"The end of bills as we know them?"
A pledge to transform merchant transactions
[An old article but useful in terms of understanding the Feb 3 deal with e-route inc.]
By TERRENCE BELFORD
For The Financial Post
Saturday, September 12, 1998
Ever pray for an end to those bills the postman brings? They clog the mailbox. They get mislaid. They take hours a month to pay and file and it costs you 45 cents each to mail them back.
Considering the average consumer receives 80 bills a year through Canada Post, that's $36 a year in postage alone. And if you think mailed bills are a hassle for you, consider the impact on the company that's mailing them out. Industry figures say postage, paper and handling can cost companies up to $2.50 per bill. That means total cost of paying bills by mail could be as much as $300 a year for each of us -- billions of dollars a year in Canada.
Is there a better way?
Newstar Technologies Inc. of Thornhill [now part of BCE Emergis] and Microsoft Canada Company think so. The multinational software giant and the Canadian company which dominates Internet banking applications here have teamed to deliver an as yet unnamed Internet product which reduces the cost of monthly bill paying to just pennies.
What's more, the new bill payer will revolutionize the way banks relate to their merchant customers, the two companies say. "The techies would call it a 'killer app.' (application)," says Terry Ham, Newstar's president.
The bill payer would be incorporated into bank and the Web sites of financial institutions. Just another button to click on when it comes to paying bills. "It's all very, very simple and totally seamless," says Warren Dent, director of business development, desktop finance for Microsoft U.S.
Need to pay a bill? Go to your bank's Web site and register for the program, then click on the bill paying button. Up pops a menu of bills needing your attention. Click again and a summary of charges appears. Need more detail? Click once more.
When it comes to paying, it's as simple as a few clicks to tell the system what account or credit card you want to pay with.
Money is transferred electronically from your account to that of the company whose bill you're settling. The system notifies the merchant's computers that you've paid and updates your account there. All in seconds, without need for Canada Post, without envelopes, stamps, receipt forms, cheques and related hassles.
The cost? Just pennies per transaction. "It's not just the cost savings. It also eliminates the hassles," saysDavid Daniels, development manager at Microsoft Canada. "No more unpaid bills, because you thought the wife paid them. No more misplaced bills. Nothing gets lost in the mail or at the merchant's bill payment centre." "What's more, you can pay bills or get answers on the state of your account when it suits you, 24 hours a day, seven days a week," adds Dent.
"The potential impact is enormous. It dramatically changes the way banks deal with merchants. Acting as their collection agent, they can help merchants do away with an enormous amount of infrastructure and create a whopping great savings," says Ham.
Newstar has more than 400 clients, a list which includes all Canadian banks, he adds. "We're a global supplier of online banking solutions -- both PC banking and Internet banking." The reason the new application is unnamed is that Newstar and Microsoft figure banks will want to impose their own brand on the service. No buyers yet though. [Ancient history as of Feb 3]
"The banks will form a consortium [now called e-route inc.] to offer the solution with a common interface to both consumers and merchants, much as they have with Interac," says Ham.
"What we can say is that we're visiting with all of the banks right now," adds Microsoft's Dent. "So far they seem extremely pleased to see us." [guess he wasn't kidding!]
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