Paying bills over the Web(from Sam on the ckfr thread)
BY MONUA JANAH
Mercury News Staff Writer
Bills -- those annoying, inescapable, easy-to-lose bits of paper. Wouldn't it be wonderful if they just went away?
As long as people insist on being paid for their work, that won't happen. But several big banks and other companies are trying to at least get rid of the paper by making it possible to receive, view and pay bills on the Web.
But the road to this paper-free Nirvana is bumpy.
For one thing, having all of their financial transactions floating about in cyberspace is a scary concept for many people, no matter what the safeguards may be.
And for the system to operate not just securely but efficiently, banks and billers have to work together. But they are already splitting into opposing camps with technologies that may not be compatible.
''Whenever you have many billers and many consumers, and you're trying to develop a highway to connect them all, common standards are required,' said Brook Newcomb, an analyst at Forrester Research Inc. in Cambridge, Mass. ''Until those standards exist, the highway can't be built.'
The goal for companies issuing bills is to save postage and processing costs. Banks and other firms hope online bill delivery and payment will build customer loyalty and bring in new revenue from fees paid by people and companies who use the service.
The Gartner Group Inc., based in Stamford, Conn., said companies in this market could earn $1.7 billion to $2 billion in annual revenue by 2002, and firms that issue bills could save around $1 billion a year.
So far, a small but growing number of Americans -- about 20 million, according to most estimates -- pay their bills online, using personal-finance software or the Web sites of banks or bill-pay services. But these people still have to deal with the clutter of paper bills, which they receive by mail. About 15 billion bills a year are sent in the United States to individuals and small businesses.
Industry observers predict that in about a year, though, more big billers such as phone companies, utilities, stores and credit-card firms will send electronic bills.
''We surveyed 200 major billers this year, and over half of them are starting to put bills on the Web,' said Avivah Litan, a research analyst at Gartner. ''Going into next year, 56 percent of high-volume billers, who generate more than a quarter of a million recurring bills,' will deliver them over the Web, Gartner predicts.
The leader in electronic bill delivery and payments is Checkfree Corp. of Atlanta. More than 60 companies, including BellSouth, MCI WorldCom and Portland General Electric, use Checkfree for delivering bills and getting paid online. More than 350 use Checkfree just for online bill payment. But the competition is heating up: Late last year, Citibank joined an existing Internet bill-delivery partnership between Microsoft Corp. and First Data Corp., which was renamed Transpoint LLC.
Though Transpoint is based in Engelwood, Colo., its management is in Redmond, Wash., where Microsoft is based, and its chief, Lewis Levin, is a former Microsoft executive. Transpoint has signed up 21 billers so far, and will add 10 more this week, Levin said. Users of Microsoft Network's Money Central site can view and pay bills from these registered billers online.
Meanwhile, Spectrum, a collaboration between three big banks, Wells Fargo & Co., Chase Manhattan Bank and First Union Corp., will open its doors this week. Spectrum will provide the technology that banks and other customers can use to offer online billing.
''Spectrum's main goal is to protect the banks,' said Robert Sterling, an analyst at Jupiter Communications Inc. in New York. ''This is a big business, and it's cheaper in the long term to do this themselves rather than rely on Checkfree.'
Sharon Osberg, executive vice president of online financial services at Wells Fargo in San Francisco, said the bank participated in Transpoint's early pilot, but found that it would be difficult for Wells Fargo's computers to connect to either Transpoint's or Checkfree's because they didn't share a common standard, or set of rules governing how systems exchange this kind of information.
Analysts said such standards are important because online billing makes the most sense only if people can view and pay bills at a single site or very few sites. People who have to go to Transpoint's site, then to MSN Money Central, then to Chase Manhattan's site are not gaining much in time or convenience.
Some start-ups, such as Santa Clara-based CyberBills, allow people to look at scanned images of their bills on the Web. The paper bills are mailed to CyberBills instead of to individuals. The company scans in the bills and posts them on the Web. Customers, who pay a monthly fee, can use a password to view and pay the bills on the company's StatusFactory.com Web site.
Secure Commerce Services Inc. of Princeton, N.J., operates a similar site, Paytrust.com, as does PayMyBills.com of Pasadena.
Though few people are using these sites, some find them useful and well worth fees that range from $3.50 to $29.95 a month.
''My mother used to hate paying bills,' said Roger Doyle, a Realtor in Morristown, N.J. ''It's funny, but as I've gotten older, I've developed the same thing. I always had the money, and I always got the bills, but I never could seem to pay them on time.'
Doyle started using StatusFactory.com a couple of months ago, and says life has improved. ''Two clicks and the bills are gone,' he said.
Jim Moran, a vice president at a Philadelphia advertising agency that moved him to San Francisco to open an office, is just as pleased with Paytrust.com. ''I travel a lot. The problem was that bills would come in and be overdue by the time I got back in town,' he said.
Paytrust took care of that problem, and also reduced paper clutter. ''I work in an information-intensive business, and my life is already overrun with paper,' he said.
These companies all promise to keep financial data secure and never resell it to companies doing market research. Analysts believe, however, that the appeal of such services will be limited by people's fear of having their bills sent to an anonymous Web site.
Analysts said banks have an advantage because people generally have an established relationship and are used to the idea of using a bank account to pay bills. ''We think most consumers will prefer to use their bank Web site for viewing and paying bills,' said Forrester's Newcomb. ''But there will be other sites as well. Some people may prefer to go to a portal.'
A debate is also brewing about how much access a bill delivery and payment company, or ''consolidator,' should have to the information in a bill.
Under one approach, used so far by Transpoint, the consolidator runs the server and ''hosts' the biller's data. Under another, used by Checkfree, a company called Just-in-Time Services Inc. and which Spectrum also intends to use, the company sending out bills hosts its own data, and all the consolidator sees is the electronic equivalent of a sealed envelope.
Transpoint promises its customers that it won't use the data. Billers using the service, such as GTE Corp. of Irving, Texas, said Transpoint can't even see it because the data is encrypted and password-protected.
''GTE has very strict privacy standards,' said Wayne Irvin, assistant vice president of Web commerce. ''The information is owned by the individual, just as it is with a paper bill, and is never shared with Transpoint or any other vendor.'
But some analysts said this model raises concerns about the privacy of sensitive consumer information.
''Information is power,' said Gartner's Litan. ''Why share your customer base with Microsoft, even if they have signed a contract saying they won't use the data? It doesn't make a lot of sense.'
Transpoint's Levin said the company offers its customers a choice between Transpoint or the biller itself hosting the data. So far all of them are using Transpoint, but have projects under way to test the other approach.
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Contact Monua Janah at mjanah@sjmercury.com or (408) 920-5916.
mercurycenter.com
Thanks Sam for helping out here from time to time
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