EBPP 2000

Industry analysts project a reign for EBPP. But absentee subscribers may delay the final vote.

Gauging the potential of new technology is always a precarious enterprise because what you see now is not always what you're going to get in the future. Take electronic bill payment and presentment (EBPP), for example. Analysts continue to pump it up, but consumers aren't rushing to the application right now.

In late September, Jupiter Research prophesied that more than 40 million households would adopt EBPP by 2005. In November, the Gartner Group predicted that by 2004, 25 million people would access all of their e-bills through consolidators, and 15 million would pay through billers' Web sites. And back in late 1999, Forrester Research forecasted that 2 billion consumer bills would be presented and paid electronically in 2004.

Despite their enthusiasm about EBPP's future, these analysts acknowledge customers' current lack of interest in the application. For instance, according to Gartner, only 17% of 127 million adult Internet users in the United States want to view their bills online, nearly half prefer paper bills, and the remainder aren't sure which billing and payment method they prefer.

So what can carriers do to stimulate the adoption of EBPP? Carriers such as Telus Communications, Cingular and Cincinnati Bell Wireless are putting thought and effort into finding the answers to that question.

Building Support in Stages Telus Communications' customers have been able to view account information online since 1997. But it was not until early 2000 that the company gave customers the opportunity to pay via the Web and suppress paper bills.

Since then, more than 100,000 customers have registered to use the service, according to Tony Rizzuti, Telus director of Web operations and customer care.

"If you look at the number of customers that have suppressed their paper bills, without giving the specific numbers, we're in the low 5-digit range," Rizzuti said.

Telus continues to erect its program in stages, planning its next moves based on customer feedback and market research. The company's current EBPP offering uses the biller-direct model. Consumer- and small-business customers can view account information and pay bills only through Telus's Web site.

But Telus plans to move to a thin-consolidator model before the end of this year. Once that model is in place, customers will be able to view bills at the site of Epost, Telus's consolidator, or at Telus's site.

"It's kind of a unique arrangement because it offers not only electronic billing, but in the future will extend to all mail pieces that we typically send through snail mail today," Rizzuti said.

Epost is a new Web-based service formed by a partnership between Canada's postal service and Cebra, an e-commerce solutions vendor owned by the Bank of Montreal. Telus recently invested $30 million in Epost, which bought the telecommunications carrier a 5% stake in the Web service and a seat on its board of directors.

The next step for Telus will be providing an EBPP solution for its corporate customers. Planning a program for these larger customers was more time-consuming because business EBPP applications need to be more sophisticated than those designed for consumers. Corporate customers typically prefer e-billing services that can perform reporting and analysis tasks, rather than those that offer mere invoice presentment.

The company plans to roll out corporate EBPP services during the first quarter of 2001.

Then Telus will need to decide what other transaction types should be moved online and set adoption goals for each transaction type. In the recent past, Telus executives said the company's goal was to have 40% of its customers transacting online by 2002. Now, the company is redefining that goal.

"That was a very high-level executive objective," said Mark Donnelly, Telus director of Web marketing. "What we're doing is breaking that down into specific types of transactions that will have specific metrics attached to them. So there might be an objective of billing as one component. We may want a much higher number than 40% in terms of transactions online."

The current emphasis at Telus is on developing the online services that customers really want. The rationale is that adoption will follow. Another reason for optimism, according to Donnelly, is that online bill payment and financial transactions have gained broad acceptance in Canada.

The Merger Inheritance BellSouth spent a great deal of time building and promoting its EBPP program before the recent merger with SBC, which resulted in the creation of Cingular. The company offered enhanced EBPP services, such as the ability to download e-bills onto a spreadsheet application and sort the data by columns.

In addition, BellSouth vigorously promoted the online service. During the Billing 2000 conference, Klaus Werner, then BellSouth's director of consumer e-business marketing, addressed the magnitude of the effort. "We dropped a million pieces of mail to drive adoption," he said.

So how is Cingular using the knowledge BellSouth gained?

"The experiences of BellSouth have shown the set of application components that we're going to need to make EBPP successful," said Steve Krom, Cingular vice president of marketing, data and Internet services. Those components include enabling customers to sign up for recurring use of EBPP, allowing them to suppress paper bills, offering electronic funds transfer as a payment option, offering e-mail notification of new online bills and creating a dynamic e-bill that can be manipulated by customers.

In the Southeast markets, where most of the former BellSouth properties are located, Cingular offers the range of EBPP services.

"On the SBC market side, we've launched a few markets with the viewing and recurring payments capabilities," Krom said. "Now that we're one company, we're migrating all of the markets to this new capability that we have in the Southeast."

Like Telus, Cingular uses the biller-direct model, providing bill viewing and payment on its Web site. "We're really focused on ensuring that we provide our customers a very robust bill payment and viewing capability within our space," Krom said.

But he foresees the company extending its current services to provide customers access to other payment channels, such as banks and Internet portals.

Cingular also is continuing the BellSouth tradition of vigorous promotion.

"We're starting the process of sending out bill stuffers and the like to notify customers that this capability now exists and to encourage them to go to the Web site to look at it," Krom said.

The company is considering boosting corporate use of the services by offering intranet and, in some cases, extranet services.

"Corporations are looking to develop more of a direct connection with suppliers and vendors," Krom said. "So we're working with them to find out what's the best way to have that kind of tight integration, to help them manage their wireless services expense."

Polling the Voters Cincinnati Bell Wireless has not seen much customer demand for EBPP, according to Chip Burke, the company's director of information technology. The AT&T Wireless affiliate doesn't offer presentment, but its customers can make payments online or through an integrated/interactive voice response (IVR) system. Right now, the IVR payment system is more popular with customers, Burke said.

"Any push for EBPP is coming from two areas," Burke said. "First, everybody else is doing it. Second, we are looking at e-care initiatives that encompass online billing."

Although interest in EBPP is currently low, Cincinnati Bell recognizes that electronic billing may be an important differentiator for carriers in the future. So the company is mulling ways to drive customer adoption of its WebPay service.

"We are considering giving a discount if you pay your bill through the Web. We're also considering launching a Web-only business line," Burke said.

With a Web-only line, consumers would buy products and services through Cincinnati Bell's Web site, receive customer care at the site and make payments through the site. The concept behind this approach is that customers who sign up for services online would be more likely to use a Web-only service.

"We have contacts with people in the United Kingdom who have launched something like this," Burke said.

Two chads in Cincinnati Bell's business model prevent votes in favor of the company's WebPay service. First, the company allows subscribers to set up their accounts so that their credit cards are automatically debited each month. Second, the company is affiliated with an ILEC, which offers combined billing to its wireline and Telus's wireless subscribers.

A deterrent for Cincinnati Bell's EBPP architects originates on the market's supply side.

"We have a lot of vendors call and want to talk about their solution," Burke said. "It's hard to sort it all out."

But for now, Cincinnati Bell is leaning toward an online system that enables online account management, not just presentment and payment.

Ballot of Confusion Besides software vendors and billers, the EBPP market has three major players: billing consolidators, biller service providers and consumer service providers. Consolidators, such as Transpoint and Checkfree, offer a single online channel through which customers can pay several companies' e-bills. Biller providers, such as Docsense and Princeton eCom, furnish services, such as hosting and syndication for e-billers. Consumer providers, such as Internet portals, banks, and financial institutions, operate bill-pay channels designed to reach consumers directly.

Driving the adoption of EBPP depends on billers' ability to offer customers a choice of channels for online billing.

"One of the things that you hear in this business is that this application is not really going to take off until consumers can get their bills through some medium besides the biller's Web site," said Curtis Welling, Princeton eCom CEO.

Princeton encourages customers such as Verizon to arrange for the distribution of e-bills through all of the major channels, to give end users more choices.

"We think that if adoption runs on driving consumers to a particular type of interface, that adoption is going to continue to be very slow," Welling said.

Unfortunately, there is no open standard in the U.S. for handling financial transactions online, which means that e-bill distributors' systems will not communicate with each other.

"This is a highly fragmented market, where you need to get bills from many sources to customers at many destinations," Welling explained. "Therefore, the concept that someone could have a proprietary distribution system comprehensive enough to satisfy all of those points is (unrealistic)."

The OFX Forum was created to develop an open standard for online transactions. Welling said that wireless carriers should support such efforts.

Another billing provider, Pitney Bowes-subsidiary Docsense, is considering non-traditional billing methods.

"We are beginning to assess what's going to be the right way for consumers," said David Gardner, Docsense chief systems architect. "For example, we're challenging some of the ways we look at billing cycles."

Docsense execs are considering moving away from the monthly-billing-cycle model to a pay-on-demand service. With this service, customers would designate a charge limit, and when their account reaches the limit, they would automatically receive an e-bill notification.

Gardner estimated that the current adoption of EBPP is 1% to 2%. He recommended advertising as one way to boost that figure. Another would be to create e-bills that exploit the capabilities of the Internet. For example, Docsense plans to capitalize on the Internet's capabilities in the future by giving customers extras, such as the ability to click on a phone number within the account statement to reveal the name of the person to whom the number belongs.

"Billers want people to pay online," Gardner said.

They'll get their desire, he said, because the widespread adoption of EBPP is inevitable.