November 8, 1999

IT Impact:
New Concept For Electronic Billing
Companies that syndicate E-billing processes through many channels are the most likely to see widespread adoption

By Jeetu Patel

he market for electronic bill presentation and payment over the Web is starting to mature, but it hasn't grown as quickly as many had predicted. Part of the problem is that electronic-billing companies have been wrestling with the decision of which model promises the best chance of success.

For example, billers can build and host their own biller-direct sites or outsource their development and hosting. The direct approach provides better control over the billing process, and it lets billers market their service more easily and improve relationships with customers. However, this requires customers to visit different biller sites to pay various bills.

The alternative is to work with an E-billing consolidator such as CheckFree or TransPoint. By aggregating many billers, these consolidators give customers a site to pay all their bills. Unfortunately, the consolidators have been slow to build significant rosters of billers, thus limiting the comprehensiveness of their sites. In addition, billers that work only through consolidators may lose out on direct-marketing advantages and dilute their brand awareness.

But, ultimately, slow adoption by consumers has held back the electronic-billing market. The key to E-billing is to let customers access their bills through whichever mechanisms they prefer. The best way to do this is by syndicating the billing process. Information on the Web is becoming commoditized, as users are able to find what they're looking for from many sources. If you're a biller, why not give yourself the best chance to reach your customers?

Companies in the best position for E-billing success are looking beyond specific E-billing models and are instead letting the customer decide which channels to use. The future of E-billing lies in a syndicated approach using multiple distribution channels.

There are dozens of sources for customers to access and pay their bills online. These include Web sites run by the biller, a bill consolidator, or banks. Customers might want to use their own personal financial-management software such as Intuit's Quicken or Microsoft Money to access bills through their home banking service, or visit these products' sites such as quicken.com. Or they can use portals such as America Online, Excite, or Yahoo.

Billers that use the syndication approach can provide billing data to whomever is willing to host it--portals, consolidators, banks, credit unions, and personal financial managers, each of which has a different customer demographic. The channels themselves have incentive to carry the bills of others, because those bills represent "sticky content," which draws consumers to visit--and revisit--their sites.

One model that E-billers could follow is credit-card services syndication. Visa and MasterCard have achieved vast reach by providing transaction services through many financial institutions.

Of course, E-billing syndication offers technical challenges. It's one thing to deliver bill data in HTML or Extensible Markup Language, but most distribution channels have formatting standards that require each data feed to be customized. The effective management of payment processing through dozens of channels is also an enormous challenge. These factors will help crystallize the value of biller service providers that specialize in providing data to multiple distribution points, as well as those that can consolidate payment services and seamlessly integrate with billers' back-end enterprise resource planning systems and accounting applications. In addition, billers will have to reassure customers that their payment-transaction data is secure. Users also need reassurances that billers aren't revealing personal information to other companies.

Clearly, a billing syndication strategy requires planning. Billers need to decide if the syndication approach makes good business sense. The next step is to put in place the technology to handle the unique data-formatting requirements of different distribution points and to integrate your internal processes with those of your distributors to ensure reliable two-way processing and accurate updates of your line-of-business systems. However, the potential rewards are enticing--a more efficient way to handle the billing process and an opportunity to keep and hold a new generation of customers.

Jeetu Patel is VP of research with Doculabs, an independent advisory firm specializing in helping companies choose the right technologies for knowledge-management, document-management, document-delivery, and Internet applications. He can be reached at info@doculabs.com.

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