Mitek and US Bank let users pay bills with their smartphone camera

If you’re like me, you’re still getting used to the idea of depositing checks into your bank by snapping a picture with your smartphone. But the camera isn’t just good for sending money into your account, it can also be used to pay bills thanks to a new service from Mitek Systems.

The San Diego company is launching its mobile photo bill pay services for the first time with U.S. Bank, enabling millions of customers to snap a photo of a paper bill to quickly add a payee or pay off a bill. The service, which can be used via smartphones and tablets starting early next year, is integrated into U.S. Bank’s mobile app.

How it works

Mitek, mobile photo bill payA user snaps a photo of a bill and Mitek’s technology cleans up and corrects the image, isolates and extracts the data, transmits the encrypted information to the bank, and then sends it back to the user, who can confirm the information and decide how much they want to pay. If it’s a bill from a new company, the app will establish them as a new payee. Users just click pay and then the transaction is complete. Or they can set up recurring payments if they choose.

Now, while it might seem everyone you know already pays bills online, there’s still a big opportunity for banks to extend bill pay to mobile phones using a camera. Mitek CEO Jim DeBello told me that there are 17-25 million who pay bills online and another 22 million who don’t pay online but have a smartphone. And there’s also an even larger group of 60 million people who pay some prepaid bills, often traveling to payment centers to pay in person. He said banks have the opportunity to make the paying experience more simple for existing online billing customers and pull in new users who have shied away from online payments.

DeBello thinks that mobile photo bill pay could be bigger than mobile check deposit, which Mitek started rolling out with banking partners two years ago. He said $10 billion in checks have been deposited remotely via mobile devices. Now that consumers are getting used to the idea of using their camera to input data, they will likely be even more comfortable paying off bills with their smartphone or tablet.

“We look at the mobile camera as a next generation keyboard,” said DeBello. “The key is leveraging existing user habits. They’re already using a camera and we’re using that habit for handling pain points in daily financial transactions.”

Advantages for banks and consumers

For banks, mobile photo bill pay allows them to better engage and retain their customers, enjoy some cost savings by handling less paper, and they can also make some money if they choose to offer expedited bill payments for people who wait until the last minute.

For consumers, it’s a way to pay more easily with a device that’s always on and with them. And it can get people over the hump of starting online bill pay because it makes the onboarding process easier. For some people, entering in your payee information is just enough of a barrier to keep them relying on paper checks or other payment options. Also, paying via picture also allows users to have a photo trail of payments in case of a dispute.

Mitek is pretty much the undisputed leader in offering mobile imaging software to banks. It has more than 500 banks using its check deposit service including the top 10 banks. But getting the algorithms to work with bills is harder than scanning checks. The data is largely structured but the bills come in up to 100,000 formats. That puts more pressure on Mitek’s software to identify and pull out the right data. But it’s creating a big opportunity if consumer get on board with mobile photo bill pay. The service will roll out to more banks in 2013.