Customer ambivalence hinders e-billing potential

By Dana Bacciocco, Associate Editor

EBilling may promise rewards to utilities, but it won’t mean exodus from the paper chase. Paper billing has been around and will stay around for utilities and they can’t charge extra for it. But the sunk costs of paper aren’t as eye-catching as the new investment dollars required for electronic bill presentment and payment (EBPP). To see any cost reductions on the paper side, companies will have to drive a lot of volume to electronic-and we’re not there at this point, according to Jeanne Capachin, senior analyst with Meridien Research.

Despite towering expectations and a range of vendors to provide functionality, little progress has been made in terms of market demand for EBPP, said a report from Meridien Research. “Electronic Bill Presentment and Payment: Money Talks and the Postman Walks,” said that “conventional wisdom predicted the need for online bill presentment to spur bill payment, thereby enabling consumers to receive and pay bills entirely online. Despite increased consumer usage of online banking applications in the last five years, electronic bill payment services failed to gain a strong following.”

Probably because billing, as is, works. Customers receive bills and pay them, not losing sleep over missed opportunities to explore richer information and to act in real-time online. They don’t always know they can save steps to customer service and more with online billing.

And utilities that don’t jump on the EBPP bandwagon now won’t be missing too much yet. “Where consumers aren’t clamoring for this, I don’t think it’s a matter of losing customers,” said Capachin. It may influence customer retention, but it seems there’s little risk of losing customers based on biller capacity for EBPP. “Now down the road, it may be more of a differentiator. Something that billers and utilities need to get into, but at this point there’s not a lot of downside, except not being viewed as leading edge, which is not that critical for utility companies in general,” Capachin added.

However, choosing EBPP, companies will definitely see value, “but it’s very much an individual business decision based upon what they have for legacy billing systems; how much of a commitment they’ve already made to investing in Web-based or e-commerce solutions; and what they think they’re going to be able to get for adoption rates,” said Capachin. “So in long run I would say yes, it’s in their best interests. Is it a strategy for 2002? Maybe not depending on the unique situation.”

A key driver for many is the current billing system, even before consumer demand. It could be very expensive to ramp up EBPP depending on backend linkages and front end presentation-Web sites, portals, service providers. “We could see it as a multi-year project for folks in utilities to make the right decision, pick the right vendors and use right strategy,” said Capachin. And the more robust the solution, the more expensive it will be.

See a penny, pick it up

After adding value, comes communicating value. “Probably one of the issues for utilities is that, because its regulated industry, without all the flexibility of other industriesellipseoutright incentives can’t be done. So it’s more subtle marketing pitch,” said Capachin.

CheckFree, on the vendor side has been successful as a provider because they have been building relationships with billers, consumers, and portals, according to Capachin. “They’re trying to build relationships everywhere to drive volume up.

“Although CheckFree has been able to amass more volume than anyone else, even that isn’t really striking. They’re definitely the biggest player out there,” said Capachin, but, “There’s huge universe of untapped potential still out there.”

CheckFree has 279 billers signed, and over 65 percent are utilities; of those billers signed, 190 are in production, according to Teri Bemis, product marketing manager at CheckFree. “Our subscriber growth is growing. We saw from 3.8 to 5.6 million [subscribers] in a year. So it’s almost a 50 percent increase.” Bemis also said that a recent Jupiter survey on the demand for EBPP said that over 70 percent of respondents prefer to receive online bills via e-mail.

“Another thing we’ve learned is: if you build it, they will come. We found if you market and let them know its there, they want it.” CheckFree has created marketing program that works with customers to develop a tailored marketing plan. “Results of that have been phenomenal; they’ve seen increases in adoption based on these programs of up to 20 percent, in very short periods of time” said Bemis.

ROI is better and faster when the approach to EBPP robust. “What we’re seeing are those utilities who have started to have a little success, maybe dabbling in distribution or a biller direct site, they’re coming back and saying lets do more. Like Dominion, who went from distribution to buying the software,” said Bemis.

Dominion wanted to be in position to present bills and accept payment through whatever method customer chose, and to keep pace with other service providers, according to John Rothnie, director of customer Internet services at Dominion.

Working with CheckFree since 1998, Dominion recently converted from a thick model to a thin model of EBPP-selecting CheckFree’s complete suite of software and payment services to enhance its existing electronic billing and payment initiative.

“We’ve purchased software from CheckFree to host bill presentment and payment on the site itself. It’s a scalable solution that we can host at We primarily purchased the B2C model, certainly scalable to B2B application, also,” said Rothnie. Rothnie said that since it’s introduction of Internet billing, customer reception has been very good.

Consumer clamor may be a secondary driver for EBPP. Biller benefits are significant and include process automation, cost reduction, and improved customer service and brand image-cornerstones for competition.

Capachin can be reached at Bemis can be reached at Rothnie can be reached at

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