E-Bills Arrive -- Adoption Of Electronic Billing Is Spreading. Fundamental Business Needs Are Driving That Growth.
April 20, 1999
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INFORMATIONWEEK: For banks, credit-card issuers, utilities, and companies in other industries, online billing has been one of the most promising areas of electronic commerce because it cuts costs, automates manual processes, and creates a new way to cross-sell to customers. Last week, two major banks moved forward with ambitious E-billing initiatives for all of those reasons. E-billing is starting to pay off.
After months of testing, Bank One Corp. has begun offering integrated electronic billing and payment to all of its 300,000 online banking customers. Bank of America, meanwhile, revealed that late last month it launched a test of its own online-billing technology that could make it a major player in the electronic-billing market.
On the product front, two companies that develop applications for generating and presenting electronic bills unveiled software enhancements. BlueGill Technologies Inc. released online-billing apps tailored for four vertical industries, and Edify Corp. made available an upgrade to its banking platform that includes online billing. Later this quarter, CheckFree Corp. will introduce E-bill 2.0, an upgrade of its toolkit, which lets banks and billers convert legacy billing data, present it on the Web, and process cash payments. Yahoo Inc. plans to use E-bill for a new billing service on its portal by summer.
Online billing is still in early development, but the increased activity shows it's getting closer to widespread adoption, driven mainly by basic business needs. Online billing is cheaper than mailing printed invoices, and supporters say it substantially reduces billing errors. MCI WorldCom says it saves $1 for every bill consumers pay online-and that its online customers are 75% more satisfied with MCI's customer service than conventional customers.
But electronic billing's real attraction is that it offers a new means for interacting with customers. Banks can use E-bills to promote credit cards, mutual funds, and other products. Citigroup, which is testing online billing, sees it as a crucial part of its E-commerce strategy. "It's an important component of the overall electronic-commerce relationship with customers," says Ed Horowitz, executive VP for advanced development at Citigroup. " It's one thing you need to have if you're going to compete in electronic commerce."
One Site, Many Bills
Banks, service bureaus, and Internet portals all want to consolidate bills from many companies on their sites because most consumers would prefer to go to one location to pay all their bills. Service providers that attract large numbers of billers and consumers stand to lock in customers and generate revenue by pitching products, selling ads, and charging fees.
CheckFree is the market leader among the consolidators. It displays bills from 15 companies, including BellSouth and Pacific Gas & Electric, on its site and delivers the bills to banks and portals. It's being challenged by Transpoint, which has 37 billers and 10 financial institutions, including Citigroup, testing its system. Transpoint says at least one of those pilots will go live this quarter.
In addition to consolidating bills, CheckFree and Transpoint provide software and integration services to convert data to the Web and operate data centers where online bills are hosted and payments are processed.
First Union Corp. was the first bank to present electronic bills to customers last year. Like Bank One, it uses CheckFree's E-bill. Bank One's billing system is linked to CheckFree billers by Integrion Financial Network, a service bureau owned by Bank One and several other banks, IBM, and Visa USA. The 15 billers working with CheckFree also present bills on Bank One's Web site.
"E-billing is interesting because the active customer would return to the site several times a month," says Bruce Luecke, president of interactive delivery services at Bank One. "That's an opportunity that a lot of companies would kill for."
Bank of America is positioning itself as an electronic bill consolidator. A few dozen of its employees started viewing and paying their credit-card bills on the Internet in a pilot program. That number will grow to 1,000 over the next few months. If all goes well, the billing service will be offered to the bank's retail customers in California by year's end.
Bank of America plans to make online billing available to its 1 million U.S. customers who do at least some of their banking via the Internet or through online services such as America Online. The bank declined to identify its billing partners.
The bank's system, which uses the Open Financial Exchange standard for transporting data, was developed almost entirely in-house. Bank of America already had some components, such as technology for rendering bills on-screen, and found packaged solutions didn't fit well, says Jane Wallace, the bank's senior VP of electronic bill presentment and payment. "We found this to be a lot easier than what some technology companies were telling us," she says.
Banks say they have an edge in becoming electronic bill consolidators because they are already trusted financial intermediaries. But Internet portals are fast becoming centers of E-commerce. With Yahoo and Netscape Netcenter planning to offer E-billing, banks are anxious to cement their position. "The portals will clearly be big players," says David Fortney, director of product development at Integrion. "The banks that invest in building compelling functionality on their Web sites will attract a large number of their customers" to their billing services, he says.
Business-To-Business Billing
Consolidators and banks have focused mainly on consumers, but that may soon change, according to Meta Group analyst Kip Martin. "Bill payment and presentment will follow the evolution of E-commerce," he says. That means attention initially will be lavished on consumers. Then companies will realize the business market offers big dollars and compelling business cases.
Martin says there's a much better rationale for a multinational corporation to review a massive phone bill on the Web than for a residential consumer who made only a few calls. Companies already see the potential advantages of online billing, but it will take time for consumers to understand them, he says.
One of the first vendors to focus on business-to-business billing is BlueGill, which has expanded its software line with applications that take advantage of the Extensible Markup Language to present legacy data on the Web. The packaged applications, including i-Banker and i-Biller, tailor bills for banks, brokerages, insurance companies, and telecoms.
BlueGill's apps use a customizable rendering engine that takes print-stream data and converts it into a format that can be displayed on the Web. They are used mainly for delivering bills and statements to consumers, but BlueGill has introduced a module for managing business-to-business bills, which typically have more data and require more manipulation.
Vestcom International, which prints and mails statements for billers, uses BlueGill's rendering engine and plans to use i-Biller because it requires less customization than the current product and can be implemented more quickly, says Cynthia Ward, chief operating officer of Vestcom's Internet solutions group. She's also interested in the business-to-business module because it would let her business customers provide more extensive analysis of bills presented to their own business clients on the Web. All of Vestcom's Web billing clients are in the testing phase.
Other software suppliers are still focused on consumers. Edify's Electronic Banking System Release 3 lets banks deliver information and transactions via various access channels, including the Internet, telephone, and personal finance software. The update adds support for online billing.
Billserv.com, a new Internet service bureau targeting local and regional billers, last week previewed a billing portal called Bills.com, where it hopes consumers will come later this year to pay bills. Brinkman Technologies Inc., a banking software provider, says Tucker Federal Bank of Atlanta will be the first to test its new NextBill technology, which lets merchants E-mail a bill summary directly to customers, who can click on a button and route payment from their Tucker account to the merchant via the national automated clearinghouse network.
The role of banks, consolidators, and billers will continue to evolve as they try to figure out what works for their customers and their businesses. Recent developments represent a significant step forward, but as Meta Group's Martin says, "We've got a ways to go here."
-with Jennifer Mateyaschuk, Mary E. Thyfault, and Bob Violino
Copyright c 1999 CMP Media Inc.
By Gregory Dalton
<<INFORMATIONWEEK -- 04-19-99, p. PG18>>
[Copyright 1999, CMP Publications]
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