from the New York times
November 16, 1998
DIGITAL COMMERCE
Get Ready for E-Billing
By DENISE CARUSO
Prepare for the next Internet feeding frenzy. Sharks from several
industries are already circling the nascent market for products and
services that will enable consumers to receive and pay their
monthly bills online.
Electronic billing systems are expected not only to save merchants
and banks billions of dollars in printing, paper and postage costs,
but also to save time and deliver a new level of convenience for
consumers.
And the customer base is already a captive audience. By some
reports, 60 percent of the 62 billion pieces of first-class mail
delivered annually by the U.S. Postal Service are bills.
Calculating, verifying, creating, mailing, collecting and
processing those 37 billion statements have been estimated to cost
$370 billion -- an average of $10 a bill, according to the report
"On Bills, Banks and Bill (Gates)," published by Diamond Technology
Partners (www.diamtech.com), a Chicago-based consulting firm.
Diamond estimates that presenting and paying bills electronically
could save 10 percent of that amount -- a huge incentive for large
companies, in particular, to embrace e-billing. Merchants have
already said they would be willing to pay as much as 40 cents a
bill for such a service, instantly creating a market with a $15
billion potential.
Last week, Netscape Communications Corp. announced plans to offer
Web-based e-billing software for online sellers. Transpoint, a
joint venture of Microsoft Corp., First Data Corp. and Citigroup,
plans to introduce its e-bill service this quarter.
And the Integrion Financial Network, a consortium of banks,
financial services and technology companies including Checkfree,
IBM, RSA Data Security and Visa USA, is preparing to start an
e-bill pilot with one of its owners, Bank One, in January.
One version of an e-bill system would allow merchants to send
monthly bills in an e-mail format that could be forwarded directly
to a customer running bill-payment software like Quicken from
Intuit. Another would allow consumers to view all their bills from
one Web site.
But the potential impact of e-bills could be much more significant
than cost savings and simple convenience.
William Fenimore, chief executive and managing director of
Integrion, says that although e-bills are inevitable, such sweeping
change comes slowly to big financial institutions. "The biller
community is further ahead than the banking community in terms of
distributing these bills and getting them paid," he said.
And that disparity presents an opportunity for the law of
unintended consequences to kick in.
That is because the Internet has given many different kinds of
companies -- from Microsoft and Intuit, to brokerage firms and
insurance companies -- the ability to offer financial services more
cheaply and without the regulations, including those governing
consumer privacy, that banks and other financial institutions must
obey.
Because merchants and financial institutions are unlikely to build
e-bill technology themselves, many will be forced to yield their
precious customer data to a technology or service provider --
Microsoft's Transpoint venture, for example -- to run the system
for them.
Clearly, companies like Integrion, with owners that are almost all
banks, are a hedge against that. But that hedge may not hold. Once
companies start delivering digital bills, says Gordon Bell, a
senior researcher for Microsoft, other opportunities present
themselves rather quickly.
_________________________________________________________________
A captive audience is seen for the receipt and payment of monthly
bills online.
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Bell says he has for years encouraged Microsoft's chairman, Bill
Gates, to create a version of the Checkfree service. "The other
thing is to give WebTV away to do just this kind of thing, with a
bank account or whatever," he says.
Some analysts say that such opportunities will forever change the
balance of power between customers and merchants. Referring to
software applications, Chunka Mui, a partner in Diamond Technology,
said, "The real reason this is a killer app is because the
technology provides a platform for doing other things."
Mui predicts that e-bill systems will start a new "aggregator"
business that enables people to pay all their bills online in one
place, rather than with individual merchants all over the Web -- as
well as allowing those merchants to deliver precisely aimed junk
advertising.
"All these folks are talking about how this becomes the marketing
machine from heaven," he said. "What they don't understand is that
once these bills are in digital form, they are infinitely
controllable by the customer. It won't take 25 seconds for someone
to realize, 'I could make a lot of money selling a filter for this
junk."'
What is more, he said, "It would only take another 25 seconds to
say, 'Hey, if I work for the customer and not for the merchants,
maybe I can create an alliance of consumers."'
To date, there are few consumer bill aggregators. One new start-up,
Cyberbills.com in Santa Clara, Calif., recently began a consumer
service that sends customers all their bills electronically.
Mui says that such a service -- started as a cost-saver for
merchants -- is actually "stealth technology," a first step in
returning the power over personal information to consumers who are
tired of being bombarded with e-mail spam and junk advertising in
all media.
"It's about aggregating power," says Mui. "It's not about selling
information to merchants. It's about going to the people and
saying, 'I know what you've bought -- let's do price comparisons
for shopping, let's provide a direct connection to the seller when
you have problems, things like that. This bill becomes the
interface for so much -- it's a tremendous window onto the
electronic world."
Copyright 1998 The New York Times Company
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