InformationWeek
Defining The Business Value Of Technology
September 13, 1999
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CheckFree and TransPoint are predictably bullish about the future of online billing. "In January, you'll see a big spurt in billers going ahead and Web sites offering bills to consumers," says TransPoint's Young. "This time next year, it will be a dramatically different story." CheckFree's vice chairman Mark Johnson is also optimistic. "A lot of the investment and energy people spent in the last few years is at the point where it is going to explode," he says.
Perhaps. But the fact is that important obstacles on both sides of online billing--supply and demand--must first be overcome.
On the demand side, there just isn't a compelling economic reason to pay bills online. Trading stocks online saves people big money--$100 or more for a trade of several hundred shares. But paying bills online saves about 33 cents, the price of a stamp. And to make matters worse, many banks, such as Wells Fargo, are charging many customers $5 a month for online payment. "The demand side from customers really isn't obvious," says Beth Barling, a lead E-commerce analyst at consulting firm Ovum.
On the supply side, billers such as Con Edison aren't putting marketing dollars behind online bill presentment. "We don't want to spend a lot of money on something that has a small payback," says Con Edison's Jawor. Companies that routinely bill their customers also are frustrated because CheckFree and TransPoint technologies aren't compatible, making life difficult for their IT departments. The technologies perform similar functions--taking billing data and presenting it on the Web in a format that can be manipulated by customers who want to see various levels of detail and then initiate a payment.
But they can't talk to each other. That means billers have to evaluate both systems or place their bets on one of them. Installing one is challenging enough; using both would be a real headache.
Con Edison's Jawor says the utility went with TransPoint because the vendor's software allowed more control over the process. Kerver, on the other hand, says Consumers' Energy went with CheckFree because it preferred its business model, which lets companies retain most of their billing data while sending only summary information to consolidators such as CheckFree, banks, or portals. TransPoint's business model initially called for it to control detailed billing data, though the company has quietly backed away from that this year.
Interoperability
Regardless of who does it or what technology is used, consumers want a bridge between CheckFree and TransPoint so they can pay all their bills in one place. And billers don't want to worry about feuding between the two companies. "There's still a big battle out there," Kerver says. "That makes it very difficult for billers like ourselves to select one or another.
I don't think we should have to choose. We ought to be able to go through one clearinghouse."
CheckFree and Transpoint dominate the billing landscape, but many other companies are coming out with software and services for various parts of the complicated process of presenting legacy data on the Web and processing payments. BlueGill Technologies Inc., for example, provides a leading rendering engine for presenting bills online; Security First Technologies Corp. sells online financial software and services to banks. Then there are service bureaus, such as Output Technology Solutions Inc. and Billserv.com, that take billing data from billers and send it to distribution points, such as banks, portals, and so on. Meanwhile, virtually all major banks are testing some kind of online-billing system as they strive to keep themselves in the middle of consumer financial transactions.
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People such as Kerver are troubled by the lack of interoperability--but help may be on the way. "Early next year, there will be a solution for bill aggregation based on IFX," says TransPoint's Young, referring to the Internet Financial Exchange protocol that draws from both CheckFree and TransPoint technologies. Consolidators such as banks that use the IFX protocol would then be able to present consumers with bills rendered on the Web using both systems.
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