Electronic bill payment and presentment continues to gain momentum with billers, but consumer adoption rates still are much slower than anticipated. A new study by Blueflame Consulting has found the long-awaited tipping point could be as many as five years away. Charles Davis reports.
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A recent study conducted by Blueflame Consulting on behalf of the US Electronic Payments Association NACHA and e-biller PayItGreen found 5.1bn e-bills delivered in the US in 2010, with more billers expected to come online in 2011 and 2012. It could be five years, however, before the US sees the long-awaited tipping point when e-bills surpass paper bills.
"After easily converting the early adopters to e-bills, billers are realising the second and third tiers of consumers will take more time to convince," said Ed Bachelder, director of research for Blueflame Consulting.
"However, billers across a broadening range of markets and sizes see e-bill adoption as an important programme for their companies, and have shown commitment to continuing to try to convert their customers."
On the business side of the equation, the news for electronic bill payment could hardly be better, as 9 of 10 of the companies surveyed rate e-bill adoption to be a significant opportunity for their organisations. The major driver for businesses is cost savings the study projects savings between 40 and 50 cents per bill for firms converting.
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By GlobalDataBillers also said e-bill customers are more satisfied customers and are easier to retain. Collectively, participants in the study distribute 735m bills in a typical month, which is approximately 25% of all bills nationwide.
"E-bills have not reached their full potential, but theyre gaining momentum," said Janet O Estep, president and CEO of NACHA. "With companies long-term commitment to converting their customers to electronic bill presentment, we see adoption gaining momentum."
The survey found, despite the obvious advantages for US billers, it has been a bit of an uphill battle converting paper-based customers to e-bills. Overall, e-billing with paper turn-off and electronic payments were found to be strongly correlated, but e-billing adoption among participants is currently trailing behind electronic bill payments.
The study found the complexity of e-billing system continues to hamper adoption rates. US billers continue to struggle with technical issues, as e-billing adoption requires a higher degree of organisational cross-functional coordination.
The majority of surveyed companies rate the switch to e-billing to be a very significant opportunity, yet not all of them were found to taking the proper action ensure that happens.
Consumers likewise struggle with enrolment, logins and the difficulties of paying bills without that all-important paper reminder.
Participants in the study agree that more customer education is needed about how e-billing works, the security involved, and how significant paper reduction is to improving the environment.
"Once customers truly understand e-billing, they respond positively for a number of reasons," said Estep. "Convenience is key, and environmental messaging continues to be a supporting motivator for e-bill adoption."
A closer look at market penetration among various industry sectors responding to the NACHA survey shows the growth potential for e-billing. Of those surveyed, universities had the most successful e-billing programmes by far. Most universities can mandate e-billing for their students or use a customer opt-out approach rather than an opt-in approach.
Areas for growth
Besides universities, telecommunications companies reported the highest rates of e-billing, with wireless companies at 41.4%, landline telephone companies at 22.8%, and cable and satellite television services at 29.1% adoption among consumers.
On the business-to-business side, however, those adoption rates plunge to just 1% for wireless, 1% for landline telephones and 4.3% for cable and satellite television, underscoring just how vast the gap is between consumer and business e-billing.
Other opportunities exist in the utilities market, which the study reported at a 15.3% penetration rate among consumers and 6.6% among business customers; the insurance industry, at 10.9% and 25.9% among businesses; and the mortgage market, which reported a 24.5% adoption rate among consumers.
Overall, respondents reported a 26% adoption rate among consumers and a 20.4% rate among businesses.
Some of the industry sectors with the lowest current adoption rates have the highest growth rates, illustrating the quickening pace of adoption among key markets.
The insurance market led the way with a 67.2% growth rate, followed by government at 52.3%, water and sewer billers at 44.1% and municipal utilities at 40.1%. Telecommunications (24.4%), financial services (22.3%) and private utilities (15.5%) reported the slowest growth rates.
To achieve even greater growth rates, the study suggests that billers move from and opt-in to an opt-out approach, simplify their web sites where e-billing is initiated and leverage smartphone and other mobile computing devices to reach a wider population.
"Most billers ask their customers to opt-in to the e-billing programme," said Bachelder. "Companies could increase their e-bill participation dramatically by changing their new customer enrollment to an opt-out approach. Our study suggests that only 10% of customers who have internet access would choose to opt-out once they experienced e-billing.
"Study participants identified one obstacle to e-billing is that the sign-up process is often too time-consuming for customers. An opt-out programme would simplify that step."
Participants in the study agree more customer education is needed about how e-billing works, the security involved, and how significant paper reduction is to improving the environment.
Many customers are aware of and interested in making the switch, the study found, while other segments need an extra push in the form of a customer incentive.
Finding the right customer
The study found billers are narrowing the gap by targeting customers who use a recurring automatic clearing house to pay bills; younger, tech-savvy customers; and by routinely collecting email addresses during customer service calls.
The study suggests simple steps such as making customers aware of e-billing when a customer misses a payment or using video tutorials on the billers web site to walk customers through the process can make a huge difference in adoption rates.
Organisational culture can play a vital role as well. One telecom service provider is toward the front of the curve with a 17% adoption rate because of their focus on customer satisfaction. The company sees e-billing as a way to perpetuate their loyalty to their customers by offering them something they genuinely believe will be more convenient for the customer.
Other respondents saw e-billing as more of a threat, placing an automated transaction between the company and the consumer, but it is hard to argue with the reports data ticking off the benefits of e-billing and how compelling a business case is made by the technology. When asked whether e-billing was compelling, respondents of all types responded overwhelmingly in the affirmative.
All that remains, it seems, is to simplify the process, and vendors are responding seemingly daily by creating one-stop shops that automate e-billing for even the smallest institutions. Key to the future development of e-billing acceptance among consumers is extending the technology to mobile applications.
Emerging players
One up-and-coming vendor, Kubra, has launched a new mobile e-billing solution that has been deployed by Nashville Electric Service (NES), a major public utility in Tennessee.
The new platform allows NES customers to experience all the functionality of the existing e-bill Biller-Direct site on their mobile devices. Initially the mobile solution will support touch-screen specific platforms including iPhone and Android. Phase two will include support for BlackBerry devices.
NES currently uses Kubra to support three distinct e-billing models Biller-Direct; e-bill Consolidator, which supports both the FIS and Fiserv e-bill consolidator networks; and secure e-mail delivery.
The system immediately identifies that the user is accessing the site via a mobile browser, for example, and displays the e-billing site optimised for the mobile browser. This integrated approach provides the best possible experience for the end user irrelevant of browser or device preference, and enables billers of any size to offer a mobile e-billing application in weeks.
One of the leaders in e-billing technology, Fiserv, recently launched a new e-billing platform for National Grid, an international energy company that delivers gas and electricity to more than 6.7m customers in Massachusetts, New Hampshire, New York and Rhode Island, using its expanded e-Bill Distribution platform.
The system delivers e-bills containing the same information as traditional paper bills, delivered directly to the online banking site and stored there for 12 months or longer. Consumers who receive e-bills at their financial institution can view and pay all their bills in one place, alongside all their day-to-day financial information.
"Our customers are increasingly relying on electronic billing and payment because it is fast, convenient and helps eliminate the clutter of paper-based statements," said Jeff Martin, director of billing and systems at National Grid. "Delivering bills to financial institution sites is an important complement to our existing billing capabilities, and helps enhance customer satisfaction."
That echoes the findings of the NACHA survey, and is repeated by payments executives in industry after industry. Now, as the technology emerges to ease the process, business adoption, and consumer acceptance, is likely to keep pace with each other.
