Sunday, December 31, 2000

A Look at Paying Bills Online

According to a Gartner Group, Inc report, only 17 percent of 127 million U.S. adult Internet users are certain that they want to view their bills online. Almost half prefer mailed bills, and the rest are unsure about their preferences. Meanwhile a major electronic bill presentment and payment (EBPP) industry has emerged that offers three main e-bill distribution models — electronic bill consolidation, total bill consolidation and biller direct.

With eight million subscribers — of which about a third are actively using the application — the biller direct e-bill distribution model, whereby consumers view and pay bills directly on a biller's Web site, is currently the most popular method for EBPP. Following in popularity is the electronic bill consolidation model and the total bill consolidation model, with less than 100,000 subscribers each.

"Consumers are attracted to the biller direct model because the applications are free, easy to find, easy to use and they offer frequent data updates and responsive customer service in comparison to the consolidation models," said Avivah Litan, research director for Gartner. "Their success is testimony that e-billing is indeed a killer application when content is compelling and consumers can save time and money."

Gartner research indicates a strong appetite for consolidated account and bill payment services among consumers who bank or invest online, but high fees, inadequate customer service and clumsy enrollment processes have kept consumers at bay. By 2004, however, as the EBPP network and technologies mature, biller direct models will no longer be the most popular with a projected15 million customer base, while 25 million will prefer to access all their e-bills in one place.

In the total bill consolidation model, consumers are presented electronic images of all their bills — scanned paper or electronic — through a very friendly user interface. Although convenient, high consumer fees and inconvenient enrollment, such as having to change billing addresses for bill scanning purposes, have hindered consumer adoption.

The electronic bill consolidator model consists of consolidators who work behind the scenes gathering electronic bills, and offering bill presentment services through other firms that interface directly with consumers. High fees, ineffective marketing, lengthy and confusing enrollment, and fragmented customer service have kept enrollment low.

Three E-Marketplace Models Will Control B2B Market
Business-to-business (B2B) e-marketplace functionality and participation are currently limited, but by 2005, more than 500,000 companies will be participating in e-marketplaces as buyers and/or sellers, according to Gartner Group, Inc.

The developers and managers of B2B marketplaces, called e-market makers, have begun to attract large numbers of buyers and have begun to use the buyers' market power to attract sellers. The long-term effects of these new entrants in markets are yet unproven, but it is expected that benefits from their presence will far outweigh the costs.

"Independent e-market makers will help sellers increase the size of their markets by investing heavily in branding, as well as helping buyers meet their needs by attracting large numbers of sellers," said Barbara Reilly, vice-president and research director for Gartner. "Most importantly, independent e-market makers will manage massive quantities of supply and demand data and help foster the distribution of near-perfect information to buyers and sellers."

E-marketplaces are generally limited to spot buys, excess product sales and indirect procurement. As marketplaces mature, they will begin to mediate larger sets of buyer supplier relationships. Marketplaces will be forced to constrain their focus, producing an environment populated by three unique varieties of marketplaces:

The commodity marketplace - This marketplace will support high-volume trade of products and services of commodity or near-commodity status, as well as financial instruments such as futures contracts.

Business service marketplaces - These marketplaces will be focused on supporting specific inter-enterprise processes, such as those related to logistics, financial services, and maintenance, repair and operations (MRO) procurement.

Integration service marketplaces - This market will emerge with a focus on linkages and process definitions between trading partners to facilitate process-to-process integration.

"Individual marketplaces will find it increasingly difficult to support broad sets of commerce capabilities required to sustain relationships of differing intensity and duration," Ms. Reilly said. "Marketplaces will have to align themselves strategically with business services partners as well as technology partners."

Marketplaces will find themselves taking on the role of the traditional distributor as well as an application service provider (ASP). With business process efficiency comes added value and traditional customer responsibility. Marketplaces must take on the customer relationship management (CRM) initiatives that traditional brick-and-mortar organizations struggle with today through other channels outside of their internet initiatives.

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