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Electronic Bill Presentment and Payment (EBPP): delivering electronic versions of bills to consumers over the internet, and return electronic payment processing. Eliminates inherant waste and inefficiencies of paper-based billing and paper checks.
Electronic Billing and Payment Industry Facts
The Market
Americans spend on average about two hours a month paying the 18.2
billion bills a year sent to them, according to Tower Group, a Newton,
Mass.-based market research company.
U.S. businesses send or receive some 26 billion bills, account statements and payments annually. And they pay some $17 billion in postage alone, according to the U.S. Postal Service.
The cost for billers to print, process and distribute paper-based bills ranges from 85 cents to $1.50 each. The cost of sending and receiving an electronic bill, by comparison, is about 40 cents each per round trip.
Hence, electronic bill presentment (the delivery of bills in an electronic format via the Internet) has been dubbed as the "killer app" of this industry: It completes a paperless round-trip for consumers, saves money for billers and builds online business for financial institutions.
The Case for Electronic Banking
Tower Group predicts banks will spend $930 million annually on online
banking applications and services by 2002. Almost all these applications will be based on the World Wide Web standards.
Experience has shown that subscribers are ready and waiting to enroll when financial institutions aggressively market their electronic financial services: Preliminary figures and results indicate that as many as 10,000 subscribers per day would sign up if offered the choice.
Piper Jaffray expects online banking households to grow from 4.4 million at year-end 1998 to 25 million at year-end 2003. At least 55 percent of the so-called "Newbie" online users are women, according to research company NetSmart. This firm, which recently released a study subtitled "e-Commerce: Internet Users Mean Business," says women pay 70 percent of the household bills, and "they will start the online financial experience with bill payment."
The Case for Electronic Billing and Payment
About 2 percent of consumers use electronic bill payment through banks
and personal financial management software (Quicken, for example), and
industry revenues total about $200 million. Industry analysts believe
electronic bill payment hasn't "taken off" mainly because consumers want a complete, electronic "round-trip" – that is, they want to receive their bills electronically as well as pay them electronically. Electronic bill presentment still isn't available in most places, but that is expected to change dramatically starting in 1999.
Research indicates that consumers will begin utilizing electronic bill
presentment in large numbers when at least four bills per month are
presented online to them. Consumers will also prefer to receive their
electronic bills at one central site, similar to today's mailbox.
According to a recent study by Killen & Associates – a market research
firm based in Palo Alto, Calif. – by the end of 2000, almost eight billion repetitive bills will be presented electronically each year. Overall, the Killen report asserts that U.S. utilities could save $1.2 billion in billing costs by using electronic bill presentment and payment.
The number of bills presented electronically is expected to grow at a
compound annual rate of 275 percent. (source: Piper Jaffray)
Within five years, industry analysts believe the majority of banking
households will move more money electronically than by paper-based
systems, and industry revenues will total approximately $6 billion.
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