.”
DeBello says the app could help banks and processors add new billers to their electronic-bill pay programs. “We’ve been told by many banking institutions that one of the biggest impediments to online bill-pay is the enrollment and sign-on of the payee,” he says. And it also might be another reason for consumers to get interested in bank-based bill-pay. DeBello says about 40% of bank customers use online banking, and only 40% of those pay bills through their bank or credit union, or just 16% of all bank customers. “This could tip the balance in favor of banks for online bill-pay,” he says.
