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Electronic Bill Presentment & Payment
It's All About Options
The Electronic Marketplace is booming! Most retailers have electronic stores open 24 hours a day on the Internet and many retail stores operate exclusively on the Internet. Consumers now understand the benefits of buying online and are becoming more and more savvy with every shopping experience. U.S. online sales grew 21% from 2006 to 2007, according to Forrester Research. With skyrocketing gasoline prices, online sales are expected to continue grow in 2008 and 2009.
The billing marketplace has also responded with many new billing options and alternate payment technologies. While no one alternate payment methodology appears to be dominating, the push in the industry now is in the selection and integration of the right combination of payment alternatives for each customer segment.
Electronic Bill Payment has been gaining ground too, in terms of acceptance by customers. CheckFree’s recent survey, “The Latest Consumer Billing and Payment Trends”, found that 69 percent of U.S. online households are paying at least one bill online, up from 56 percent in 2005. Interest in subscribing to a consolidated bill payment service was also higher among households that were not currently paying bills online.
The rush to accept online payments has been a major driver of Electronic Bill Presentment & Payment (EBPP) programs for many. The focus appears to be shifting. Electronic bill presentment is now being pushed more urgently, in the hopes of reducing printing and mailing costs, and saving a few trees.
Companies are also trying to tap into the mobile banking services market which is expected to increase 10-fold by 2011. While the greatest growth in mobile transactions is predicted in China and the Far East, Western Europe and India are also expected to grow quickly. Acceptance is a bit soft in the U.S., with a study by Harris finding that half of all Americans have no interest in using their handsets for banking or commerce. However, a growing range of new mobile banking products and services are being introduced, such as bill payment and presentment, funds transfer, and account management.
Mailed Payments Slowly Declining
With the rush to deliver E-Commerce and the popularity of the Internet, one would expect that consumers are signing up right and left to receive and pay their bills on-line right? Not quite. Many companies are finding that EBPP participants are quite allusive.
The Ascent Group recently conducted research into billing and payment practices. We asked companies about billing services and payment plans, including Electronic Bill Presentment and Payment (EBPP). While we confirmed that companies from many industries are actively implementing EBPP, we also confirmed that customer adoption is still quite low—averaging 5.3 percent for eBill presentation and 8.6 percent for ePayments.
Our study participants indicated that most customers still prefer to pay with paper check by mail—both business customers and consumers. Surprisingly, many consumers and business customers still pay face-to-face—more than 21.8 percent of consumers and more than 19.3 percent of business customers.
However, the percentage of payments received through electronic means is growing and slowly displacing the paper check payment. A study by the Federal Reserve Bank, NACHA, and the TowerGroup noted that check volume is decreasing, mainly because of the growth in acceptance of alternative payment methods. However, paper checks are not going away any time soon as analysts predict that checks will represent 50 percent of business payments as far out as 2012.
When EBPP was first introduced, most companies offered online payment options while continuing to send paper bills to customers. Now, companies are looking for ways to encourage the adoption of EBills and discourage paper statements.
While many consumers are eagerly paying online, they may not be ready to give up the paper bill. A study by Forrester revealed that nearly 40 percent of U.S. households receive electronic banking statements and services online. However, only 8 percent have opted to eliminate the paper statements. These findings are consistent with our study’s findings—only 5.3 percent of customers have signed up for electronic bill presentation.
Fifty-percent of participants present bills electronically. Those presenting over the Internet or by email range from 1 to 18 percent bills presented electronically (total customers)—averaging 5.3 percent as a group. The majority present less than 5% of total bills electronically..
Ninety-five percent of reported accepting Internet, Web, or other electronic payments—ePayments averaged 8.6 percent of total payments received. The majority receive less than 5% of payments from customers electronically. While companies are clearly emphasizing electronic presentment and payment, EBPP has yet to achieve a significant level of participation.
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