E-billing called next Internet 'killer app'
Hi Rocki, the following is an article which appeared in the Dec 8 Globe & Mail - from it we can see just how strategic the acquisition of Newstar's technology *may* become.
=============
E-billing called next Internet 'killer app'
More firms expected to jump at cost savings to be had
from electronic distribution, and payment of bills.
Tuesday, December 8, 1998
GORDON ARNAUT
Special to The Globe and Mail
When Bell Mobility decided a year ago to enhance its Web site with a
feature that would let its customers view their bills on-line, it was seen
mostly as an added convenience for the company's cellular phone and
paging subscribers.
But with 10,000 users and 1,000 more added every month, the company
now expects to save $14-million over the next five years from not having to
print and mail monthly bills.
Last month, the service, which provides each customer with a
password-protected, personalized Web space, also added the capability of
paying bills on-line, provided users have an on-line bank account.
The Bell Mobility service is an example of the latest Internet commerce
trend, called E-billing -- the electronic distribution and payment of bills. As
more and more consumers go on-line, E-billing is expected to spread like
wildfire -- the next "killer application" on the Internet, according to some
prognosticators.
The potential is huge. In the United States, an estimated 37 billion bills are
delivered by the postal service each year. For companies sending them, the
average cost of calculating, printing, mailing and processing the payment for
each bill is estimated at $10 (U.S.), for a total of $370-billion, according to a
report by Diamond Technology Partners, a Chicago consulting firm.
Sending and receiving payment for those bills electronically could save 10
per cent of that amount, according to Diamond, which recently published a
report on E-billing called On Bills, Banks and Bill (Gates).
The report states that merchants are willing to pay as much as 40 cents a
bill for an E-billing service, creating a market that's potentially worth
$15-billion.
But putting together the pieces won't be easy. Bell Mobility, for example,
estimates that almost half of its nearly two million customers use the
Internet, but only a small fraction of those also use on-line banking.
So far, few of the large telephone companies and utilities -- the biggest
potential users of E-billing -- have taken the plunge, largely because the
payment side of the equation is not yet fully in place. Bell Mobility is trying
to address that by adding debit-card payment to its E-billing service, says
Paul Nathanielsz, the company's vice-president of marketing services.
Until all the pieces are in place, including payment systems and wider public
Internet use, widespread use of E-billing will not happen, say skeptics.
"The critical mass will not be reached for another few years," says Marian
Lewandowski, vice-president of professional services for Xenos Corp., a
Markham, Ont., company that creates software for distributing documents
on the Internet.
"It's not going to happen for a couple of years, because there is a fight going
on among the billers themselves, the banks, the electronic payment vendors
such as Microsoft and Checkfree and the consolidators, which includes the
big Internet portals and the upcoming E-billing services."
The portals, like Yahoo Inc. of Santa Clara, Calif., America Online Inc. of
Dulles, Va., and Excite Inc. of Redwood City, Calif. -- all entry points to the
Internet for a majority of users -- would like to provide a one-stop E-billing
service to consumers. It would be a place where you could view and pay all
your bills at once, instead of going to the Web sites of individual billers.
Already, portals have assembled financial services "supermarkets," to the
dismay of banks, which fear these interlopers getting between them and
their customers.
Several coming E-bill services are the result of various combinations of the
banks themselves and software companies like Microsoft Corp. and Intuit
Corp., maker of Quicken.
The Integrion Financial Network, a consortium that includes several U.S.
banks, International Business Machines Corp. and Visa U.S.A. Inc., is
expected to launch a pilot E-bill service in January.
Another E-bill service, Transpoint, a joint venture of Microsoft, Citigroup
Inc. and others, is expected to introduce its E-bill service later this year.
But what is not yet clear is who is going to pay. "The consumer is not going
to pay," says Mr. Lewandowski. "The banks are going to say 'we're not
paying, in fact we want to charge somebody.' The consolidators would also
like to be paid for providing the service. The billers are in the background and
they're saying it's our bill and you want to [take us out of the picture].
"The billers don't want the consolidators, not from a cost point of view, but
from a loss-of-control point of view. If they hand all their valuable information
to the consolidator about their customers, what other service is the
consolidator going to want to sell with it?"
While the E-billing business sorts out those questions over the next few
years, a more significant opportunity will be in electronic statements, Mr.
Lewandowski says. This includes bills, but also bank account and mutual
fund statements, insurance policies and many other kinds of customer
correspondence.
Distributing statements over the Internet not only provides customers with a
measure of convenience, but also presents the company with the
opportunity to engage in one-on-one marketing, Mr. Lewandowski says.
"With mailed statements, every customer gets the same direct advertising
materials, because of the limitation of printing technology. "When you send
statements over the Internet, you can sell the customer something he or she
is interested in based on that customer's profile."
It is important to make sure the electronic statement looks just like the
printed version, adds Mr. Lewandowski, a difficult feat, since most
large-company statements are generated on mainframe computers and need
to be translated to the Internet format while preserving their original look.
"The statement is often the only touchpoint to the customer. The statement
is friendly and non-threatening. People don't have to be trained on how to
use it and it is an exemplification of strong branding of the organization." |
