eBilling
The new kid on the electronic block, eBilling or electronic bill presentment and payment is part of the growing world of ecommerce
Many organisations, especially the utilities, spend vast sums of money issuing bills and statements, and then in the collection of the due monies. The utilities have made marginal but substantial savings in the actual business of reading household meters by outsourcing the activity to an agency that can read several meters at one property for different services at one time but the business of billing is as time consuming and expensive as it ever was. Now realisation is dawning that digital billing may be a way of addressing the issue.
Early adopters might save some money and gain a competitive advantage by speeding up the issue of bills and the collection of money owed.
Conservative estimates suggest that there over 20,000 UK companies issuing well over 5 billion bills and statements a year. Each household in the UK receives about 100 bills per year from the utilities, telcos, stores, mail order companies, etc. Only a small saving in the overall cost is worth considerable sums.
The cost of sending out a paper bill is around £1-£2, for efficient organisations. Producing the same bill electronically should cost in the region of 25p.
Although consumer billing is going to be very big business, the initial growth is likely to be in the business-to-business (B2B) market. The hope here is that the billing process becomes part of the overall process of building customer-supplier relationships. Customers may visit the billing website to see details of their bill/account and stay to read other materials.
It is no surprise that the telecoms companies who operate the Internet are amongst the leaders in electronic bill presentment and payment (EBPP) and the major banks are not far behind. The banks also see this as potential new business. They can act as billing and collection agents for other companies. This could indeed be a payoff from their major investment in electronic/Internet banking. The banks would love to be the coordinators and consolidators of bill and statement documents. They will have to move quickly to avoid being overtaken by a rush of new consolidating companies with backing from the likes of Microsoft, Yahoo and AOL.
These browser/portal companies are also slowly waking up to the potential. They have been slow because most of them are U.S. based and unlike the UK, the US doesn’t have a strong, single national payment network, so they missed the first dawning. Still, they have shown in the past that they can play fast catch-up. This would mean that customers could access their bank accounts, credit card bills, fixed-line phone bills, mobile phone bills, and utility bills from their friendly Internet portal. (see Hot Topic: Portal Power). Any of this highly portable, high volume data is capable of presentation by the same technology and there is certainly potential for both improved customer service and cost savings by the billing companies. This offers a true win-win situation.
May 2000
Update
Customer care and billing firm, MaxBill together with Japanese company Marubeni, is targetting an e-billing package at communications service providers. The system offers automated bill presentation, payment handling and ‘trouble ticketing’ to handle customer inquiries and complaints and is being offered to suppliers of network services and utility companies. See http://www.maxbill.com.
June 2000
Update
CODA plc is a leading developer of Internet-enabled financial accounting and procurement software used by more than 2,000 companies worldwide. Now, CODA has developed an e-billing solution. This complies with the Microsoft BizTalk and BASDA e-BIS XML standards and is designed to offer an easy and fast billing process, allowing customers to pay online, and the company to get useful management information.
The software, which has multi-currency and multi-lingual capabilities, is designed to support both business-to-business and business-to-consumer billing operations and the use of XML standards allows billing organisations to communicate with third-party systems.
The software lets the billing company create, amend or authorise an invoice or credit note using a workflow engine for appropriate internal routing, and then issue/present it to a customer. System accessibility is global and its low bandwidth requirements eases access making it particularly suitable for organisations that work on a worldwide basis with customers, suppliers or third parties.
BASDA is the international standards body, based in the UK, representing 350 of the world’s leading developers and suppliers of business and accounting software. eBIS-XML was designed as a simple, easy to use, many to many interface which will work with any accounting package, based on a series of international standard business document schemas for electronic business.
September 2000
In the US, a consortium of 11 major banking organisations is partnering with Sun Microsystems and Netscape Communications to develop an Internet billing system named Spectrum. The market in the US is huge. 63 billion bills are processed each year. At present, users still seem reluctant to commit their funds to electronic payment methods and if they are to break into this huge marketplace, suppliers have to overcome this understandable reluctance. As suggested above, it is likely that business billing will be transformed first. Businesses have considerable savings to make if they can both reduce the adminsitrative costs of bill processing and speed up payment. When the technology is well-established in the business world, consumers may gain confidence.
October 2000
Update
PayPal, originally a US-based service but now offered internationally, enables people to request money by sending bills online, and lets customers send money back via the same route. Using the PayPal system, it is possible to set up business accounts and accept money from customers, including credit card payments on a website, using the Web Accept online payment service. Once an account is set up on the system, the billing organisation simply clicks the request money tab, enters the amount that they want to charge together with the email address of the recipient, and the service makes the request. When the customer pays, (using PayPal), the organisation’s account is credited.
Such a service is very convenient for small companies with low billing volumes but larger operations need a more sophisticated service. Some companies offer a wide range of functionality in dedicated electronic bill payment products, incorporating payment and billing information online. One such company is edocs, (now July 2010 acquired by Oracle) which offers a range of electronic account management and billing products. Its eaSuite service, for example, incorporates a number of products such as eaPay, an electronic payment and warehousing component that enables customers to make and track payments.
See http://www.paypal.com
See http://edocs.com
May 2001
Update
Blueprint 3 estimates that banks and building societies distribute around 720 million statements annually in the UK at a total cost of some £2.6 billion. According to Blueprint3, sending electronic statements could cut costs by 67%. Customers would also get more up-to-date information. Since it is now possible to send secure email (and Blueprint3 have the technology!), there is little reason to continue sending printed statements where customers have ready access to online services.
See http://www.projectblueprint.com/.
Jan 2002
Update
A recent report from Logica and leading economist Roger Bootle suggests that the existing payments infrastructure has not kept pace with what is now technically viable, resulting in a significant brake on economic growth. “The existing payments infrastructure is unnecessarily slow, expensive and inflexible. Improvements to the speed and efficiency of the current system could unlock value to the tune of a staggering 1% to 1.5% of GDP,” says Eddy Collier, Chief Executive Officer, Logica Consulting, the management consultancy arm of Logica.
Domestic and international payment infrastructures are not able to support the low cost, fast, innovative services demanded in today’s markets. Unless reform is forthcoming, banks will lose a part of their core revenues to new entrants. New competitors include mobile operators set on securing as much of the mobile commerce value chain as possible, and who rightly see payments as a lucrative business which could contribute handsomely to the costs of third generation networks and services.
The report adds that lengthy delays in the payments business no longer need be the norm. New systems will allow ground-breaking developments such as interest accrual by the hour or minute and instantaneous trading and settlement.
The study acknowledges that there will be a growing role for payment users to exploit fully digital monies that could become the universally accepted means of exchange. However, such currencies will not pose a threat to national currencies. “These privately issued e-monies that trade against each other at fluctuating exchange rates will not replace government-issued money,” says Roger Bootle, managing director, Capital Economics, an independent economic consultancy. “While a number of new currencies may exist to allow consumers to make small-value online payments, these currencies will remain fully backed by government money, and prices and contracts throughout the economy will continue to be quoted in the existing national currencies.”
February 2002
Analyst organisation The Giga Information Group suggests that companies that implement electronic invoice presentation and payment (EIPP) can break even on their investment in less than two years with a customer adoption rate as low as 12% – 15%. This is partly because unlike consumers, corporate customers see the benefits and are prepared to use the technology. EIPP has added advantages; prompt payment and fewer disputed bills result in a reduced number of days worth of sales being outstanding. Suppliers get their money more quickly.
August 2002
In partnership with utility companies and telecomms suppliers, the UK’s major high street banks are developing a system to allow customers to pay all their bills for gas, electricity, telephone and water via a single visit to their bank’s website. Customers would receive email reminders of bill due dates. The service should be launched in Q2, 2003.
This is not the first attempt at such an all-embracing service. Plans for an earlier version under the auspices of Apacs, the payment association, were withdrawn last year because the banks were unsupportive. This new version will be managed by Intelligent Processing Solutions, owned by Unisys together with HSBC, Lloyds TSB and Barclays. IPS already processes about 70% of UK cheques.
October 2002
Update
As part of its continuing effort to enhance customer service, US Gas Company Laclede has fully implemented a convenient, paperless, electronic billing or e-bill system. Laclede Gas sent information about the new e-bill system to customers in this month’s bills (Nov 2002).
Laclede Gas customers, including those of its Missouri Natural Gas division, are now able to view and pay their monthly gas bills through their choice of more than 650 web sites that include banks, brokerages, credit unions, Internet portals and personal financial management software. For customers enrolled in the e-bill system, Laclede Gas will post the customers’ bills through a secure connection with CheckFree, which makes the bills available for review at the website of choice for each customer. Rather than a paper bill, those who enroll will receive an e-mail notification that the e-bills have been posted so they can securely review their bill and schedule payment.
Laclede and Missouri Natural customers can begin managing their accounts online by visiting www.lacledegas.com to find out how they can enroll. Once enrolled, customers can make their payments online and view the past electronic bill statements for each month they have been enrolled, up to six months. When they approve their monthly payment amount and schedule the payment date, the payment is sent to arrive on time from their designated bank, credit union or brokerage account.
The new service is made available through Laclede’s relationship with CheckFree i-Solutions, the leading provider of interactive e-billing and e-statement software and services and part of CheckFree Corporation. Unlike paper payments, customers who pay their bills electronically through CheckFree are protected by the CheckFree Guarantee against late fees resulting from processing delays, as well as liability for unauthorised transactions.
November 2002
Cheques on notice to quit
The UK Payments Council has decided that the cheque payment system should come to an end, setting a date of 31 October 2018 for the abolition of the system that processes cheques. The use of personal cheques has declined steeply and many large stores, supermarkets and petrol stations no longer accept them. Personal cheque transactions reached a peak of 2.4 billion in 1990 but had dropped to just 663 million in 2008.
“There are many more efficient ways of making payments than by paper in the 21st century, and the time is ripe for the economy as a whole to reap the benefits of its replacement,” said Paul Smee, of the UK Payments Council.
The announcement has not been welcomed by all. Charities and small businesses fear that it will adversely affect them but it seems likely to increase pressure for consumers to accept e-billing and electronic bill payment.