As mobile wallets expand their services, they more closely resemble full-fledged bank accounts. And PreCash Inc. says it can do at least one job better than banks do today.
PreCash's new PayConnect mobile and online bill payment system claims to deliver funds to billers faster than they typically arrive from bank accounts. The system works in conjunction with single-use payment cards to fund bill payments for cash users.
"We see the issues in bill payment around speed and the intersection of mobile as a way for us to expand beyond the underserved space and into the bank space," says PreCash CEO Steve Taylor.
Mobile wallets will eventually become an alternative to a bank account by offering direct deposits, a companion card and more funding options, Taylor says.
"In those cases, the mobile wallet really is a bank account, and those mobile wallets are going to need bill paying services," Taylor adds.
Mobile wallets typically ask users to link a bank account or credit card, but several prominent wallets, such as Isis and PayPal, provide a stored-value account linked to a plastic card. PayPal users have several ways to fund their accounts without bank accounts, such as by using Coinstar machines, PayPal and Green Dot cash cards, and eventually MoneyGram.
Green Dot's GoBank account further demonstrates how prepaid card providers are making their offerings more like bank accounts, Taylor says.
With the cloud-based PayConnect system PreCash is launching this week, "80% of our payments [can be] made within one day," Taylor says.
Consumers paying bills online through a bank use a slower clearing process and typically cannot make payments when banks are closed on weekends, Taylor says.
PayConnect can integrate into existing services as an application programming interface, or as a white-label mobile and online app bearing a biller's brand.
PreCash PayConnect can serve underbanked consumers with a bill-payment card that would be available at retail locations such as check-cashing or lending services. The consumer could pay cash to load money through the PayConnect card. After the retail clerk scans the card in, the consumer can use the funds to pay bills from a computer or mobile device.
Though prepaid card marketers such as Green Dot sell reload cards, PreCash is the first company in the bill-pay market to utilize a gift-card concept, Taylor says. When the PayConnect card runs out of funds, the consumer would need to buy another one, he adds.
"We are taking this approach because we are bank-like secure and follow regulatory compliance, but we don't want the regulatory burden of holding a consumer's personal information with a reloadable payment card at this time," Taylor says.
PreCash is filling "an interesting need" with its bill-paying platform and could become "a giant in this space very quickly" if the company attracts the right mix of partners, says Scott Strumello of New York- and London-based Auriemma Consulting Group.
"A partnership with a big retailer to provide this service could turn things upside down overnight in the mobile wallet space, while still serving the underbanked," Strumello says.
If PreCash could land a deal with Walmart, for example, it would be akin to "having an 800-pound gorilla on your side," Strumello says.
In the future, PreCash may also find itself in a position to partner with traditional banks to provide bill-paying services, especially if the company can help a bank avoid the common method of processing payments in batches through old mainframes, Strumello adds.
PreCash establishes different pricing models with its customers, depending on the products and services involved. "Some [contracts] will be based on convenience fees, others on a revenue-share with partners," Taylor says. "Our main focus is to drive the cost of paying a bill down for the consumer."