1. MIS 3090 IT for Financial Services
Electronic Bill Presentment and Payment
Please use this space for making ANNOTATIONS or for adding comments to individual slides.
April 22, 2017

2. Business Landscape Billers today are As a result Billers are demanding
Facing pressure to acquire, retain & reach customers
Under stakeholder pressure to drive down costs
As a result Billers are demanding
Technologies that enable cost savings
Technologies that enable customer relationship management (CRM)

3. Consumer Landscape Consumers today are
Busier
More demanding
Striving to reduce costs where possible
As a result Consumers are demanding
Convenience (time is money)
Greater control of their finances
Better, faster, smarter way of doing things
35 million U.S. consumers are paying bills online; this is expected to increase to 65 million by 2007 (Gartner 2004)

4. Presentment (two aspects)
Electronic Bill Presentment and Payment
The business-to-consumer process (B2C) by which bills are presented and paid through the Internet
Relatively simple process
Increasingly being adopted by utilities
Electronic Invoice Presentment and Payment
The process by which companies present invoices and make payments to one another (B2B) through the internet
Relatively complex process
Not yet widely adopted

5. The Business Case Business to Consumer Business to Business Europe US
Average individual European consumer receives 4 bills/month
European companies produce 20 billion consumer bills p.a.
Bill presentment and payment costs for billers and consumers = €95 billion
An SME with turnover of €2.5 million sends on average 7,500 invoices/year
European business to business e-trade amounts to $777 billion
A Belgian subsidiary of a large consumer electronics firm sends 400,000 invoices p.a. to other members of the group
Europe
Average online American household receives 11 bills/month
US companies produce billion consumer bills p.a.
Bill presentment and payment costs for billers and consumers = $80 billion
US business to business e-trade amounts to $870 billion
80% of invoices are generated by four industries: finance, insurance, telecoms & utilities US
Source: PwC analysis – various sources

6. Limits Customer Interaction Long Payment Cycles & Float
Current Process
Slow Delivery
U.S. Mail
Expensive
Printer
DAYS
$1.30+ Per Bill
Paper Payment Cycle
Biller
Customer
The paper bill process is expensive and time consuming for everyone. It limits your interaction with your customer and takes much longer than necessary to get to the final processing of customer payments. It can take as long as a month, from the time the original bill is printed, to receive payment for an invoice. And it’s costing you an average of $1.50 for4 every bill you print and mail out.
Now it just so happens that NISC is in the utility, but the business logic is the same for any process in which you are taking care of your customers whether you are in business or government
Limits Customer Interaction
Bank
Long Payment Cycles & Float
U.S. Mail
Payment Processor

7. Future IT-enabled Process
Efficient
Instant Delivery
Hours vs. Days
Pennies vs. Dollars
Bill
Bill
Bill
INTERNET
Biller $ $
End User $
The billing cycle is completed without one stamp, killing no trees, completely paperless, at a fraction of the cost.
Now I don’t have anything against the USPS or FedEx or UPS, but my challenge to you is, every time you are mailing something to a citizen of Montana, I challenge you to ask the question, it there a e-commerce solution to the snail mail alternative.
During these difficult economic times we have a responsibility to be as efficient as possible.
And make your services available in your case the citizens of Montana in a manner what is as convent at possible. $
Reduced Float
One-to-One Marketing
Payment Processor

8. Value Creation Strategies
Business to Consumer
Business to Business
Value
Decrease customer transaction costs
Example: allow customers to verify bill details on line (especially valid for recurring bills with varying amounts)
Example: allow integration with ERP systems for faster processing, approval and payment (especially valid for complex invoices)
Price
This is more difficult
Customers seem unwilling to pay for the convenience of electronic invoicing and/or payment
Idem – on the other hand some companies are starting to charge a fee to corporate clients for paper invoices
Cost
Invoice production and delivery
Cost of paper invoice: $1.30
Cost of electronic: $0.60
Prevent/automate dispute handling
4% of bills are disputed
Cost of paper invoice: $6.00
Cost of electronic: $2.60
13% of invoices are disputed
Improved cash management
Get paid quicker
Source: PwC analysis

9. Types of EBPP Systems
Source: Pearson Education

10. Bill displayed on biller website for view and pay
Bill Direct Model
Biller
website 
Biller
website
Biller
website 
Biller
website 
Biller
website
Bill displayed on biller website for view and pay

11. Bill displayed on aggregator website for view and pay
Aggregator Model
Biller
website
Biller
website 
Aggregator
website
Biller
website 
Biller
website 
Biller
website
Bill displayed on aggregator website for view and pay

12. Consumers’ Habits
How Consumers View and Pay Their Bills Electronically
Source: Gartner Research (January 2004)

13. What Consumers Want…
Source: Gartner Research (January 2004)

14. Categories of bills…
Million
Source: Gartner Research (January 2004)

15. Checkfree Market leader in online billing and payment
Faces a number of challenges:
Industry changing fast and leadership precarious
Although market is growing, consumers have traditionally resisted online bill payment
Conflict strategic goals of stakeholders (merchants, banks, credit companies, billing firms and consumers)
Technology changes: XML-based vs. proprietary
Competitors: PayPal, Metavante
Source: Pearson Education

19. USPS eBillPay
USPS announced in April 2000 that it was entering EBPP market.
Partnered with Checkfree and a smaller provider (YourAccounts.com).
GAO: Movement from paper to electronic billing could reduce revenue by more than $16 billion per year for USPS, assuming that every bill now mailed is instead billed and paid on-line.
Billing statements currently represent 25 percent of USPS revenue.

24. For Next Class… Read Capital One case
Write out your answers to the case questions and be prepared to discuss
We will also discuss the “Check 21” topic