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Online Billing Promises Huge Cost Savings
PC Week via NewsEdge Corporation : New online bill
presentment technology and services due this fall are
shaping up to offer corporations huge annual cost
savings.
Integrion Financial Network LLC--which was founded
nearly two years ago by 17 banks, IBM and Visa
International Inc.--will launch a service that ties
electronic check processing into corporate billing
departments and a processing service run by CheckFree
Corp., of Columbus, Ohio.
Also this fall, MSFDC, formed last year by Microsoft
Corp. and First Data Corp., of Hackensack, N.J., will turn
on its bill processing and data hosting service.
These and other forthcoming services like them will
allow corporations to accept bill payments over the
Internet, reducing billing costs by as much as 50 percent
a year. Such savings are expected to spur growth toward
2 billion bills transacted online within four years.
"Everyone is a winner, except the post office," said
Rusty Potts, manager for bill presentment and payment
at Integrion, in Philadelphia.
A traditional paper bill costs about 90 cents per bill in
postage and processing, according to industry
estimates. For small companies, without the economies
of scale of a corporation, it's more expensive. Online
services can cut that cost by 30 to 50 cents per bill.
"There's a few reasons for doing this. One, probably the
biggest, is costs savings," said Kevin Duffy, manager of
billing strategy at AT&T Corp., in Basking Ridge, N.J.,
which launched its own service, OneRate Online, last
month. "This also provides us with another channel to
bill our customers. We can have multiple options, and
customers can choose which one suits them. "
AT&T is in the vanguard of the market, which is
expected to rise from 400 million bills paid online this
year to 1.8 billion bills paid online in the year 2002,
according to the New York-based Financial Services
Technology Consortium.
The key, said analysts, is billing services, such as
MSFDC and Integrion/CheckFree, that act as a
middleman in a bill payment.
"To pay a bill, you have to have someone linking the
customer to the biller and to the bank," said David
Medeiros, an analyst at the Tower Group, in Newton,
Mass.
Several distinctive online billing models are emerging.
Integrion offers the biller server software and integration
to legacy applications, as well as home banking
software. The company also provides a bank with a
server and relies on a back-end integration standard,
called Gold.
For security reasons, Integrion allows its corporate
customers to decide how much customer data it wants
to give up to the actual bill presentation service, which
is being run by CheckFree.
The second model, used by MSFDC, offloads all of the
biller's customer data to MSFDC, which handles the bill
presentment process at its headquarters in Denver.
MSFDC officials said that this model is faster and
cheaper to run. But some companies are reluctant to
disclose customer data to a third party.
MSFDC also provides integration tools to its biller
customers and relies on the OFX (Open Financial
Exchange) specification for home banking.
By the end of the summer, Integrion and MSFDC will
develop a way to merge the Gold and OFX
specifications.
Microsoft, of Redmond, Wash., promises to ship
products by late fall that support the combination.
AT&T is looking to beef up its service with software
from Just in Time Solutions Inc. This week, the San
Francisco startup will announce the release of BillCast, a
server suite built on the OFX specification. |
