By William Fellows
Electronic billing and payment may be the logical extension of online banking strategies but research by Meta Group suggests that a clutch of US banks which have formed a consortia to offer clearing house services to this market may be getting a little ahead of themselves. Consumers are not demanding bill presentment, it says.
Chase Manhattan, Wells Fargo, and First Union banks have formed a for-profit company called The Exchange to offer clearinghouse services for electronic bill presentment and payment (EBPP) between US billers and consumers. The system will run on outsourced Sun hardware and Netscape software and is expected to be up and running with a new name by the end of the year.
Indeed, while for many home PC owners online banking systems have evolved to the point where they are now useful and convenient, offering web-based access rather than dedicated dial-up, the rate of uptake of these services has been slower than the industry’s expectations because of the required consumer behavior modification. Paying bills from a PC is convenient and in most cases easier than online shopping with its endless form filling, especially when the European standing order mechanism of making regular, automatic payments out of an account are not available to US consumers.
Receiving bills electronically this way is very different. Do consumers check their email as regularly as snail mail? Moreover the paper bill would appear to be more portable and accessible – and probably more persistent given the tendency for PCs to lose data and be upgraded.
What the for-profit EBPP may create is revenue potential for banks, and promises to save billers bill creation and distribution costs and Meta believes given the lack of consumer demand EBPP will find a home first in business-to-business commerce.
In the meantime, UK integrator and ISV Logica Plc has created a consortium to design electronic bill presentment and payment systems for telecoms and utilities industry. Adesso Software Inc, Group 1 Software and Edocs have joined Logica in the initiative. Logica plans to tie Adesso’s archiving, Edocs’ bill presentment and payment programs and Group 1’s formatting software.
Logica is hanging its hat on industry estimates suggesting that by 2005 40% of US telephone, gas, electric, water and credit card bills will be presented electronically. Paper billing and distribution costs between $0.75 and $1.50 – e-billing typically costs 10% and avoids expensive customer service calls that can cost an additional $1 to $5 to handle. In other words the opportunity is to save providers’ costs, not improve customer service. Customer inquiries by email anyone?
Internet billing specialist portal Software Inc says it is already working with a number of alternate bill presentment and payment systems. It has written an API to integrate with a number of them, including Group 1’s invoice generation system. It thinks there will be a gradual shift to the electronic presentment and payment over time, but are not yet seeing a lot of pressure from the market, except for credit/debit card, which are very popular. If the credit card companies get their act together, they could be very strong in this area, said CEO John Little.
