For years pundits have warned banks will lose in the billpay game. Spoiler: They were right.

Way back in 2013, Ron Shevlin, now director of research at Cornerstone Advisors, said banks were losing billpay for several reasons:

1. Billers have made it easier to pay bills (via email and other notifications)
2. An aversion to banks among young people
3. Mobile makes it harder, not easier, to pay bills digitally

This was bad news for banks because billpay is considered the “stickiest” feature — who wants to leave their bank when they have fifteen billers loaded in the bank’s billpay service?

Today unmistakable signs across the industry show that billpay is changing. In 2014 Intuit, owner of the PFM service Mint, bought Check, formerly PageOnce, a billpay service, for a staggering $360 million and renamed it Mint Bills. In April, Mint shut it down, due to lack of adoption. From the Mint blog: “Bill payers are some of our most loyal, dedicated users but unfortunately, there just aren’t enough people that find value in bill payment to make it a viable feature going forward.”

Also in April, the financial technology service provider Malauzai, which releases a monthly data report, noted that growth in its photo-based billpay, called PicturePay, was “juxtapose[d] to standard bill pay where growth is flat or actually falling. Yes, it’s true, for the first time in years, bill pay has started to see some level of contraction.” Malauzai’s banks, from which this data is drawn, tend to be community banks in the south-central U.S.

This echoes the findings of a Jan. 2017 Aite report, “How Americans Pay Their Bills: Sizing Bill Pay Channels and Methods,” by Senior Analyst David Albertazzi. The report noted that U.S. consumers paid 14.7 billion bills worth $3.9 trillion in 2016 and that 56% of those were made online. “The percentage of online payments made on biller sites has grown from 62% in 2010 to 73% in 2016, at the expense of bank bill pay, which declined from 38% in 2010 to 27% in 2016.”

Albertazzi further noted that 2.5 billion checks were written, compared with 2.2. billion debit card bill payments, and 2.2 billion credit card payments.

Technology companies serving banks have taken notice. Q2, an Austin, Texas-based financial technology provider, released a product called Biller Direct at Finovate last week in Santa Clara, Calif. The service, meant to stop the bleeding and keep billpay at banks, resembles a billpay screen on a bank site or app but is actually a portal to billers’ own sites. Biller Direct is an enhanced and rebranded version of the service Unbill, which Q2 bought in June 2017. Unbill also allows for bill splitting between multiple parties.

Payments are sent not via ACH or paper check, but by real-time debit or credit rails. The card-based aspect means banks get some swipe fees, and users can get “instant credit” for paying their bills because the billers are immediately notified. The one or two-day delay with traditional billpay is one of the reasons millennials, in particular, avoid it, according to Rahm McDaniel, vice president of strategic services at Q2.

McDaniel told Bank Innovation that we are not at the end of bank-based billpay, and that it will never go away completely. (Nothing in banking ever does.) “I do think there is a huge and unmet market appetite for an alternative to billpay as we have it today,” he said. “Billpay aggregates billers, that’s all it does. No real-time payments, no updates to information about when bills or due or how much is owed.” Further, those using bank-based billpay don’t know when payments go through, unless the merchant alerts them. Of Q2’s ten million users, 80% say real-time or at least same-day payments are important or very important, McDaniel said.

McDaniel described Biller Direct as “a complementary system to traditional billpay. It takes a cost and turns it into a revenue opportunity.” He added, however, that there is no conversion path from billpay to Biller Direct because most billpay customers don’t know their merchant logins. In traditional billpay, time and effort are spent entering other data, like address and account number. In Biller Direct, the customer must know the biller’s login data to create a direct connection, via API, to the biller site.

There are 5,000 billers on Biller Direct, and only 225 or so do not accept card payments, and 221 charge a convenience fee for card payments. These exceptions are typically “long-tail” billers — rural utilities and the like.

The target customers for Biller Direct are the 73% noted by Aite that pay bills directly at the merchant sites, and this number may have grown since early 2017. “You would be astonished how common it is,” McDaniel said — and how rare bank billpay is.

It’s getting rarer. Solutions like Biller Direct may provide a way for banks to bring millennial customers to the billpay table.