The new kid on the electronic block - part of the growing world of ecommerce - is eBilling or electronic bill presentment and payment.
The utilities especially - but many organisations - spend vast sums of money issuing bills and statements, and then in the collection of the due monies. The utilities have made marginal but substantial savings in the actual business of reading household meters (by outsourcing the activity to an agency that can read several meters at one property for different services at one time) but the business of billing is as it ever was - time consuming and expensive. Now realisation is dawning that digital billing may be one way of addressing the issue.
Not only might the early adopters save some money, they might establish a competitive advantage by speeding up the issue of bills and the collection of money owed.
Conservative estimates suggest that there are in excess of 20,000 UK companies issuing well over 5 billion bills and statements a year. Each household in the UK receives in the order of 100 bills per year - from the utilities, telcos, stores, mail order companies, etc. Only a small saving in the overall cost is worth considerable sums.
The cost of sending out a paper bill is of the order of £1-£2, for efficient organisations. Producing the same bill electronically should cost in the region of 25p.
Although consumer billing is going to be very big business, the initial growth is likely to be in the business-to-business (B2B) market. The hope here is that the billing process becomes part of the overall process of building customer-supplier relationships. They may come to the billing website to see details of their bill/account and stay to read other materials.
The telecoms companies - not surprisingly since the Internet is their business - are amongst the leaders in electronic bill presentment and payment (EBPP) and the major banks are not far behind. The banks also see this as potential new business - acting as billing and collection agents for other companies : this could indeed be a payoff from their major investment in electronic/Internet banking. The banks would love to be the co-ordinators and consolidators of bill and statement documents. They will have to move quickly to avoid being overtaken by a rush of new consolidating companies with backing from the likes of Microsoft, Yahoo and AOL.
These browser/portal companies are also slowly waking up to the potential - slowly because most of them are U.S. based and since the US - unlike the UK - doesn't have a strong, single national payment network, they missed the first dawning. Still, they have shown in the past that they can play fast catch-up. This would mean that customers could access their bank accounts, credit card bills, fixed-line phone bills, mobile phone bills, and utility bills from their friendly Internet portal. (see Hot Topic : Portal Power). Any of this highly portable, high volume data is capable of presentation by the same technology - there is certainly potential for both improved customer service and cost savings by the billing companies : a true win-win situation.
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Customer care and billing firm, MaxBill together with Japanese company Marubeni, is targetting an e-billing package at communications service providers. The system offers automated bill presentation, payment handling and 'trouble ticketing' and is being offered to suppliers of network services and utility companies. See http://www.maxbill.com.
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CODA plc is a leading developer of Internet-enabled financial accounting and procurement software used by more than 2,000 companies worldwide. Now, CODA has developed an e-billing solution. This complies with the Microsoft BizTalk and BASDA e-BIS XML (see below) standards and is designed to offer an easy and fast billing process, allowing customers to pay and online, and the company to get useful management information.
The software, which has multi-currency and multi-lingual capabilities, is designed to support both business-to-business and business-to-consumer billing operations and the use of XML standards allows billing organisations to communicate with third-party systems.
The software lets the billing company create, amend or authorise an invoice or credit note (using a workflow engine for appropriate internal routing), and then issue/present it to a customer. System accessibility is global and its low bandwidth requirements increases access - making it particularly suitable for organisations that work on a worldwide basis with customers, suppliers or third parties.
BASDA is the international standards body, based in the UK, representing 350 of the world's leading developers and suppliers of business and accounting software. eBIS-XML was designed as a simple, easy to use, many to many interface which will work with any accounting package, based on a series of international standard business document schemas for electronic business.
In the US, a consortium of 11 major banking organisations in partnership with Sun Microsystems and Netscape Communications, are developing an Internet billing system known as Spectrum. The market in the US is huge - 63 billion bills are processed each year! At present, users are still showing a reluctance to commit their funds to electronic payment methods - it is this natural (and understandable) reluctance that the supplying organisations have to overcome if they are to break into this huge marketplace. As the original 'Topic' article suggests, it is likely that business billing will be transformed first - business have considerable savings to make if they can both reduce the adminsitrative costs of bill processing and speed up payment. When the technology is well-established in the business world, consumers may gain confidence.
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PayPal, originally a US-based service but now offered internationally, enables people to request money by sending bills online, and lets customers send money back via the same route. Using the PayPal system, it is possible to set up business accounts and accept money from customers, including credit card payments on a website, using the Web Accept online payment service. Once an account is set up on the system, the billing organisation simply clicks the 'request money' tab, enters the amount that they want to charge together with the email address of the recipient, and the service makes the request. When the customer pays, (using PayPal), the organisation receives cash.
Such a service is very conveneint for small companies with low billing volumes but larger operations need a more sophisticated service. Some companies offer a wide range of functionality in dedicated electronic bill payment products, incorporating payment and billing information online. One such company is edocs, which offers a range of electronic account management and billing products. Its eaSuite service, for example, incorporates a number of products such as eaPay, an electronic payment and warehousing component that enables customers to make and track payments.
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Blueprint 3 estimates that banks and building societies distribute around 720 million statemnts annually in the UK at a total cost of some £2.6 billion. According to Blueprint3, sending electronic statemetns could cut costs by 67 per cent. Customers would also get more up-to-date information. Since it is now possible to send secure email (and Blueprint3 have the technology!), there is little reason to continue sending printed statements where customers have ready acces to online services. See http://www.projectblueprint.com.
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A recent report from Logica and leading economist Roger Bootle suggests that the existing payments infrastructure has not kept pace with what is now technically viable, resulting in a significant brake on economic growth. "The existing payments infrastructure is unnecessarily slow, expensive and inflexible. Improvements to the speed and efficiency of the current system could unlock value to the tune of a staggering 1 to 1.5 per cent of GDP," says Eddy Collier, Chief Executive Officer, Logica Consulting, the management consultancy arm of Logica.
Domestic and international payment infrastructures are not able to support the low cost, fast, innovative services demanded in today's markets. Unless reform is forthcoming, banks will lose a part of their core revenues to new entrants. New competitors include mobile operators set on securing as much of the mobile commerce value chain as possible, and who rightly see payments as a lucrative business which could contribute handsomely to the costs of third- generation networks and services.
Furthermore, the report notes that lengthy delays in the payments business no longer need be the norm. The new systems will allow ground-breaking developments such as interest accrual by the hour or minute and instantaneous trading and settlement.
The study acknowledges that there will be a growing role for payment users to exploit fully digital monies that could become the universally accepted means of exchange. However, such currencies will not pose a threat to national currencies. "These privately issued e-monies that trade against each other at fluctuating exchange rates will not replace government-issued money," says Roger Bootle, managing director, Capital Economics, an independent economic consultancy. "While a number of new currencies may exist to allow consumers to make small-value online payments, these currencies will remain fully backed by government money, and prices and contracts throughout the economy will continue to be quoted in the existing national currencies."
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