E-billing in Europe and the US
In the US and Europe, electronic billing and payment (EBP) has been increasing in popularity with both the business community and end consumers alike. For organisations that issue large volumes of bills (credit card, insurance, telephone, Internetinternet, cable and utilities providers, and more) e-billing has proved to be an ideal way of reducing operational costs while opening new revenue streams, retaining customers and remaining competitive. For consumers on the payer side, it represents both convenience and a more efficient money management tool.
In a survey conducted by CheckFree Analytic Research Services with Tthe Marketing Workshop and Harris Interactive (in January 2004), consumers in the US who currently receive and pay their bills online through their bank, brokerage or InternetInternet portal ranked the top benefits of the service. The biggest benefits were:
Overall growth in electronic billing and payment indicates that many payers will consolidate their bill viewing and payment behaviorbehaviour as part of online banking. According to the same January 2004 study, the “Next Wavenext wave” of consumer payers in the US are those who have indicated a high likelihood of subscribing to an online bill payment service within the next year. Characteristics of the next wave include those who are seeking to take control of their finances, ? with 71 per cent saying they hate to feel behind when paying bills. And 60 per cent don’t like buying stamps for posted cheques.
Then there are those who already use biller direct sites ? , 50 per cent of the next wave have tried paying bills online by first paying a bill using one or more individual biller Web sitewebsite, be it their telephone company, utility, credit card or other. Finally, there are those who want to eliminate hassle, ? 45 per cent of the next wave say they sometimes forget payment due dates or do not like writing cheques to the same companies every month.
The adoption of e-billing is of course dependent on the uptake inof online banking. In the US, Bank of America now has 10 million active online banking subscribers (up from 4.7 million at the beginning of 2003) who use online banking services to order new products, transferring money, and check balances. Out of that online customer base, 4 million consumers receive and pay bills (up from nearly 1.8 million during the same period last year). In Europe, where consumers have traditionally been more comfortable with transacting their financial affairs online, the uptake of online banking is fuelled by the existing familiarity with electronic payment methods such as direct debits, standing orders and electronic funds transfers. In both cases, e-billing is proving to be a major value-add to these services, a factor which has prompted the direct involvement of central bank payment processors in the provision of EBP services, in a number of European countries.
In Europe particularly, customers already make extensive use of online banking for the viewing of most recent transactions, transferring money, downloading financial data and limited forms of bill payment. -in many ways fully-fledged e-billing and payment is a natural extension of these services. When it comes to paying bills online, payers today will often view bills at a biller’s site but pay the bill at their bank’s website. However, CheckFree’s latest research shows that those who view bills at the online bank in the first place, have a higher propensity to also pay them at the same site.
Banks, always on the alert for competitive edge customer services, loyalty-building incentives, operational efficiencies and opportunities for new revenue streams,streams are seeing multiple advantages to be gained by providing e-billing and e-statement services within the online channel. As a customer’s use of online banking services increases, the likelihood of switching banks decreases. To confirm this, the study cited above discovered that online bill payers are less likely to change banks by 23 per cent, and customer satisfaction ratings are almost double for e-bill payers at a bank web sitewebsite, compared to those not using online services.
Banks are also finding that because of the repetitive nature of billing, the e-bill experience is a way of attracting customers to their web sitewebsite more frequently, thus exposing them to further customer touchpoint opportunities. While customer retention rates within Europe tend to be much longer than in the US, banks in the region are nevertheless witnessing the same growth in added value that can be gained from delivering e-billing and payment services through their web sitewebsites.
While bill consolidation continues to grow in the US, these services are also notably now on the increase in Europe. This enablement of centralised bill viewing and payment is on the rise within the European online banking community. -typically up to 10 different cyclical bills, which may include telephone, utilities and credit card statements, are managed from within the bank’s online channel. In the USA, e-bill consolidation is now reaching critical mass, driven largely by the educational and marketing efforts as well as the technologyical advances of EBP specialists, such as CheckFree which is a consolidator for around 300 of the largest US billers and supports a wide network of more than 1,200 entry points into its central consolidation service including leading consumer-facing web sites such as Bank of America, US Bank, Yahoo, Microsoft and Charles Schwab. .
In Europe, from Scandinavia to southern Europe, it is the Internetinternet banks, very often fuelled by national payment initiatives that are setting the pace for e-billing adoption. Banks offer a tried and tested core competency in payments and are best equipped to handle the end-to-end payment transaction cycle from presentment at the front end, to transaction settlement in the back office. Regarded as a trusted third party, financial institutions have a reputation for providing a stable, secure and trustworthy platformsa stable, secure and trustworthy platform, offsetting the reluctance some customers still feel about sharing their financial information online. By providing bill and statement aggregation portals, online banks thus become a viable new route to market for high-volume billers, keen to reduce paper billing costs and improve customer service channels.
One of the most exciting e-billing trends in banking is the emergence of payment processing centres (transaction clearing houses for member banks) as e-bill aggregation hosts. By acting in this way as a central Billercentral biller service provider (BSP), the significant investment required to develop and manage an e-billing infrastructure is fronted by a central institution on behalf of a network of banks.These banks which individually may not have the capital, expertise or necessary connection with local billers to undertake a stand-alone service. By providing a one-stop-shop for integrated bill viewing, e-payment and transaction processing, these clearing centres are also able to realise major operational and cost efficiencies which they can pass on to their bank members and local billing communities.
Saving money is one of the most obvious efficiencies to be gained through online billing and payment. Paper-based bill and statement production costs European banks &and billers billions of eEuros every year. This being the case, it is no surprise that customers are being proactively encouraged online by billers eager to ‘turn off the paper’. In the study cited above, it has been found that people are more likely to settle for a paperless transaction environment if they have paid bills via their e-bank rather than at a biller site, since they tend to have more confidence in their bank’s ability to retain payment records and archives. After all, most banks already have a successful track record in handling customer loans, money market accounts, and home insurance etc. The online customer care features of e-billing (bill queries, dispute handling, data downloading, and data storage, etc.) also has a major impact in reducing customer service and call centre overheads for local billers.
There are a host of other business and marketing benefits to be realised through electronic billing. EBP creates more web sitewebsite ‘stickiness’ by bringing customers online on a regular basis, improves customer retention and enables high-margin, more profitable customers to be identified and targeted with customised sales messages and marketing campaigns. Interactive customer communications in real-time can be developed, possibly for the first time. For valuable corporate customers, e-billing offers a wealth of business support services including rapidly customisable statement summary layouts, flexible data access and accounts payable workflow tools. These payment efficiency tools lead to a reduction in day’s sales outstanding DSO (day sales outstanding) and better cash flow for the biller.
An increasing number of businesses and consumers are opting to go online to manage their monthly accounts and other e-commerce activities. By viewing and paying all one’s bills via the online bank, there is no need to remember multiple passwords for each bill site, no need to write cheques or to miss a payment. Clearly there are enormous business advantages for both billers and banks in the adoption of e-billing. For payers, online billing and payments is fast becoming the preferred way of doing business.