Simplifying and automating debit card transactions

Last month I wrote about using Amazon Allowance to generate credit and debit transactions, like those required by Wells Fargo to waive monthly maintenance fees, by Bank of America's Better Balance Rewards card to ensure you receive your quarterly bonuses, and by Consumers Credit Union to trigger the high interest rates on their Rewards Checking accounts.

I like Amazon Allowances and I use Amazon Allowances, but there are reasons you might prefer not to use Amazon Allowances: you might not do enough shopping on Amazon to justify buying Amazon gift credit, or on the contrary, you might value your relationship with Amazon too much to entangle it in your extracurricular activities.

With that in mind, here are two other options for, if not automating, at least simplifying your monthly transaction requirements.

Evolve Money

Interest in Evolve Money has dwindled since they added fees for transactions funded by prepaid debit cards, but the site still exists, and they still have a large database of billers that's well worth exploring. For example, I'm able to make contributions to my Utah Educational Savings Plan account, which is in my opinion one of the better 529 Educational Savings Plans available — and, even better, it's not administered by Upromise Investments!

Importantly for our purposes, Evolve Money charges a flat 3% fee on credit card and "small bank" debit card transactions, rather than the more typical 2.9% + $0.30 fee charged by many payments processors. That means a $1 charge incurs a fee of exactly 3 cents. Since you are allowed to make 4 debit card-funded payments per month, per biller, if you can find 3 eligible billers in their database you can generate 12 transactions per month at a total cost of $0.36.

Unfortunately I cannot seem to set up recurring payments using Evolve Money, but since payments can be scheduled in advance you can just set aside 5 minutes per month to schedule your 10-12 monthly debit transactions. Likewise, a monthly $5 Better Balance Rewards payment would cost all of $0.15 in processing fees.

Bluebird, Serve, and Target Prepaid REDCard loads

American Express's full-service prepaid cards actually feature a powerful recurring payment service: you're able to schedule recurring transactions to move funds from a debit card to your prepaid account, as well as from any credit card on the American Express network (some American Express-issued credit cards do not earn rewards on such transactions, however).

Unfortunately, as with Evolve Money, I am no longer able to create new so-called "scheduled add" transactions. What I am able to do is edit existing scheduled add transactions and change the funding source to a new credit or debit card.

So on the Bluebird account I manage, I had three recurring "scheduled add" plans already created, and was able to change them to set up daily $0.50 funding transactions for the first 12 days of the next 3 months. That's not exactly automatic (I'll have to move the dates forward every 3 months), but it also doesn't take up too much mental bandwidth.

Conclusion

Frequent Miler and Matt at Saverocity have both raised the question lately, in their own ways, of how much cognitive space they're willing to devote to "smaller" deals when they could instead be pursuing big fish, and I think it's an absolutely essential conversation to have.

In my own travel hacking practice, I tend to err on the side of doing more, rather than less. I continue to pursue a number of "small fry," like Visa Buxx cards, which offer a small amount of unbonused spend each month. But I'm also eager to automate or simplify as many elements of my manufactured spend as possible, so I can devote more cognitive bandwidth to exploring new deals — and sharing them with my readers!

Recurring, small debit card transactions are precisely the kind of nuisance that can take up a disproportionate amount of attention, and are the kind of thing that are essential to simplify or automate if at all possible.

Liquidating deeply-discounted $200 Vanilla Visa gift cards

As most of my readers no doubt know, through May 16, 2015, you'll instantly receive $20 off every $300 in Visa gift cards purchased at both Office Max and Office Depot. The discount is instantly calculated against every $300 in Visa gift card purchases in each transaction, regardless of the denomination (so three $200 Visa gift cards receive $40 in instant savings).

The offer is supposed to be limited to two rebates per customer. What that means in practice is that the register will only award two $20 rebates per transaction. It's possible to evade this limit by:

• visiting multiple stores;
• bringing multiple "customers" with you (each with their own authorized user card, of course);
• visiting on multiple days;
• having indifferent cashiers.

The math

Since variable-value gift cards can no longer be purchased with credit cards, the two obvious options are purchasing six $100 Visa gift cards or three $200 Visa gift cards. After applying the instant discount, those transactions will ring up as $595.70 and $580.85, respectively.

Metabank versus Vanilla

The key difference between the two sister chains where this deal is available, Office Depot and Office Max, is that the former offers only Vanilla-branded Visa gift cards, while Office Max offers Visa gift cards issued by MetaBank.

Vanilla-branded Visa cards can no longer be used at Walmart for PIN-based transactions exceeding $49.99 (using any four digits on the first use of the card), while MetaBank-issued Visa cards can be liquidated for their full value using the last four digits of each card's number as its PIN.

Liquidating Vanilla Visa gift cards

For those lucky enough to have access to friendly grocery stores willing to sell money orders without a second thought, there's no particular reason to privilege MetaBank over Vanilla prepaid Visa debit cards.

For others, Vanilla Visa cards are a sheer nuisance. For my own monthly Vanilla liquidation needs, I load Serve cards at Family Dollar, which is free, although faces still-poorly-understood velocity limits (multiple identical loads at the same store are rejected as fraud, but up to 3 sequential loads of different amounts seem to be allowed).

Another obvious option for those with access to the Target Prepaid REDcard is using Vanilla Visa cards to load funds to the REDcard at any Target register. Since the cards aren't personalized, however, your success will depend entirely on the willingness of your Target cashiers to oblige you (mine insist on seeing any card I use to load funds to REDcard).

Liquidating deeply-discounted Vanilla Visa gift cards

The problem with all three of the above options is that they don't increase the amount of spend you're able to manufacture during this deal, they cannibalize the time and techniques you were already using to liquidate prepaid cards. Every $200 in Vanilla Visa gift cards I load to a Serve account is $200 in OneVanilla prepaid Visa debit cards I can't load to the same card.

For me, the essential fact about this deal is the deeply-discounted nature of the $200 Visa gift cards we're able to buy, paying just $193.61 for a card with $200 in spending power.

That deep discount means you shouldn't consider yourself throttled by the free and cheap techniques I described above; save those for your more expensive manufactured spend techniques, where every penny matters to the profitability of the technique.

This deal is about volume, and even more expensive methods of liquidation are profitable under these conditions.

Evolve Money

For many people, Evolve Money lost its luster when they started charging 3% for bill payments made with prepaid debit cards.

But guess what: if you've purchased $200 Vanilla Visa gift cards at a 3.18% discount, you can liquidate an unlimited number of them through Evolve Money and turn a profit on every single one, before even taking credit card rewards into account!

Specifically, you can make $194.17 bill payments with cards you purchased for $193.61.

So if it's been a while, or if you're new to Evolve Money, I recommend searching through their biller database for any bills you're already planning to pay.

Tuition bills

Although not found in Evolve Money, many school from kindergartens to universities are willing to accept payment with debit cards, often tacking on a similar fee to Evolve's 3%. If you're able to make multiple partial payments, this is a terrific way to liquidate deeply-discounted Vanilla Visa gift cards without cannibalizing other avenues.

Tax payments

Since these are debit cards, they should qualify for discounted debit card pricing when making payments to the IRS (and find way, way more information here).

Conclusion

When this deal comes around, as it does a few times each year, the key to maximizing it is volume. You'll be making money even at unusually high liquidation costs, so as long as you have a plan to liquidate them, you should consider buying as many $200 Visa gift cards as possible, whether they're backed by Vanilla or MetaBank.

But remember: the logic above applies only to deeply-discounted $200 Vanilla Visa gift cards; I won't personally be buying any of the much less-discounted $100 Vanilla Visa gift cards (although $100 MetaBank-backed cards will be fair game).

Here's when it really makes sense to make Evolve Money payments with credit cards

It's no secret that I'm proud of my initial research on Evolve Money soon after the service first launched. I experimented with and described a number of possible uses of Evolve Money, like making contributions to 529 College Savings plans and making mortgage and student loan payments. If you were buying prepaid debit cards with a 5% cash back credit card, or American Express gift cards, making such payments with Evolve Money might completely negate any interest on the underlying loan, or give your college savings a nice upfront bump in value (since your true basis in the savings would be lower due to your credit card rebate).

In conducting that research I even discovered (and shared in the newsletter I send out to blog subscribers), that Evolve Money accepted some Visa and MasterCard credit cards, and that such payments were processed as purchases. Pace affiliate blogger Daraius Dubash this was not a "short-lived" glitch, but rather one that worked continuously from the time I discovered and shared it on February 2, 2014, until a few days after he publicly and excitedly revealed it to his readers on May 15, 2014.

Now Evolve Money is again allowing credit cards to be used for bill payments, but with a 3% surcharge. This is a terrible idea, but you already knew that. Rather than tell you what you already know, I thought I'd brainstorm: when does it make sense to pay a 3% fee to charge bill payments to your credit card?

You need time to pay

On the one hand, paying 3% up front in order to take out a short-term loan is a terrible idea. It's loans like that which result in the insane interest rates you hear about on payday and car title loans.

On the other hand, if you don't have the cash available, I can imagine a few instances where the numbers add up. For example, if you're in a high tax bracket and your state allows you to deduct contributions to a 529 College Savings plan from your income, and you forgot to contribute until the end of the year, you might not have the cash for a contribution immediately available. Instead, you could make a payment using Evolve Money, taking a 3% hit up front but saving more than that when you file your taxes.

Likewise, if your landlord is a biller in Evolve Money, you don't have the cash available to make your rent payment, and your landlord charges more than 3% in penalties for late payments, you might come out ahead taking out a short-term loan by paying him using your credit card (keeping in mind that if your rent is less than $500, you'd be better off buying a prepaid debit card and paying with that).

You're incapacitated

If you're in an accident and wind up in the hospital, or you're stranded by an avalanche in a ski chalet with nothing but firewood, a bearskin rug, and your smartphone, you may find that you can't log into your accounts in order to make payments. As long as you have your smartphone, remember your Evolve Money login credentials, and have a linked credit card, you can make essential payments like your cell phone (or, given the first example, your health insurance). It's not ideal, but these things do happen!

You're abroad

Even if you find the last few scenarios outlandish, you might be able to relate to this one. If you're overseas and a big credit card signup bonus comes along, you might be tempted to apply, but not have access to the techniques you usually use to manufacture spend. There are a number of cheaper ways to meet minimum spend requirements (even if you're committed to using Evolve Money, you could fund a Nationwide Visa Buxx card and use that to make an Evolve Money payment for free), but as a last resort you could fund bill payments directly with your new credit card.

Likewise, if your credit card is lost or stolen shortly before the end of the period allotted to meet your minimum spending requirement, but you have the card's information recorded separately, you could use Evolve Money rather than wait for a new card to arrive in the mail.

Any others?

Hopefully these examples illustrate the outlandishness of funding Evolve Money payments with credit cards! Just go to the drug store, gas station, or grocery store, pick up a prepaid debit card, and pay with that instead.

Can my readers think of any other situations where a 3% fee would be a small price to pay?

Easy and free ways to liquidate prepaid gift cards from Office Max

By now many of my readers will have seen information about the current Office Max promotion, running through December 27, 2014, for $20 off $300 or more in Visa or MasterCard gift cards purchased in-store.

Since $200 Visa and MasterCard gift cards come with a $6.95 activation fee, buying two will net you $6.10 in value even before accounting for any credit card rewards earned on the purchase, while buying one $200 and one $100 gift card would net you $7.10, again before accounting for credit card rewards.

While it's possible to simply integrate these cards into your existing workflow of manufactured spending, this deal is so good I think folks who, for reasons of geography, time, or inclination, don't typically manufacture spend with prepaid debit cards should still consider going for it.

For their sake, here are several ways to capture the value of Office Max gift cards without studying up on all the ins and outs of manufactured spend.

Give them as gifts

Ok, this one's a bit of a joke, but some people actually give Visa and MasterCard gift cards as gifts! If you can get $200 in credit with your loved ones for $196.60, that's still a win!

Prepay your bills

You might be accustomed to paying your cell phone bills each month with a Chase Ink card to earn 5 Ultimate Rewards points per dollar spent. Using a Visa or MasterCard gift card bought at Office Max during this promotion captures the same 5-Ultimate-Rewards-point earning opportunity, but includes a nice discount off face value. If you're the kind of guy who frets over taxes, you can probably even get away with deducting the entire amount of your cell phone payment (though as I'm fond of saying, not only am I not an accountant, I'm definitely not your accountant!).

In addition to cell phones, there are many telecommunications companies, among others, that happily accept prepayments made with debit cards online. Check yours.

Use Evolve Money

This is a more flexible version of the above. Evolve Money accepts prepaid debit cards for bill payments to many merchants that don't themselves accept debit cards directly. You can use prepaid debit cards to make payments to your mortgage, car loan, student loans, municipal utility companies and tax authorities, and thousands of other merchants. If you use a Visa or MasterCard debit card bought at Office Max during this promotion, you'll do so at a nice discount.

As I've reported extensively elsewhere, you can even use prepaid debit cards to fund your own or your children's education through one of the many 529 College Savings plans that accept contributions through Evolve Money (I use the Utah Educational Savings Plan because of its flexibility and low-cost Vanguard mutual funds). If you decide to go this route, please read my entire series on Evolve Money.

Buy gift credit at merchants where you'll use it

While a classic example is at a merchant like Amazon.com, where you can buy gift credit in almost any denomination and have it simply wait for you to redeem it against future purchases, there are other choices you might consider: if you frequently ride Uber, buy yourself some gift credit and it will be automatically used up as you take rides.

Conclusion

Offers like this Office Max deal are as close to free money as you're likely to find without a deep dive into the world of manufactured spend. You may think it's not worth lugging around gift cards for everyday purchases, but hopefully the examples above show you that's totally unnecessary: these cards are almost as easy to liquidate as they are to buy.

Quick hit: free money from Evolve Money

Evolve Money is a weird company, but they have a great product which I use many, many times each month. And it appears that they are currently running two promotions that add up to $10 in free money.

Use promo code "save5april" through April 21

Make any bill payment of $5 or more and receive $5 off your total bill payment.

Use promo code "TaxDay2014" through April 15

Make any bill payment of $5 or more and receive $5 off your total bill payment.

Can you combine these promotions on the same bill payment?

I redeemed "save5april" earlier this month, so I don't know whether the promotions can be combined in one transaction. But I have redeemed them both through my account, so you're not limited to one or the other.

Leave your experiences in the comments.

I just paid $200 in bills for $171.90 – did you?

As the one-stop source for all things Evolve Money, I want to make sure my readers know about two currently available deals I took advantage of yesterday.

Use promo code "Save5april" and save $5 in April

The next (or first!) time you make an Evolve Money payment, enter the promo code "Save5april" during checkout and you'll save $5 — including on bill payments of $5 or less.

Sync each of your American Express cards to Twitter and save

If you have an American Express card "synced" to a Twitter account, you can tweet "#AmexStaples" to activate an offer giving a $20 statement credit after making a purchase of $100 or more at Staples by April 30, 2014.

If you have more than one American Express-issued credit card, your first stop should be Frequent Miler's primer on syncing multiple cards to Twitter.

Once you understand that process, add the #AmexStaples offer to each of your cards, and head to Staples!

I bought 2 $100 Visa gift cards for $105.95 each – paying just $171.90 after my $40 in Amex Sync rebates.

Register your Visa gift cards and use them to pay bills

Any bills you can find in Evolve Money can be paid using Visa gift cards purchased at Staples, as long as you register the gift cards with your billing address prior to using them. To do that, follow the instructions on the back of your gift cards.

Revise and extend: uses for Evolve Money

Last Friday I was wrapping up the week and shot off a quip:

"Evolve Money is live with prepaid phone refills, but you're probably better off using a card that bonuses cell phone or telecom service."

This felt true to me at the time. After all, the US Bank Flexperks Travel Rewards card (the Olympics bonus is back!) earns double Flexpoints on cell phone services (but not cable or internet), worth up to 4% cash back in paid airfare redemptions, and the Chase Ink cards give 5 Ultimate Rewards points per dollar spent on all telecom expenses.

Those are good deals, but I was wrong to suggest that they're self-evidently better than the discount you'd realize by paying for your phone, internet, and television service using Visa or MasterCard gift cards through Evolve. Specifically, the Ink deal at Staples seems straightforwardly more lucrative than paying for your telecom service directly — especially if you're paying a service that charges sales tax depending on your credit card's billing address (like AT&T's GoPhone, my own cell phone service) but doesn't when paying from an external account like Evolve.

Anyway, I didn't want my somewhat ignorant quip to stay out there as my official opinion. Do the math for yourself, make good decisions, and save yourself some money!

What do PreCash (Evolve Money)'s patents claim?

Ever since my conversation with Alex last week, I've been pondering one thing he said in particular:

"We’ve built out our system in a way that allows us to deliver bill payments cheaper than absolutely any other person, any other company, in this country. And we have patents around that process, so we’re the only ones who can do those things. It allows us, where other companies and banks, it costs them, so the bank will usually pay somewhere between $50 and $60 a year per every customer who uses their online bill pay service, on average, for us the cost is significantly less."

What patents, and what process?

Believe it or not, in a former life I was an aspiring lawyer and have always loved digging into the minutiae of these things, so I visited the US Patent and Trademark Office's website to see what I could see. By searching for "precash," Evolve Money's parent company, I found 6 patents which are registered to Mssrs. Randy Templeton, Matt Callanan, and David Resnick:

"David Resnick (Resnick) was the founder of PreNet (previously known as PreCash) and a member of its board of directors. In 2001, to recapitalize PreNet, Resnick sold his PreNet stock to KCI for $3.165 million. KCI distributed the stock to investors."

As I dug into the 6 patents, my first reactions was, "these guys are jokers." It appears that the inventors were claiming to have invented the storage of value. There was a lot of language like this:

"With this approach, the end-user stores value on the end-user's account and the end-user account is decremented when the end-user actually purchases or uses the particular good or service."

In other words they were claiming to have invented "currency:" the end user has a thing of value they exchange for goods and services at the time of purchase or use.

Then when I got to the 5th patent I was blown away. It appears to me that the process patented by PreCash is something like the process used by Square Cash, whereby a charge to one debit card is treated as a refund to another debit card. As patent #8086530 states:

"The present invention leverages the existing financial network that is used around the world for credit card transactions, but it uses that existing system "backwards" in that payments are received, rather than credit extended, at the merchant point-of-sale. Interfacing to the existing world-wide network, e.g. VisaNet or another card association network, in this new way allows payments to be received at any of literally millions of merchant locations that are coupled to the network, thus providing extraordinary convenience for the end-user. The payments are posted to an intermediary account maintained on the centralized payment system."

Patent trolls have been in the news a lot lately, but if, and it's a big "if," these folks actually were the first ones to realize that merchant payment terminals could be used to route payments backwards through the payment network, then they're heroes.

Alternatively, they might just be patent trolls. What say you?

Preliminary reflections on Evolve Money

To close out a couple pretty epic weeks of reporting on Evolve Money, I want to offer a few reflections on where I see them in the firmament of travel hacking as it currently stands, and how I'll be covering them in the future.

Paying real bills & displacing Bluebird bill payments

There are a number of monthly bills I currently pay using my Bluebird account.

I agree – in principle – with arguments (like Frequent Miler's and Saverocity's) that paying bills with Bluebird doesn't have any advantage over withdrawing the money to a checking account, since you earn your miles and points when you load the account, not when you unload it.

However, there have, historically, been bills that can't be paid for free using credit or debit cards, and I've always considered it worth paying those bills using Bluebird in order to maintain a pattern of "normal" usage (although I don't know how normal it is to spend exactly $6,000 each and every month).

Meanwhile, I've never been terribly interested in gift card churning, since every gift card I load to Bluebird takes up valuable load space in which I could be using Vanilla Reload Network reload cards (bought at 2%, 2.22%, or 5% cash back).

Evolve Money changes that calculation, since now every bill in Evolve Money can be paid at a discount of 2-10% using gift cards (see the comments to this post). That's your house, your student loans, your store-brand credit cards, and it's an incredible opportunity for as long as it lasts.

(Un)fortunately, thanks to the additional recent development that it's no longer possible to make Walmart bill payments to American Express cards, I'll now be using my Bluebird account to pay off my Delta Platinum Business American Express and Blue Cash cards, as well as my Fidelity Investment Rewards American Express. For my Visa and MasterCard credit cards, I'll continue to use my Bank of America Alaska Airlines debit card for Walmart bill payments.

Additional opportunities

There will also continue to exist opportunities to manufacture spend by making payments to specific billers within Evolve Money. In keeping with my general philosophy here on the blog, I won't be writing about those opportunities in any detail. If you dig into the comments to my existing posts, the relevant thread on FlyerTalk, and follow me on Twitter, you'll quickly see the kinds of opportunities that continue to exist. Knowing that the relevant parties read my blog, I'm simply not going to write about them explicitly to make sure they last as long as possible for as many people as possible.

PayPal cash back

Following up on the suggestion of regular reader Ben, I submitted an e-mail through PayPal's clunky customer service center and asked for the cash back I earned for my roughly $40 in Evolve Money payments. 21 minutes later I received a response from a PayPal representative saying:

I reversed a fee for you to cover the cash back rewards that were not issued. I apologize for the inconvenience, our system automatically calculates the cash back rewards. Thank you for letting me know so that I can get this issue resolved for you.

So it seems that they're aware of the problem and happy to help resolve it, although I imagine it would get pretty old, pretty fast, if you were to have to submit such a request for $4,000, or more, in bill payments each month.

The sooner PayPal resolves this issue so that cash back posts automatically, the better!

Future developments

On Friday, Alex told me about several coming initiatives at Evolve Money, including scheduled payments, recurring payments, and credit card payments, and over at FlyerTalk he also mentioned introducing higher limits to facilitate mortgage payments.

Stayed tuned for more of the news and analysis you know to expect from this site.

Interview with Alex at Evolve Money

After posting Thursday about my conversation with Bill at Upromise Investments, I received an e-mail from Alex, a Vice President at Evolve Money, who wrote that he was reaching out "to chat with you regarding our product and why we think it is the perfect solution for your readers.”

How could I turn down an offer like that? We spoke for about 40 minutes Friday morning, and Alex shared some interesting information about Upromise Investments, Evolve Money, Evolve's parent company PreCash, and what seem like some pretty exciting developments currently in the pipeline.

I wasn't able to get this post up in time (CRJ, no leg room, etc.) and Alex himself scooped me, posting some of the same information in the FlyerTalk thread about Evolve Money. See that thread for ongoing developments.

Alex is a marketer, so our interview has been heavily edited for length and repetition. Also, Alex is a marketer so don't take anything here or elsewhere as gospel; this is what a highly-placed employee of Evolve Money wants us to believe, nothing more and nothing less.

Finally, the interview is still very long, and it's gonna take up a lot of space on the front page of the blog until it rolls off in a week or two. My apologies in advance.

FQF: I saw you were contacting me after I wrote about my conversation with Upromise Investments. Before we got to talking about anything else, I’d like to know what your reaction was when you saw that this company was targeting your customers just because they were doing business with you?

Alex: Actually it’s not as negative a view as you would think. We have actually been talking to Upromise now for a few days as well. We as a company are trying to enable our customers to make as many payments as they can to all of the bills they want to pay with whatever source of funds they want to use. That’s sort of our philosophy. We want to make bill pay simple. Simple not just from the app or the online solution being simple, but also in terms of, you know, you’ve got a couple gift cards in your drawer, use those, you’ve got a debit card, use that one, etc. and I can talk about that in a minute.

So obviously when we started seeing this behavior around churning 529’s, we actually have quite a few legitimate customers that are paying into their 529’s like they would through their bank account. It’s usually once, twice a month, and they’re completely legitimate. I don’t mean legitimate like it’s illegal to put so much in and pull it out, but from our perspective they were using it as the service was intended.

Obviously Upromise reached out to us and we’re in the middle of – I mean I can’t share too much – but we’re in the middle of talking to them about sort of figuring out a way for us to make this work so our customers can continue to pay their bills. Our goal is not to shut all this down. Our goal is to educate our customers and let them know that churning dollars through 529 accounts is honestly not something they want to be doing. We’re actually in the middle of writing a blog post about it and getting tax advice because it actually has massive tax implications in certain states and so we really want to educate our customers, that’s really not something they should be doing, it’s not good for them, it’s not good for us, it’s not good for companies like Upromise.

And by the way, one of my colleagues talked to Bill at Upromise and they’re a great organization. Personally I’ve participated in Upromise for years now as well, they’re a great organization doing great things. They just ended up with a new headache and they’re trying to find a way to get rid of it or not get rid of it but make sure that it’s not something that’s causing any major concerns in terms of their business model, our business model, and obviously anything related to regulatory.

FQF: I agree that Bill is a very charming guy. I guess my next question is what responsibilities you think you have to your customers if you know that it’s precisely your customers who are making precisely these payments who are being targeted by Upromise, what do they need to know up front before you process one of these payments for them?

Alex: At the end of the day if somebody has a 529 account and they want to pay through Evolve Money to put money in the 529 account, that’s perfectly fine with us. If they want to use their debit rewards card, great, if they want to use cash, fine, if they have a couple gift cards lying around, great. We have absolutely no problem with that model at all, and I want to talk to you about that in a little bit because I know, I’ve seen especially on your blog and others a lot of people sort of worry that we’re gonna shut them off because they’re using gift cards and we’re not going to do that, that’s exactly against what we’re trying to build.

But we do have to make sure we’re not allowing our own customers to put themselves in a position where either we or another institution like Upromise has to report them to some sort of agency, right? It’s only in very rare cases that happens, and then you end up with frozen accounts, and all sorts of not-pleasant stuff.

From our point of view we’re gonna try to educate our customers, so part of me talking to you is exactly that, is trying to reach out through different avenues. We use our blog a lot, we are building out our social media presence but we’ll be using that as well

FQF: I saw that you created a Twitter account but you haven’t posted any tweets yet.

Alex: We haven’t, and honestly even though PreCash, the parent company of Evolve Money, has been around for 15+ years, Evolve Money itself, which is our consumer wing of our business, has only been around since November. We were in a sort of Beta in October and September but really it’s been November since we’ve been actively marketing and acquiring customers. 

Ultimately you’re gonna see us put a few more controls in place around paying things like 529’s. We want you to pay it. If you need to pay it 4 times a month because you’re trying to make installment payments every week, that’s great, we have no problem with that, but if you’re paying 20 times a day soon enough the system’s gonna tell you, “mmm, you can’t really do that.”

FQF: Ok, so we’ve talked about the Upromise situation, let’s pull out a little bit and talk about Evolve Money and PreCash in a little more general terms. You mentioned the use of multiple gift cards, that’s something a lot of people are concerned about, I have seen reports of people who have been locked out of their Evolve Money accounts, they weren’t sure why, so I can’t say it was because they were using multiple gift cards, but could you say just a little bit more about that, about people who are trying to drain gift cards or prepaid cards just to get rid of the balances?

Alex: Yeah absolutely. Let me actually tell you a little more about how we do payments. A lot of people ask, “how do you make money?” Well, we’ve been at the bill pay game for a while. We are actually a company driven by technology and innovation. We’ve built out our system in a way that allows us to deliver bill payments cheaper than absolutely any other person, any other company, in this country. And we have patents around that process, so we’re the only ones who can do those things. It allows us, where other companies and banks, it costs them, so the bank will usually pay somewhere between $50 and $60 a year per every customer who uses their online bill pay service, on average, for us the cost is significantly less. And so our model really is predicated around the ability of us to build our same-day express payments, that as you know are $1.50. It’s also predicated around the fact that as we gain customers we will have [unintelligible] monetization effort.

I want to be very clear about what I perceive as monetization. It’s not advertising. It is value-added services where we give our customers something of benefit. We may be giving them the ability to switch their cable company and save money, or we may be giving them the ability to get a better mortgage rate.

FQF: So "right now you’re paying Cox Communications, but you could be paying less if you were paying your Verizon bill instead,” something like that?

Alex: Yeah, something like that. That’s not a new model, companies like Mint use the exact same model. The difference for us is that we’re focused on bill pay. We’re laser-focused on bill pay. We want to be the absolute fastest, easiest, most convenient way to pay your bills. Period. Part of that philosophy includes the fact that we want to let you pay your bills whichever way you want. We’re the only solution out there that allows you to pay 10,000 bills with cash.

When you talk about other companies that say “oh, we’re seeing a lot of people using gift cards to pay,” they have a cost model around bill payment. Bill payment to them isn’t really their acquisition method. They’re trying to get you because you are a good paying customer, there’s some other behavior you’re doing as a customer that they want.

We want you to pay bills. For you to do that with a gift card, sure, it’s a little more costly to me, but that doesn’t matter, it’s perfectly within our model. So, the same thing with debit rewards cards. Actually, it’s funny because I was just reading your blog yesterday and I noticed that you were saying that PayPal wasn’t honoring your rewards.

FQF: That’s right.

Alex: But it wasn’t necessarily telling you whether you were or not…all of our transactions are absolutely signature payment transactions and they are meant to generate rewards. We are actually set up specifically so that debit rewards cards will work.

FQF: My suspicion is that PayPal has manually coded those transactions, because they know you exist, I’m sure.

Alex: Yeah they do. They’ve known of us for a while now. PreCash in general. The payments space is a very small space. We’ll reach out to those guys, if I remember correctly the PayPal MasterCard is run by Netspend which is another payments company, so we’ll reach out to those guys and try to figure it out a little bit. [editor's note: Alex appears to be talking about the PayPal Prepaid Debit MasterCard, which is run by Netspend]

Our goal really is if you can go get a debit rewards card, that you should be able to get your points for it. We have employees at our company that have, I’ll give you an example, we have a person who works on my team, their parent is a teacher and they’re a part of a teacher’s credit union that gives reward points. They’re using that card, and they’re happy doing it, and they get points back. Honestly the credit unions don’t mind it at all because bill payment is a cost for them. And whenever you use their card to do a signature transaction they make money.

FQF: Well pass my blog along to your team member, I’m sure they’ll find all sorts of interesting information there!

Alex: Believe me, I think everybody in our company has read every single post you’ve made by this point.

Ultimately my goal today was to chat with you about what we’re doing and why. I don’t want anybody out there to start worrying about, “oh, you know what, I just used my Chase card to buy a gift card because I get points on my Chase card, and now I’m using my gift card to pay my utility bill on Evolve Money.” Honestly, I prefer not to know all the details about that, but there’s nothing wrong with that from our perspective.

FQF: Let me change the subject just slightly because you have said that this is the new, consumer-facing product and it’s just rolled out in November. So I have 2 questions you can answer in either order, or neither of them, but the first question is are you guys getting the consumer-facing website into the shape that it needs to be in? Right now the search function in particular is something that is not a 21st century search function, the fact that it’s a linear list, that you can’t click on the next page of links, that you can’t narrow your search in any way, it’s very primitive search function.

Alex: Yeah, I agree with you, and that’s actually a part of my job. Sometime in May, you’re going to see a completely redesigned site. Some of the areas we’re going to be addressing, I’ll give you a perfect example: today if you wanna pay your AT&T wireless bill “standard,” we have a lot of “standard” payments that are tomorrow, that are next-day, which is faster than any bank, but we still call them “standard” and they’re still free, so if you want to pay your AT&T bill “standard” which is tomorrow, you add your AT&T “standard.” If you want to pay your AT&T “express,” which means today, you add your AT&T “express,” so there’s really 2 different accounts you have to add, and that’s redundant.

So in May you’re going to see a whole new release that allows you to just add your AT&T wireless account and at the point you are going to go pay it you can decide if you need to pay it today or if you can pay it tomorrow, and if you want to pay it today you’ll add the extra $1.50. So things like that are gonna get cleaned up.

The search is a little bit harder. The issue we have is that we have over 10,000 different billers, and the problem there is that a lot of times you have billers that are in our system appear under one name and consumers may know them as another. So I’ll give you an example. In Colorado Excel Energy is one of the major companies, however they bought out a Colorado energy company so the most part of the marketing is still in that old company’s name but in our databases of accounts that doesn’t show up.

So we’re in the middle of addressing that. There are gonna be two changes you’re going to see: in the near term you’re gonna see a design change that’s gonna be a lot more aligned with iOS 7, a lot cleaner look. And then in May you’re gonna see a lot of new functionality.

In May there’s gonna be the ability to schedule your payments.

The search is harder for us. We’re going through a project to categorize billers by region so that when you first go to search the ideal thing is it recommends the top 10 in the area you’re in.

FQF: Well literally any change is gonna be an improvement to the text list that the site spits out now.

Alex: We’re with you. We are iterating as fast as we can.

FQF: My final question, and then you can share anything else you want to share with me, is that I am terribly curious about the process of selecting which billers are in your system. I’ve heard a lot of reports of people just e-mailing in and saying “my biller isn’t in your system, can you add them?” and then you very promptly reply and add them, but I’m wondering is it a technical problem or you’re just waiting for people to suggest new billers to add. The subquestion to that is obviously, everyone want to see credit card companies added to the list, so we’re wondering what the logistical or legal or technical problems would be with doing that?

Alex: Those are great questions and I anticipated both of them. Let me answer the first piece of that, which is how we deal with billers. We have access to over 10,000 billers. Some of them are directly, so we have a lot of relationships with the billers. Some of them are indirect, so we have a relationship with another group that has a relationship with the biller. That’s very much how bill pay works. If you pay your bill pay at your bank, there’s probably 3 or 4 hands in that cookie jar. And we obviously are trying to simplify that, that’s one way we make payments cheaper by taking a lot of those hands out of the cookie jar.

The truth of the matter is that 6 or 7 out of every 10 requests to add a biller that we get, is really a biller we already have, but somebody knows it under a different name. What we do is when we identify that, we have a group of product researchers that identify that, and then they figure that out, and they basically add the same biller with another name.

So on our back end you may have 3 or 4 companies that just get sent to the same place, in terms of bill payments, but they operate under 3 or 4 or 5 different names. Comcast for example is really bad that way. There’s 255 entities that are considered Comcast.

In the next week you’re gonna see us announce a lot of top-up billers. Topping up your AT&T GoPhone, you’re gonna see a lot of those guys, the wireless top-ups. Towards the end of the month or early in March you’re gonna see us announce 550 new billers that we’re gonna add.

The exception, and it’s because of regulatory reasons, is that if you want to pay someone else, kind of like the banks let you do where you can designate somebody just adding their address and the bank basically cuts a check to them, that is a functionality that we will never really have, because we allow you to move money with cash, we allow you to put cash into our system, that is something that from a regulatory perspective can’t be supported.

Let me move on to your second question, and it’s definitely a lot more what the users are looking for. The good news is that yes, we are going to be adding the ability to pay your credit card. The not-so-good news for your readers, although I still actually think it’s good news, and it’s probably just a handful of your readers that aren’t going to like it as much, is that we are going to have to limit what sources of payment – that’s the only type of bill where we’re gonna have to limit what sources of payment you use. Gift cards are gonna be off the table for that.

But if you want to pay your credit card with your debit rewards card, you’ll be able to do that. If you want to pay with your standard debit card, you’ll be able to do that. We are still not sure about prepaid debit cards; we’re still looking into that. In terms of using gift cards to pay credit cards, the concern there is that there would be too much churning of that. Unfortunately for us, we have very good relationships with all the credit card companies and that’s just not something that as a company we’re able to enable.

The easy answer is ‘yes,’ that’s going to be added sometime in the middle of the year. It will be limited though in how you can pay those.

FQF: Let me tell you that is terrific news. I don’t think anyone is going to be terribly surprised by that restriction. You’re gonna earn a lot of customers and a lot of good will that way.

Alex: That has always been our plan. To be honest, we would have probably done it sooner, but we are absolutely taking our time with this because we need to make sure that everything we do has 17 layers of security. Our CTO would say 50 layers of security. The moment you take credit cards for payment you’re taking a credit card number, and as our friends at Target learned that’s a scary thing to do. So the reason you’re not seeing it until the middle of the year is more because we are doing and testing every check and balance possible to make sure that that information is secure and safe.

Not that information isn’t today, but just that credit card numbers are gonna be under additional lock and key.

FQF: I do think that the redesign of the site can’t come soon enough, for precisely that reason, that people come to the website and it’s not 100% clear that there’s 17 layers of security around your account numbers.

Alex: That’s part of us in terms of marketing as well. At the end of the day we actually process payments across all our business lines, not directly to the consumer but across all our business lines for over 3 million customers on a monthly basis, we move about $3 billion worth of bill payment every year. We’ve been in this space, we’re pretty big in it, we’re pretty secure as a company.

Evolve Money is our consumer brand, we want to make sure it has its own life, that it doesn’t get necessarily completely tied into PreCash as a brand, because the name PreCash doesn’t really tie into what we trying to do with Evolve Money, but we make reference to PreCash and we make reference to the security, and part of our marketing is actually to beef up what we say about it.

We really feel that your readers are the type of customers that are really our best customers, at the end of the day most of them - a few of them are grabbing their 529’s and just throwing a lot of money through them - but most of your readers are just paying their mortgage, they’re paying their gas, their electricity, their water, their cars, their wireless phones, their cable, etc., which are all exactly what we want, we want people to pay every bill they can with us.

The last thing I wanted to sort of leave with you is one more future roadmap, and I wish I could give you a date on this, but I can’t, but one thing we’re going to add in the future, is the ability for you to use your credit card to make payments. Unfortunately, we’re gonna charge for using a credit card.

We’re gonna be extremely aggressive about how low we try to keep that fee. We’re not gonna make money from that, we’re just gonna make sure we can cover our costs.

FQF: Exciting stuff. A lot of my readers thought that if you knew what was going on, then the gig would be up. I’m glad that we spoke and that I can pass along this information.

Alex: That’s exactly why I wanted to reach out to you. We have kept semi-quiet, because there’s been no reason to reach out to anybody, because we’re not seeing anything wrong. But after you talked to Bill I decided it was a good idea to get the word out, “the gig’s not up,” we like what you guys are doing.

I would leave you with the parting shot that Bill left you with, which is, “this is great, just try not to abuse the system. 20 payments to a 529 every day or finding other ways to sort of churn money and manufacturing spend aren’t beneficial to anybody, even the people who are actually doing it to get points, at the end of the day, if they do it too much, whether it’s through us or through the institution that they’re doing it with, they’re gonna end up on a list somewhere.”

We tend to give people the benefit of the doubt but I can’t say the same for the banks and credit unions and 529 accounts in terms of submitting that information to federal agencies.

FQF: Let me leave you with a note as well, as you’re rolling out your social media team, on FlyerTalk there’s a very lively discussion of your company and I think it would benefit from having a company rep chime in every once in a while and share your take on things, just because right now there is a sort of persecuted, siege mentality over there and I think it might cut through some of that tension if someone were to pop on and tell everybody not to worry, if you told them the same things you’ve told me.

Alex: Absolutely. We plan to. Honestly, we have a lot of good guys here who have done a lot of consumer marketing and, you know, our first step was always to sort of look at the ecosystem and figure out what people do with the information they have, and what their thoughts are and we wanted to make sure that people felt like they could share without feeling like we were watching. So your comment about the search for example is repeated over and over and over and we have actually taken that from the blogs and posts and have prioritized addressing it.

We’re sort of keeping an eye on it mostly because we want to learn more about how people interact with our product without us sort of sticking a finger in the fishbowl and swirling the water. So now that I think we’ve done a lot of that and we’ve learned a tremendous amount and I completely agree with you and I think you’ll see in the next week or so that our social media team is gonna start being more active both on Facebook and Twitter and start engaging with this community.

FQF: It’s funny you say you want to see how people engage with the product because as you can see from the forum, how people engage with the product is typing in slight variations of their biller over and over again trying to get it to show up on the first page.

Alex: It’s one of the things that sort of backfired a little bit. The technology behind our search is an intelligent search algorithm. It takes into consideration the billers that are used the most and if you’re writing something close to that biller it tends to return that biller because it has weight.

If you had a biller that was “commercial lending” and you write “com,” you’re gonna get Comcast every single time. Because 99% of the time people type “com” they’re looking for Comcast.

At the end of the day I think it’s backfired a little bit in that everybody can find Comcast, and people aren’t having issues finding Comcast, or any of the national guys, DirectTV, Sprint, those guys, but we’re seeing people have issues with their water company. All the little guys that are in our system somewhere but aren’t showing up on that first page of results.

We are absolutely reengineering how that works and splitting it into “here’s an alphabetical list you can sort through” and “here are our recommended ones based on the fact that when you type ‘com’ these are the top 10 that people usually pick.” That’s an approach we’re gonna take with it.

In May along with scheduled payments you’re gonna see recurring payments.

FQF: People have really appreciated the mortgage companies that are in the system, that has been a real godsend for a lot of people who have been writing checks every month.

Alex: For us that’s one of the key elements. At the end of the day, to be honest with you, mortgages are expensive for us to process, but we think that offering them is how we get customers. Most people, the first payment they think of is their mortgage, and if you can offer that then they’ll come and give you the rest of their payments. So far that’s proved true for us. We are excited about that. We’re continuously looking for more and more companies we can pay.

FQF: Thanks for reaching out to me, if there are any final thoughts you’d like to share with my readers, I’ll give you the same chance I gave Bill.

Alex: I won’t even go down the path of “please don’t abuse us” because I think I got that point across. I’ll just say, “everybody’s welcome." We built this for people like your readers, and we want to hear more. We have feedback forms on our website, we have feedback forms in the app, if they think of anything that they think should be different, the search we know about, but if they think they have a way they think the search should look, please tell them to reach out to us. Either directly through the feedback forms on our app or our website or even through our Twitter feed or Facebook page, or even e-mailing us directly at our Customer Service.