Electronic bill presentation has been slow to take off, especially in the public sector. But signs indicate it may finally be ready to get off the ground. Segments of the private sector have begun to embrace the concept, and the U.S. Postal Service recently unveiled an electronic bill delivery and payment service that could help pave the way for state and local governments to follow.
Not far behind is the state of Washington, which has targeted electronic bill presentation as a goal for more than a year. The state hopes to implement the technology and take advantage of the benefits, which include cost savings and a better level of service for businesses and citizens.
"I think the marketplace is much more ready to accept this now than it would have been a couple of years ago," said Linda Jo Demery, strategic initiatives project manager of the Washington Department of Information Services (DIS).
Electronic bill presentment involves presenting the summary and details of a bill over the Internet instead of mailing a paper version. Although electronic bill payment via automatic debits and credits has become more common, electronic bill presentment has been more difficult to implement.
Part of the problem has been consumer adoption and the issues surrounding privacy and accuracy. The other problem was software. Although it is now easier to find vendors who offer the software, consumers are generally still wary of both electronic bill presentment and payment.
Brian Valente, vice president of marketing for Avolent Inc., an electronic bill presentment and payment (EBPP) solutions provider, claims that one of the reasons online bill presentment is more prevalent in the private sector is because the private sector is more confident in the security of the technology. "People who understand the technology recognize its incredibly secure and in many ways more secure than the way they receive paper invoices today," Valente said.
The private sector, namely insurance, telco, credit, lending and utility companies, is pushing the electronic bill presentment issue. According to John Murphy, vice president of product marketing for Mobius Management Systems, the immediate benefit is the establishment of an interactive electronic relationship with customers.
"There hasnt been the rapid adoption that people expected," Murphy said. "Nevertheless, 50 percent of the large billers have already implemented or are implementing an electronic presentment and payment strategy. Theyre doing it now because its part of an overall customer relationship management strategy. They want customers to come to their Web site."
Murphy said that strategy could pay off in cost savings down the road when consumers decide they dont need their paper bills any longer.
According to a Gartner Group study, the cost to insurance, telco, credit, lending and utility companies to present a paper bill is 93 cents. The same bill delivery without paper would save 50 of those 93 cents.
"Additionally, on the payment side, if you could take an electronic payment over the Internet and not deal with a paper bill, the savings would be on the order of 17 to 20 cents," Murphy said. "With 19 billion recurring bills, youve got a $9.5 billion market immediately."
That kind of cost savings is what helped start a wave of enthusiasm for online bill presentment 24 months ago. But misjudgment of consumer readiness and the lack of available software served to stall progress.
"It is becoming more concrete now," Demery said. "Now we are able to download real application program interfaces. It is becoming more production-ready."
Demery said that nearly two years ago when Washingtons DIS began experimenting with electronic bill presentment, it was difficult to get credible software tools. "[Now] there are several vendors that are out there doing these kinds of things."
Models of Success
"When [EBPP] got started, there was really just one way to do it," said John Joseph, marketing manager of EBPP for Mobius. Joseph refers to the direct method, where the customer goes to each billers Web site to pay each bill. The problem is, if the average household has 17 bills to pay per month, the consumer has to go to 17 different Web sites each month. "Thats when the consolidators came in with the next model: the third-party consolidators," he said.
The idea there is to consolidate all the information from the billers onto one Web site where consumers have one log-on, one user ID and one password and can pay all of their bills at one central location. Its convenient, but the party thats doing the consolidating is usually not the customers bank. Rather, its a third-party company that has the customers billing information and bank account, which raises a security issue.
Mobius recently countered those first two models with a patent-pending model that lets consumers utilize consolidation services on its own Web site. "What we have is a piece of software that lets the consumer go to each of their billers, get the information, bring it down to their desktop[s] and consolidate it there," Murphy said. "They pay their bills from one location, so the idea is you get the convenience of the consolidation, but the security and the privacy of biller direct.
"But if you look at the market right now," Murphy continued, "it comes back to the adoption issue. What youll see is there are competing models out there about what you should implement and how you should do this. It all hasnt settled down yet."
Avolent is a partner in an overhaul of the commonwealth of Pennsylvanias network infrastructure and software application
systems. "The first component of it is laying down [a] new network ring throughout the state, and the second component is upgrading all of their existing back-office systems in terms of billing and customer care to Web-based technologies," Valente said. "Its a very exciting project and quite a good case study for other government agencies that want to move toward Web technologies."
In Washington, theyre learning by trial and error and getting to know the technology as it becomes available.
"What we have is a development environment," Demery said. "We have gone out and actually run checks over the Internet to test the product. We set up the product and have players send bills to each other in a test mode."
The results of all the testing will be documented in what Washington calls its Applications Template and Outfitting Model (ATOM). Part of ATOM is a demonstration module that can be downloaded and used to demonstrate to the customer how an electronic billing system will look.
"One of the biggest hurdles is presenting the information to the business or the customer online, and were working really hard to develop a common-looking field so that each agency has a familiar look and a common touch," Demery said. "We dont want to be so agency-centric that the consumer isnt sure theyre in the state of Washington any longer. We want to be sure we have a seamless-looking field."
Though the private sector is out in front right now, electronic bill presentment might lend itself better to government agencies in the long run. "Government, in some ways, doesnt have to be concerned with all of the complexities," Murphy said. "Businesses are looking to cross-sell, get a step up on their competitors, have a snappier Web site. Government doesnt have to worry about that, but [is more concerned with] doing something more efficiently."
For example, a government agency could use electronic bill presentment to remind citizens of outstanding bills or traffic tickets. "If I have monetary obligations to the government, maybe if they could identify me they could remind me," Murphy said. "For example, if I go to pay a property tax and all of a sudden a notice comes up and says, By the way, you have three unpaid parking tickets, would you like to take care of that now?"
The challenges for government will be overcoming its tendency to work in stovepipe configurations and to quash fears that electronic bill presentment will be too intrusive.
"Government has unique challenges," said Murphy. "If you want to take a holistic view and say Gee, it would be great to have a page someone could [visit] and register their car or pay whatever fees and taxes, the idea of it all coming together in one spot might be more of a challenge because the entities in government that manage that are very much divided."