EBPP: A Glass Half Full

Depending on whom you speak to, electronic bill presentment and payment tends to be viewed as either a business revolution or an over-hyped trend that offers little or no return. I’m among the believers in what has come to be known as EBPP.

The technology gurus offer rosy predictions of EBPP’s future: Gartner Group says 15 million households will be paying bills online by 2002 and that one out of every four consumer bills will be viewed electronically by 2004. Jupiter Communications forecasts that 2 billion recurring monthly bills will be presented electronically to U.S. customers by 2003. Finally, International Data Corp. expects more than 60 percent of the 20,000 banks and credit unions in the U.S. to have fully transactional Web sites by the end of this year, up from only 6 percent in 1998.

These predictions may, in fact, be overly optimistic. Today, only 100 million of the 1.6 billion consumer bills paid each month are handled electronically, according to Chicago consulting firm Treasury Strategies. Detractors will tell you that people are creatures of habit and that they won’t switch to Web-based banking and customer service so quickly. Speaking from personal experience, I believe consumers will take to EBPP quickly once they’ve tried it. I waited until last year to convert to online banking, but once I did, I immediately knew I would never go back to writing checks for all those recurring monthly bills.

What about all those technophobes who don’t even own computers? My 77-year-old father was one of them. He didn’t want any part of the Internet until I bought him a Web TV box and posted his stocks online. Now he checks in every day and prints out an investment summary at the end of each week (though I still can’t get him to type an email). Now that the Internet appliance market is adding other computer-free Web alternatives, I believe household access will increase dramatically while technophobia will slowly diminish. This will help those rosy projections become a reality.

As great as the potential is for EBPP, I think vendors should own up to a dirty little secret. The truth is, this is not going to save companies money — at least not initially. If you buy into EBPP today — and it’s not an insignificant investment — you’re still going to use mailing houses, and you’re still going to need print rooms, legacy mainframe applications and the staff to run them. You may still have this overhead five years from now, too, but you will be starting to see a return.

The most immediate savings will come from reduced call center volumes and lower costs tied to tracking down and distributing information. The next round of savings will come from paper and postage eliminated as the ratio of customers receiving ebills instead of paper bills grows ever higher. Ultimately, you will be able to either defer or scale down future print hardware investments or outsource these functions entirely (if you haven’t already).

For now, what’s driving the EBPP market is competition. In today’s market, insurance companies and utilities without transactional Web sites are behind the curve. Phone companies that can’t deliver statements online and banks that don’t support online banking are at a serious disadvantage. Brokerages and mutual fund companies without online trading and customer care are dead meat.

The bottom line is that electronic bill presentment and payment is now a competitive necessity. You have little choice but to maintain the old systems while investing in the new. This month’s coverage of presentment, payment and remittance will help you invest wisely.

—Doug Henschen, Editor-in-Chief