Taking charge of e-billing

The race to dominate electronic billing is on, but who will win the banks or the telcos?

Banks, telcos, and utilities have a regular paper-based relationship with their customer. A two-dimensional bill arrives each month, and the customer responds with a paper cheque in the post. Often the bill has been paid by direct debit, and is for information only. But there is another method. Instead of receiving a paper bill in the post, the customer receives an e-mail detailing all their charges, or a URL directing them to the biller's website.

The millions of customers who regularly receive their bills in the post are an expensive missed opportunity for telcos and all other billers. Internet bill presentation and payment reduces costs arising from printing, postage, processing and delayed payments, as well as increasing cash flow. Electronic billing results in quicker payments and fewer calls to customer care call centres questioning billed items, requesting second bills or informing the bitter of address changes. Furthermore, a direct relationship with a customer is a recognised advantage in today's Net Economy.

Using the internet for billing also allows for quicker and more accurately targeted marketing programmes. The customer has a one-to-one relationship with the bitter and is less likely to search for an alternative provider.

Consolidated bills

In addition to direct billing, electronic billing solutions can consolidate the consumer's monthly bills on a single portal. All the utility bills, 'phone bills, ISP charges, credit card bills, and hire purchase orders can be aggregated together in one place. This bill is searchable, cross-referenceable and can be paid at the touch of a button. The customer can view and pay their bills online at any tittle of day, or even schedule automatic payments for a future date. An e-mail notifies customers of the arrival of new bills, past-due payments, and special offers and promotions.

The biller who offers to consolidate a customer's bills onto one site has a very strong direct relationship with the customer, and one that is potentially very long-term. A telco or ISP that is already the home page of a customer, and has the established infrastructure, is in pole position. Each time a customer logs on they can see the current state of their finances - how much needs to be paid and when - on the telco's branded site. From this a telco has access to a wealth of data about the particular purchasing habits of the customer as well as their telephone and internet usage. This detailed information was previously only available to banks, credit card companies and other financial institutions who have consistently failed to optimise its value. The telco, or other biller, that develops this kind of billing relationship has gained a significant advantage over the competition.

Any company that bills many consumers regularly can increase its revenue by charging hosting fees from each of the billers, or a transaction charge on each bill. They can also benefit from highly targeted marketing to cross-sell their own services and partner with other companies who value this data. As a further source of income they can offer advertising opportunities on their site. By this point, the billing operation has changed from simply sending out a monthly bill into an action that can generate specific revenues.

Internet billing can strengthen the relationships that a large biller has with its SME customers, as well as being ideal for home consumers. They welcome the improved business processes without the expense of having to install or maintain EDI (electronic data interchange) systems. Traditionally large companies have employed proprietary EDI invoicing and payment systems, which have required expensive customised software and additional hardware to be installed, maintained and upgraded at each user site. Frequently this expense has been unmanageable for the SMEs. In contrast, electronic bill presentation and payment can be enjoyed by large billers and SMEs alike.

Threats to telcos

With its established financial expertise and a reputation for trustworthiness, a financial institution could also offer to aggregate all of the customers' bills on one site. Banks have a wealth of information about their customers, including details of their online purchasing, but lack the infrastructure that telcos offer. Utility companies are also in the running to win the billing race, but they lack both the infrastructure and the customer information. Competition will come from the recently de-regulated utilities, many of which now bill their customers for both gas and electricity. They are highly competitive and recognise the need to increase the efficiency of their processes.

The Post Office has a lot to lose and may also plan to offer e-billing consolidation to win back the revenue lost to online bills. Large consumer portals, such as AOL and Yahoo, are also a threat since they have a trusted reputation, customer information, and an established infrastructure.

In America, telcos and banks have both launched online bill presentation and payment offerings. SaskTel in Canada, for example, has become a hosting provider for SMEs who want to offer online billing to their customers. First Union, a leading bank in the US, hosts internet bill presentation and payment services for its corporate customers. The solution is compatible with other banks' systems to streamline the presentation of bills between billers and their customers. The application supports multiple payment types, including credit cards, and captures user information to conduct interactive marketing campaigns through event-based relationship management, user-activity tracking and targeted e-mail. First Union also uses iPlanet ECXpert, an internet commerce exchange application that enables an enterprise to automate and manage the processes that occur between organisations over the internet and existing private networks.

Businesses can make huge savings from internet bill presentation and payment. Electronic billing is also more convenient for customers and offers significant revenue generating opportunities for billers. Telcos and banks are the front runners in the race to dominate e-billing, but telcos have the upper hand as they have an established infrastructure and use their customer data more effectively. These strengths can be exploited now to win the majority of customers and gain new revenue streams. V

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Hongkong Telecom

Hongkong Telecom (now known as Cable & Wireless HKT) pioneered the use of electronic billing in 1997. But prior to offering electronic billing, C&W HKT's customer care centre used to employ 1,500 specialists to answer enquiries. The operator estimated that 30 per cent of these calls were billing-related, with basic questions about current balances and payment receipts. In addition to this, some corporate customers' bills were as long as 1,000 pages and had to be posted in cardboard boxes.

As a result, C&W HKT deployed an electronic bill presentation and payment solution, which integrated with its existing IBM mainframe and customer databases. The new solution allowed customers to review their bills and accounts online. Customers could sort calls according to state, destination, telephone number or cost. The number of calls to Hong Kong Telecom's call centre was reduced by almost one third within four months of deploying the internet billing solution.

Requirements of internet billing presentation and payment

* Customers need to know that their transactions and data are secure. Secure authentication, data encryption and digital signatures are essential to protect the information.

* Reliability is also fundamental. Customers must be able to trust in the accuracy and timely arrival of their bills and payments. All full and partial transactions must be saved, even if the users PC crashes part way through a payment. The billing solution must be scalable to cope with increasing usage.

* Finally, the billing solution should be able to integrate with a company's legacy systems and parsing engines to draw the information from existing databases and format the bill into a familiar HTML appearance.

[Author Affiliation]

Simon Holloway, business development manager, Northern Europe, at iPlanet E-Commerce Solutions, a Sun-Netscape Alliance.