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@Barrie A:

Appreciate your taking the time out to reply. Amidst all the buzz around Twitter and other social media, it's easy to forget the importance of email. While email continues to be a powerful electronic delivery channel, my point is simply that it's not suitable for eBills / eStatements - for reasons mentioned in my previous posts and comments.

To make a customer visit a portal only to view an eBill is not great UX. On the face of it, sending it by email seems better UX. However, coming to think of it, people visit portals for checking account balance, making payment, transferring money and to perform many other activities. While I'm no fan of this approach, I've to concede that there's no friction in viewing an eBill or downloading an eStatement during one such visit - especially when combined with the fact that they don't need a separate password just for viewing eBills on the portal.

I'm sure Striata and other vendors can implement their eBill-by-email solutions without passwords but, in reality, many billers do insist on passwords and that is a major source of friction.  

@ElizabethL:

Brilliant post. Thanks for pointing out that, as of today, 'no banks' virtually means 'no payments'. All the PayPals and SQUAREs of the world will cease to exist overnight if there are no bank-issued credit cards. Re. your closing sentence, I'd go one step further and say it makes them "naive rebels"!

@BrettK:

Good or bad, survival of the fittest has always been the way of the business world, in payments and in everything else, hasn't it?

From SQUARE and other nonbanks threatening banks, I see a shift in perspective to how banks who offer SQUARE-like products and / or banking rails could threaten other banks who don't. As I'd pointed out earlier, risk-versus-return and core-versus-noncore equations enter the picture when it comes to banks entering SQUARE-like products. As for rails, any bank that issues credit cards - which is a large number - is a provider of rails. 

@BrettK:

As far as I know (a) A seller using SQUARE doesn't need a separate merchant account with an acquirer bank (b) SQUARE takes on the role of the merchant-cum-processor (though not acquirer bank) on behalf all SQUARE-using sellers in the 4-corner model (c) SQUARE pays the merchant discount fee to the other rail partners (d) SQUARE charges the SQUARE-using seller a flat 2.75% of transaction value.

I don't know of any info in the public domain that breaks down this 2.75% fee collected by SQUARE into the % retained by it versus passed on to the acquirer, card network and issuer bank. Since SQUARE performs the role of merchant-cum-processor, I don't see any reason for deviation from the standard card network model whereby SQUARE might make more % than the network, almost the same as the acquirer, but much lower than the issuer. If you can point to any publicly available info that says that SQUARE makes "more on fee than any of the rail partners", I'll stand corrected.

I've already pointed out how Starbucks uses banking rails when coffee-buyers have to charge their Starbucks account using their cards.

Beyond these numbers, I think there's a larger point here: In principle, any company (say, refinery) borrows money from a bank because it's sure of earning a higher return on capital by doing refining than the interest it pays to the bank. That doesn't mean that banks should enter refining because of the higher margins available in this business. Likewise, if somebody like SQUARE offers a superior consumer experience, takes on additional risks, and enlarges the overall interchange pool in the process, I see banks as winning - as long as they do this over banking rails. These somebodies can always shift to non-banking rails in future but the reverse could also happen during the same time: After all, Boku, Zong and other GenY Mobile Payments launched on MNO rails a couple of years ago but have now announced support for credit cards, which brings them into banking rails.

@Barrie A: 

Appreciate your candid view re. paper v. paperless. I've written a couple of posts on Finextra and my personal blog and most recently commented on a post by Keith Russell to explain my preference for printed bills and ePayment.

To answer your specific questions:

1. As I've said in my previous posts and comments, consumer apathy is just one impediment to faster adoption of eBills; friction (e.g. password), regulation (e.g. KYC), etc. are more to blame.
2. When I select a service provider, it doesn't matter at all whether the service provider offers eBills or only printed bills. 
3. On the other hand, if an existing service provider sending me printed bills forces a paper-turnoff on me, I'll threaten to drop them. Both events keep happening regularly!  
4. Due to DRM, I've heard from users of iPhone + iPad - I myself use Android - that content (e.g. Kindle eBook) purchased for one platform doesn't work on the other. Therefore, while I appreciate your vision to make a bill available on any device of the customer's choice, I'm still not so sold on the eBills-iTunes analogy.

We already know that millions of people have given away their Internet Banking credentials to Mint and other P2FMs, their credit card online account credentials on Offermatic and other websites, etc. Your experience with these partially and totally unwiped hard disks is further evidence that, when it comes to privacy and security, what people do is quite different from what they say. I think it was the CEO  of the new identity service Personal.com who recently said that, like many other things in life, security and privacy are not redline subjects - they just have a price. 

@BrettK:

Welcome aboard!

The position of banks in the four corner payment model is not threatened by any of these brands since, far as I know:

1. SQUARE is only a threat to POS vendors. It's a new channel for credit card usage that brings in more more interchange revenue for card issuing banks without banks taking on the incremental acquiring risk. To avoid repetition, let me refer you to my earlier comments.
2. Every time a non-PayPal member uses their credit card to make a PayPal payment to a PayPal member - contrary to popular misconception in some quarters, such transactions are possible on PayPal - the card issuing bank gets interchange revenue.
3. Even in PayPal to PayPal transfers, the funding transaction from a credit card to a PayPal account fetches interchange revenues for banks.
4. While payment for each coffee at Starbucks disintermediates banks, all Starbucks account top ups made using credit cards does fetch interchange revenue for banks. This is a good thing for banks since they can collect 2% on a US$ 20 (typical amount of top up) with a single transaction instead of 2% on US$ 4 (cost of coffee) five times. 

If a customer tops up a Starbucks prepaid account with cash, I do agree that banks get disintermediated. But, such customers were anyway using cash to pay for their coffees before, so banks were anyway not in the picture even before Starbucks introduced its mobile prepaid account.

Not sure if your figure of "1/8th of US merchants, 25% of Starbucks' in-store payments, and 20% of the online e-Commerce payments" pertains to SQUARE, PayPal and Starbucks transactions. If it does, I must conclude that most of it still continues to happen on banking rails.

It could of course be argued that, by offering whatever SQUARE, PayPal and Starbucks are offering to consumers, banks can acquire an additional source of revenue. That'd be a valid argument to be deliberated by the C-Suites of banks. Some might find it core to their charter and enter it (e.g. Barclays PingIt) and others might find it non-core and not bother. 

This just came in: "The iTunes Hack Attack, Hiding in Plain Sight". Even if Apple started offering payments - which I strongly doubt for reasons mentioned in my earlier comments - I'm not sure if I'd want to use it. As we fintech professionals are debating about the merits and demerits of retailers entering payments, it's ironic that this article written by a retail industry analyst advises retailers to leave payments to banks and credit card processors!

It's evident that banks own the payments rail today and have done so for decades. While anything can happen in future, the fact that most payments providers still use banking rails for payments makes the guideposts very clear for any crystal ball gazing. Investment, trust, regulation, "why bother" by Apple and other nonbank giants - these are the impediments to any alternative rails. And, yes, I almost forgot to add "non core" to this list, which emerged from a recent deadpool event that took place between our comments: Nokia Money. 

Even when consumers become more comfortable with mobile payments, most forms of such payments available today will only replace the physical plastic form factor with the mobile phone form factor - the underlying credit card account and the payer's relationship with the issuer bank will still remain intact. When they were launched a couple of years ago, Boku, Zong and other GenY Mobile Payments threatened to remove credit card accounts and disintermediate the issuing banks by executing the entire payment transaction on telecom carrier rails instead of card network / ACH rails used by most other mobile payments providers. However, with many GYMPS now allowing payers to link their - ahem - credit cards to their mobile phones, that threat has passed.