Customers are key to future of e-bill, says Ovum

New Web-based applications and services are changing the way organisations bill their customers and how their customers pay them, according to a forthcoming report from respected independent research and consulting company, Ovum.

The shift from paper to electronic bill presentment and payment (EBPP) will create opportunities worldwide for new players, such as consumer service providers and software vendors. However, Ovum is quick to point out that success in this market inevitably depends on customer acceptance, which is not guaranteed. Billers need to actively promote EBPP services and encourage their customers to go on-line. In the report, Electronic Bill Presentment and Payment: Creating Opportunity from Necessity, Ovum explores this rapidly evolving market and the race to bring the over 30 trillion annual bill payment transactions to the customer - electronically.

"EBPP enhances the biller-customer relationship," says Duncan Brown, principal analyst and director of Ovum`s e-commerce research. "By offering valued-added services such as EBPP, billers create a competitive advantage, resulting in increased customer loyalty and reduced churn."

These applications and services offer promises of cost savings and process efficiencies while giving billers the opportunity to interact with their customers like never before. EBPP is also staking a claim as one part of a broader customer relationship management (CRM) application suite. "This dynamic shift enables billers to exploit the Web as a platform for enhanced customer service, marketing and e-commerce applications," adds Brown. "No longer are EBPP applications considered niche `stand-alone` products. Vendors such as Oracle and the Sun-Netscape Alliance are already marketing their EBPP applications as part of a larger family of CRM and e-commerce products."

Ovum`s report finds that while growth of the US market has been most rapid and visible, this is due to the primitive US payment infrastructure. "Payment systems in the US are underdeveloped, thus making the choice to migrate to EBPP more compelling. In Europe and elsewhere, more modern methods of payment are already established, putting the onus on service providers to create a more solid value proposition to the customer," comments Brown. Although there are plenty of opportunities for EBPP worldwide, the implementation models and adoption rates will vary across geographic regions.

According to the report, while EBPP poses a threat to existing paper-based billing services, the emergence of this market creates new opportunities for a host of software and intermediary service providers.

Brown continues, "EBPP creates opportunities right along the billing value chain. Software vendors, bill consolidators, presentment, payment processing and hosting service providers all have a stake in this market. Companies such as banks and telcos even stand to make a two-fold gain by occupying multiple roles in the chain, both as billers and as providers of third-party EBPP services." But the fiercest battles are being fought at the customer interface, with consumer service providers including banks, portals and on-line merchants all vying for customers. "The role of the consumer service provider is the place where everybody wants to be, and a place where almost anyone can be," adds Brown.

Ovum finds that many different types of applications and services are available, depending on what role a company plays in the billing value chain. Also, approaches to EBPP vary widely around the world. "It is clear that packaged applications are not yet taking hold outside the US. However, as US vendors begin to spread their reach, other countries will begin to evaluate applications instead of building in-house," confirms Brown.

The report finds that the supplier market is highly fragmented and very competitive. In order to provide full solutions, suppliers have created partnerships and are selling their services though each other. This form of co-opetition can exist while the market is young, but Ovum points out that it will get worse before it gets better. "The EBPP market is already starting to get overcrowded. However, it is still young and there is plenty of opportunity, especially in less mature markets," concludes Brown.

In viewing this complex market, Ovum forecasts market developments considering various uncertainties, including customer adoption and implementation strategies. Specifically, the report separates presentment from payment, as billers do not always implement the two in tandem. According to Ovum, the number of electronic presentments will increase from 300 million in 1999 to 32.8 billion by 2005, while payments will grow from 600 million in 1999 to 40.4 billion by 2005.

Electronic Bill Presentment and Payment: Creating Opportunity from Necessity

Electronic Bill Presentment and Payment: Creating Opportunity from Necessity will be available from Ovum in early October and costs lb1495/EUR2395/$2775/A$3595. Authored by analysts Beth Barling and Judith Jeffcoate, the report offers in-depth analysis of EBPP market developments and adoption strategies around the world. The report includes regional forecasts and details market scenarios and strategies for application vendors and service providers including Blue Gill, CheckFree, CyberCash, edocs, IBM, the Sun-Netscape Alliance, Oracle and TransPoint. For further product information call Ovum on +44 (0)207 551 9031 or visit http://www.ovum.com