Early warning from Payanybill? IMO=yes
e.bill Faces Up-hill Battle
Many still prefer paper transactions
By Phuoc Ho
“Does e.billing really work?” As president of an electronic presentment service provider, I’m asked this question more and more when I talk with companies considering e.billing solutions. Typically, we start by discussing the advantages of electronic presentment: the “competitive edge,” cost savings, customer care and customer relationship management benefits or just the importance of “keeping up with the competition.” But more and more, what they say next goes something like this: “The U.S. Postal Service hasn’t let me down yet. Right now, my bills reach all of my customers — almost without fail. Most of them pay on time. I’ve never really had a problem. Why should I change my bill delivery mechanism at all? The system makes sense — and it works.”
What these customers aren’t saying — but what they are implying loud and clear — is that e.billing right now doesn’t work, the cost savings are tenuous and — future potential notwithstanding — it doesn’t make sense to implement e.billing right now.
Are they right? The comparison with the Postal Service is a telling one.
E.bill Delivery vs. the Postal Service
Thanks to the Postal Service’s “reach,” its universal address conventions (ZIP Codes) and “interoperability” among international postal service providers, snail mail delivery allows any biller to reach any customer (consumer or business) anywhere in the world. Consumer and business adoption for postal delivery is virtually 100% — and no proprietary mail system ever gets in the way. But the ride is much bumpier with e.billing. In the US, 52% of households have Internet access (Nielsen, August 2000) and the numbers will continue to grow. But as of today, a biller in the B2C space has the possibility of reaching only the bare majority of its audience.
And the bigger problem is that there is no easy way for this biller to reach all of the 52% who are online. EBPP today consists of “biller direct” implementations (where a company presents documents directly to its customers through its own Web site) and aggregator (or consolidator) implementations (where a third-party site brings together multiple bills, creating some convenience for consumers). So instead of one universal mailbox, we have numerous competing mailboxes — financial service sites, portals, service providers, aggregators, individual billers — all trying to “capture” their own consumers and billers. The result is the best e.billing adoption rate I’ve heard is 20% of the customer base (Bell Canada), and adoption rates more typically hover around 1%.
Problems with Today’s Models
We need to face the fact today’s “biller direct” and “consolidator” electronic billing presentment and payment (EBPP) will never lead to mass biller or consumer adoption. Here’s why:
Whether billers choose biller direct or consolidator EBPP, each biller-customer relationship exists in isolation. Consolidators, it is true, offer customers access to multiple billers — but access is always limited to only their billers. No consolidator supplies access to all billers or all customers. This means, for example, that despite using a consolidator, customers still have to visit more than one site to see all their bills. This remains inconvenient when compared to the post office, which brings all bills right to the customer in one convenient location.
The model is not scalable to a large number of participants. Some customers may tolerate having to access two or three Internet sites to pay bills, but they will be much less patient when that number increases (for instance, imagine five Web sites with five passwords). Similarly, most billers will not be able to keep up with the number of aggregator and other relationships they will have to maintain to reach all their customers. Again, when compared to the Postal Service, it is difficult to imagine mass acceptance of such inconvenience.
If a biller hopes to reach the maximum number of customers by engaging multiple service providers, the management of information becomes extremely complex. Bill information will need to be located at multiple unrelated locations or “EBPP islands” — making maintenance and control very difficult. Again, compare this with the USPS, which delivers “one bill, one customer.”
Almost any change at the service provider adversely affects customers and billers. For example, if a biller wishes to change service providers, its customers are also forced to change service providers or risk losing access.
So at present, we have an archipelago of unconnected EBPP islands without a common technology to link all billers to all customers. And unless we “wire” these EBPP islands — so these barriers disappear — the sheer inconvenience to customers and billers may strangle the e.billing industry in its infancy.
How Are We Addressing the Problem
Frankly, we are dodging the issue. A year back, the e.billing industry was excited about the logic and benefits of B2C EBPP adoption. But now that such fundamental problems with the delivery channel are readily apparent — and the size of the barrier to success in achieving B2C adoption is more evident — what is our solution? Focusing on B2B instead. The reasoning goes something like this: Almost all businesses are on the Web — which resolves the problem of availability of the channel. So it should be a piece of cake, right? This is where the real growth will be, right?
Well, perhaps...but we are now starting to better understand some of the problems in the B2B space — most notable of which is legacy integration. The bottom could fall out of the B2B market as well — especially because the underlying distribution channel problem remains, even as players in the space jockey to divide the B2B universe into separate “continents” or B2B marketplaces.
What We Need
To solve the problem, we need to meaningfully progress in the following three areas — and soon.
Standards-based interoperability among all EBPP participants — and by “interoperability” I mean the ability of service providers to establish relationships beyond simply connecting a biller to its own customers (which, after all, is only the means to create one more EBPP island, as opposed to bridging the EBPP archipelago).
Collaboration among players that are used to competing. In order for EBPP to be effective and achieve mass biller and consumer adoption, these relationships must cross traditional competitive boundaries, connecting all to all. No more exclusives: “my customers” and “my billers” will demand access to other customers and other billers, through relationships that I will be expected to set up with my competitors.
Logical scalability in the solutions we are selling and our customers are implementing. This means we are not designing (practitioners are not implementing) solutions that exclusively serve the existing — and increasingly out-of-date biller direct and aggregator business models. Instead, our solutions must build in room to accommodate evolution in the business models of the marketplace itself.
We can dangle cost savings, competitive advantages and other benefits until we are blue in the face. But until we lay the groundwork for interoperability and logical scalability, we will continue to fumble for answers to questions posed by the perceptive customer. All of us — technology companies, systems integrators, financial institutions, service providers and portals — will be compelled to admit that, despite our promises of a bright future, we are not the U.S. Postal Service. We are not offering a service that is easy or convenient for our customers. And no — sorry — we are not giving them a way to reach all, or even a majority, of their customers.
It isn’t rain, sleet or snow that is keeping us from our appointed task — which is to solve this problem. So let’s start talking to one another about how we’re going to do it.