E-billing: The check is in the ether: Page 2

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Electronic bill presentment and payment involves three distinct processes:
1.  Bill data extraction and transformation. This entails capturing data from legacy sources and readying it for presentation in Web format. Billers can build their own data extraction applications, buy a software tool or contract with service providers for this purpose (see vendor list for more information).

2.  Bill presentment. Once data has been extracted from legacy systems and translated into a Web-ready format, the data must be sent to the electronic bill templates, which reside on a bill presentment server. Billers can accomplishment this through software or services (see vendor list).

3.  Bill payment. Electronic bill payment takes place either at the biller's site (see "The Biller Direct Model") or at a service provider's site (see "The Bill Consolidator Model"). In the latter, the bill payment service provider then sends electronic remittance information to the biller's bank and electronic posting data to the biller. CheckFree, CyberCash and TransPoint are the leading service providers (see vendor listing).

For starters, with more than 30 vendors, the EBPP marketplace is crowded and confusing. Billers are having a hard time sorting out all the players and their competing interests. And there is currently no standard way for a biller to send data to a bill payment service provider such as CheckFree Corp. or TransPoint (a joint venture of Microsoft Corp. and First Data Corp.). This makes it an even greater challenge to get data from a legacy system where the information generally resides, into a Web format and implement electronic payment receipt mechanisms.

Quality and security are another hurdle. E-bills have got to be both flawless and secure if consumers are to embrace them. If all that weren't enough, over the next few months companies will divert more and more resources-including those that might have gone to EBPP-to solving the Y2K problem.

Despite the challenges, industry experts believe use of EBPP will grow quickly.

"The whole biller community will adopt EBPP relatively rapidly," says Killen. Although only 8% of the world's major billers will implement e-bills by 2000, that number will surge to 33% by 2005, he predicts.

Three EBPP models

Web-based electronic bill presentment and payment appeared on the scene more than two years ago. In the early days, the only option was for a biller to build a homegrown system to present its bills to its customers on its own Web site. Today, companies can use software tools to build their sites or outsource the process to a service provider. (Giga Information Group Inc. calls this the "biller direct" model. Billers like this model because it gives them control over the customer experience and also lets them integrate analytical tools and customer service with billing.

But besides being very cumbersome technically, this model is inconvenient for consumers, who want to view and pay multiple bills in a single place. "Consumers won't want to go to different Web sites to pay their bills. Each Web site is organized differently. Who wants to remember passwords to a number of different bills?" says Erica Rugullies, a senior e-commerce analyst at Giga Information Group, in Cambridge, Mass.

Tony Sidiropoulos believes giving customers more options is the best reason for electronic bill presentment.
Photo: Kim Kulish/SABA
The next model--and by far the most prevalent today--is the bill consolidator, or aggregator, model. Consumers go to a single place (such as the CheckFree's site, a bank's Web site or a portal like Yahoo!) to pay all of their routine bills. This is convenient and easy for consumers to use, but is often unacceptable to billers because it distances them from their customers.

In EBill 2.0 release, due in April, CheckFree intends to combine the best of both models with something it calls the "direct distribution" model. In this model, the customer goes to the aggregator site (a service provider such as CheckFree) and then is bounced immediately to the biller's own Web site for bill payment and then back to the aggregator once payment has been made. This gives users the convenience of logging in just once to pay their bills, while giving billers control over the transaction.

"Direct distribution combines the other models to meet the fundamental requirements of customer convenience, biller control, and quality," says Ravi Ganesan, chief technology officer for CheckFree, in Atlanta. CheckFree also includes many layers of powerful security features, shouldering much of that burden for the biller. "If we make a mistake and the customer is charged a late fee on the bill, we will eat the cost," says Ganesan.

Three approaches to electronic bill presentment and payment:

The Biller Direct Model

Modus Operandi: A biller presents its bills to customers on its own Web site.

Pros / Cons

Billers have the capability to integrate online billing with analytical and charting tools, customer service capabilities and online stores.

Billers have control over branding, payment processing, customer enrollment and the look and feel of bills and the overall site.

This model is inconvenient for consumers who want to view and pay multiple bills in a single place.

The Bill Consolidator Model

Modus Operandi: Consumers go to a single place to view and pay multiple bills.

Pros / Cons

This model is convenient for consumers because it enables them to view and pay multiple bills in a single location.

Banks also prefer this model because it gives them an opportunity to provide their corporate and consumer customers with additional services and keeps them in the payment loop.

The party that enrolls customers can garner valuable marketing data about customer preferences and in this model, billers lose the opportunity to enroll their customers in EBPP services.

This model gives third parties an opportunity to come between billers and their customers, which is unacceptable to many billers. This is a particularly contentious issue in industries that are undergoing deregulation, such as telecommunications and gas and electric utilities.

The Invited Push Model

Modus Operandi: Biller E-mails graphically rich electronic bills directly to consumers.

Pros / Cons

This model prevents third parties from coming between billers and their customers.

It also has the potential to be highly convenient (so long as consumers can receive graphically rich bills in the same in-box as other E-mail) without having to use proprietary client software.

In most cases, this model provides billers with little tracking and auditing capability and does not incorporate electronic payments in an easy-to-use fashion.

Most solutions that support this model require consumers to use proprietary client software.

This model does little to enhance the biller/customer relationship unless E-mailed bills seamlessly link customers to the biller's Web site, where the biller can provide customer service or other capabilities.

Source: Giga Information Group Inc.



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