Increasingly, consumers are turning to personal computers
to manage their everyday lives, and the recent success of sub-$1,000 computers has put the
convenience of computing within reach for many more. Today, nearly 40 percent of U.S.
households own PCs, according to The Yankee Group, and about 17 percent are using an
online service or Internet-service provider. By the year 2000, 43 percent of U.S.
households will be wired to the Internet.
While PC-penetration forecasts and online growth look
impressive, these statistics still beg the question: Will consumers be comfortable
conducting financial transactions over the Internet?
The answer is a resounding yes. Growth in online banking is
considered a bellwether statistic -- if consumers feel comfortable looking at account
balances and moving money online, they will most likely feel just as comfortable viewing
and paying their bills online. In the next couple of years, the number of consumers signed
up for online banking is expected to grow from 5.7 million households to nearly 13
million, according to a Jupiter Communications report.
DELIVERING INTERNET BILLS TO CONSUMERS
The question for service providers is: What is the best way
to deliver your bills to them? To date, several players have introduced a number of
competing delivery solutions. So, while there are many choices, there is little clarity.
Biller-Direct Model: In this model, a biller makes its
customers' bills and statements available at their company Web site, and consumers
log on to the site to view and pay their individual bills. From a biller's
perspective, this model is attractive, since it allows tight control of user interaction,
as well as of the branding messages that the consumer is exposed to. This model may also
be attractive to consumers, as the novelty of being able to view and pay bills online will
lure them to visit the biller's Web site.
However, as more billers develop biller-direct sites,
consumers will have to jump from site to site to view and pay all of the bills they
receive each month -- each with different log-ins and payment processes. Many people will
see this as the online equivalent to driving around town to pick up and pay their bills --
which can be a lengthy, inconvenient process.
Consolidator Model: To address some of the shortcomings
of the biller-direct model, several players have emerged to offer consolidated billing
sites. Think of this as the Internet equivalent of a curbside mailbox -- one location
where a consumer can pick up all of their bills and statements. MSFDC (the joint venture
between Microsoft Corp. and First Data Corp.), CheckFree, Intuit and select banks are some
of the companies that are seeking to become statement consolidators. Consolidators receive
and store statement data from a number of billers. Consumers then go to the
consolidator's Web site to retrieve and view all of their statements. While the
consolidator model offers greater convenience for consumers, it presents some problems for
billers, including the loss of some control over their billing data and the challenge of
implementing and managing relationships with the consolidator companies.
Push Technology: Push technology, similar to the type
used with the PointCast Network, has the potential to offer the best of the biller-direct
and consolidator models. With push technology, billers post statements to their own
biller-direct Web sites, and consumers use client software installed on their PCs to
collect and download statements from a variety of biller sites. With this model, consumers
have the convenience of receiving multiple bills and statements in one location -- their
own PCs -- and billers retain tight control of their proprietary billing data. Of the
three Internet-delivery models, push technology is the newest and the least far along in
the development cycle, but movement from some new players is expected in 1998.
WHICH MODELS SHOULD YOU IMPLEMENT?
Ultimately, consumers will access their bills and
statements from all of these models -- a certain percentage will opt to use the
biller-direct method, others will select one of the many consolidator channels and still
more will choose to utilize push technology. To please your customers and to encourage
healthy adoption of electronic billing, it will be critical for you to offer your
customers a range of choices in how they receive their electronic bills.
Electronic-billing programs that limit a customer's choice by forcing them to receive
bills in one specific format will be slow to be accepted. In order for electronic billing
to be successful, billers will need to deliver the right bill, to the right consumer, at
the right time and through the right delivery method.
While offering your customers choices in how they receive
their electronic bills seems to be the wisest route to take, it is true that implementing
the infrastructure necessary to do this will require money and significant effort. In
addition to implementing two servers, a biller will need to staff an organization
dedicated to managing relationships with every delivery channel. For statement delivery
today, billers manage a single relationship -- with the U.S. Postal Service. In the world
of Internet billing, they will have a variety of relationships to manage: biller direct,
MSFDC, CheckFree, Intuit, NETdelivery and more to come.
WHY IMPLEMENT INTERNET BILLING?
Properly implemented, Internet billing has the potential to
significantly and positively impact an organization in the following ways:
Lower Costs: Electronic billing eliminates two of the
most expensive components of a bill -- paper and postage. In addition, because the
processing of electronic payments, such as direct debits, is significantly less expensive
than processing paper checks, a solution that includes electronic payment on the back end
will save additional money.
Cross Marketing: As important as reducing processing
costs are the opportunities that electronic billing presents to use highly targeted
electronic inserts to market services. For example, a cable company can place an
electronic insert for its next pay-per-view boxing event if the consumer receiving the
bill ordered the last PPV-boxing event. This type of targeting can increase the likelihood
that a consumer will click on the insert to order additional services.
A biller can also turn electronic billing into a revenue
source by selling electronic-insert space to third-party advertisers. Today, many
companies are specifically dedicating monies for online advertisements, and they are
focusing their efforts on Web sites that have recurring traffic. A site that offers online
statements fits this requirement, as it is practically guaranteed to be viewed at least
once a month by customers.
Improved Customer Service: An HTML (HyperText Markup
Language) statement can have hyperlinks to consumers' most-frequently-asked
questions. For example, if customer-service representatives consistently field questions
regarding prorations, your bill can have a hyperlink on the proration charge so that when
a consumer clicks on it, a full explanation appears. It is this type of functionality that
will have positive impacts on the bottom line of your customer-service department.
1998 IS THE YEAR TO ACT
This year, many companies will formally release their
electronic-billing solutions, and many billers will begin to allow their customers to
access and pay their statements online. AirTouch Paging, NationsBanc Montgomery Securities
and BellSouth Corp. are just some of the billers that have already taken the plunge. One
thing is certain: 1998 will be the year that many electronic-billing-solutions providers
will beat a path to your doorstep. It will also be the year that consumers begin asking
you for this option.
When looking for an electronic-billing solution, it is
critical to select a partner that not only has experience in billing processes, but that
has a solution that will allow you a high level of flexibility in the delivery of your
electronic statements. Look for one that will allow you to meet the needs of your
customers. Your consumers will like it, and your staff will benefit from having a single
point of contact for all of their electronic-billing needs.
Jorge Martin is a product manager for electronic billing at
International Billing Services.