E-billing: The check is in the ether

Consider this. If the nation's utility companies switched overnight to delivering bills to customers and receiving payment only in electronic format, the utilities could save $1.2 billion annually, according to estimates by Killen & Associates Inc., a Palo Alto, Calif., market research company.

Last September, an EBPP pilot project Sidiropoulos led for the nation's second largest utility company, Southern California Edison (SCE), of Rosemead, Calif., went live. And although he used the promise of cost savings to justify the project to senior management, Sidiropoulos believes giving customers more options is the best reason to do electronic bill presentment.

Six months after the pilot went into production, "[SCE] has not realized any cost savings. That will only come after a certain volume of customers sign up for [EBPP]. But Southern California Edison is committed to giving customers choice," says Sidiropoulos, whose consultancy is in Pasadena, Calif.

Indeed, the top reason for implementing e-bills-especially among public utilities rushing to gain a toehold in the era of deregulation-is customer care. Both business customers and consumers are clamoring for more options for paying their bills.

EBPP is still in its infancy. Of the 7,500 major billers worldwide that account for about 60 percent of all repetitive bills, only 50 have initiated a strategy to issue bills electronically, according to Killen & Associates. These early adopters include phone, credit card, cable and insurance companies, as well as public utilities. But it's not just customer demand for better service that's driving EBPP. E-billing does offer the potential for great cost savings down the road. Producing, delivering, and accepting payment via an e-bill costs only slightly more than half as much as the cost to produce a paper bill.

"It costs about 58 cents for an e-bill vs. about $1 for a paper bill," says Ken Kerr, research analyst for Gartner Group Inc., a market research firm in Stamford, Conn. But until a critical mass of customers elect to pay their bills electronically, the biller company will experience an increase in costs.

Beyond customer care-and those cost savings down the road-marketing is another major reason to do EBPP. "Ten years ago, the only purpose of a bill was to collect money. Now, the bill has two purposes: Collect the money and sell," says Michael Killen, president of Killen & Associates. Companies can address their customers-or sell space to third parties for this purpose-much more efficiently electronically than on paper.

"Marketing is a real benefit," agrees Sidiropoulos. "On the Internet, the insert mentioning a refrigerator rebate still lives," he says. And for non-utility EBPP implementers, the potential to cross-sell and up-sell (that is, sell additional or more expensive services and products), and third-party advertising is even greater because they are less restricted in these activities than are utilities.

So what stands in the way of this more efficient way of dealing with bills? Plenty.