MasterCard offers online bill-payment to prepaid cardholders

MasterCard Worldwide's prepaid cardholders will be able to pay their monthly bills online through a new service the company is offering with the intention of keeping cardholders much longer as customers.

Prepaid cardholders can schedule and make bill payments through MasterCard-issuing banks' or MasterCard program managers' websites. Cardholders enroll in the program through websites where they check their cards' balances, says Xenia Kwee, spokesperson for Aliaswire Inc., a Cambridge, Mass.-based electronic bill payment solution provider that partnered with MasterCard in this endeavor. If a bank issuer or a MasterCard program manager offers the bill-payment service, cardholders can write in billers' names, account numbers, payment amounts and payments' due dates, Kwee says. Prepaid cardholders also can pay bills over an IVR (interactive voice response) in Spanish or English, Kwee says.

Citibank is an example of a MasterCard-issuing bank, and H&R Block Inc., the Kansas City, Mo., tax-preparation service, is a MasterCard program manager. It is not known whether either company will participate in the bill-payment program. MasterCard has not yet found an issuer or a program manager willing to participate in the program, Kwee says.

MasterCard, which is based in Purchase, N.Y., Tuesday signed an agreement with Aliaswire, which developed PayVox, an electronic-payment service specifically for prepaid cardholders. PayVox integrates with MasterCard RPPS, which manages a database of 6,000 national and regional merchants.

"Bill payment with prepaid cards has been around a couple of years, but MasterCard has automated the process, making it easier for prepaid cardholders to pay bills every month," Adil Moussa, an analyst with Boston-based Aite Group LLC, tells ATMmarketplace. "With the service, prepaid cardholders don't have to enter a biller's name and payment information every month."

Aliaswire has developed a similar bill-payment service for other companies, Kwee says. Prepaid cardholders pay three to five billers per month online compared with traditional debit cardholders who pay eight to 10 billers per month, Kwee says. Prepaid cardholders usually pay utility, cell phone and cable bills. "The word has to get out more that prepaid cardholders can pay their monthly bills online," says Kwee, adding online bill-payment is easier for the consumer than buying money orders to pay bills or waiting in line at a biller's office to make a payment.

Although prepaid cards are closely associated with the unbanked that is not always the case. Some consumers with bank accounts buy general-purpose prepaid cards for budgeting, and because they fear paying with their debit cards online, say Kwee and Moussa.

The bill-pay service is expected to retain MasterCard prepaid cardholders for a longer period of time, but how long is not clear, Moussa says. "It varies a lot how long a prepaid cardholder will remain with an issuer. Sometimes four or eight months, but the more perks an issuer offers a cardholder, the longer he will stay."