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Electronic Billing and Payment Primer. CEBP Meeting June 27, 2012 Dallas, Texas. Julie Tootle, AT&T Dan Miner, 3Delta Systems. This will be a good session if you. Have a high-level understanding of . . . The terminology and various models associated with electronic billing and payments

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Electronic Billing and Payment Primer

CEBP Meeting June 27, 2012Dallas, Texas

Julie Tootle, AT&T

Dan Miner, 3Delta Systems


This will be a good session if you
This will be a good session if you . . .

Have a high-level understanding of . . .

  • The terminology and various models associated with electronic billing and payments

  • The stakeholder benefits

  • Industry trends

  • CEBP initiatives to support the electronic billing and payments industry

    . . . are comfortable asking questions throughout the meeting


Electronic billing and payment
Electronic Billing and Payment

The bill payment and presentment processes, flows, benefits, needs, and operating models differ when the Biller’s relationship is with a consumer or business.


Four ebpp biller models
Four EBPP Biller Models

The market is served by a number of players in various roles.

Biller Direct Model

Biller

Biller Service

Provider (BSP)

Examples: ACI Worldwide,

Fiserv, DST Output, EDS, Amex, Kubra, FIS, Pitney Bowes, Online Resources,

Striata, Transactis, individual billers And FIs

Biller Direct Model - BSP Hosting

Originator of the Bill

e.g. Utility, Telco, Insurance, Cable TV, Mobile Phone etc

BSP Hosting/

Distribution

Model

Customer Service

Provider (CSP)

Examples: Financial institutions, portals

Enablers:Billeo, Intuit, Fiserv,

Financial Fusion, iPay, FIS

Online Resources, S-1,

Yodlee, Doxo, Manilla

Switches:

MC RPPS,

Visa ePay,

ACH

Biller Hosting / Distribution Model

Customer Payment

Provider (CPP)

Examples: Fiserv, FIS

Online Resources,

Financial Institutions, etc.

Customer Bill Payment and Delivery

  • Key Biller buying decisions:

  • Who creates and hosts bills (in-house or outsource)?

  • Where does customer receive the bill (biller direct or distribution model)?


Consumers Have Many Alternatives for EBPP

Consolidated

Biller Direct

Pay and Receive Multiple Bills Directly at Bank and Credit Union Sites

Pay and Receive Bills Directly at Biller Websites

Single Access Point - Featured with Online Banking Services

Multiple Sites; Single Bill and Single Payment

Email

Bill Aggregation Portals

Consumer

Pay and Receive Bills Via Email

Online Websites to Pay Many Bills

Banks or Billers. E-mail Access; Multiple Sourcing for Bills and Payments

Single Access Point; Multiple Site Sourcing for Bills and Payments

47% of Online Bill Payers Use Multiple Channels

5

Source: Javelin Strategy & Research


Percent of volume of bill payments by payment method check and online bill pay
Percent of Volume of Bill Payments By Payment Method – Check and Online Bill Pay

Check payment %

69%

Online payment %

50%

23%

Online payment %

Check payment %

7%

Note: Online includes payments made through bank-based bill pay, at billers’ sites and at third party sites.

Source: Consumer Trends Survey, Fiserv, Inc., 2011


Volume of payments by channel percents 2000 vs 2011
Volume of Payments By Channel (Percents) 2000 vs. 2011 Check and Online Bill Pay

In an average month, how many bills do you estimate your household pays by “___”?

Year: 2011

Year: 2000

Source: Consumer Trends Survey, 2011, Fiserv, Inc.


Percent of US Check and Online Bill PayOnline Households Using Each Method of Bill Payment Past Month

  • 5.4M more households using biller direct vs. 2010

  • 4.1M more households using Bank Bill Pay vs. 2010

  • All other channels no change vs. 2010

Source: Consumer Trends Survey, Fiserv, Inc., 2011


Javelin s five year forecast for online banking bill pay and bill presentment
Javelin’s Five-Year Forecast for Online Banking, Bill Pay and Bill Presentment

Millions of U.S. Households Banking, Viewing Bills or Paying Bills Online (2006-2016)

9


Viewing paperless bills e bills at bank and biller sites varies by biller and industry
Viewing Paperless Bills (e-Bills) at Bank and Biller Sites Varies by Biller and Industry

Consumers Who Receive Only Online Statements for Four Common Bills (2007-2011)


Benefits of Bill Pay Mostly about Speed, Ease of Use, Control over Timing of payments and Saving Money

Source: Consumer Trends Survey, Fiserv, Inc., 2011


Providing Multiple Billing and Payment Options Is Important to Three out Four Consumer Households

Thinking of the monthly bills you pay, how important is it for service providers to offer multiple billing and payment options?

Source: Billing Household Survey, Fiserv, Inc., 2011


Almost 6m americans have utilized mobile bill presentment and payment mbpp
Almost 6M Americans Have Utilized Mobile Bill Presentment and Payment (MBPP)

Of the bills you paid using the texting, browser or app capabilities of your cell phone how many did you pay:

  • Key Mobile Stats:

  • 40% of US Online Households Own a Smartphone

  • Over 20% Own a Tablet Computer

  • ACH accounts for 40% of mobile bill payments

  • Percent of mobile bankers who paid a bill with smartphone increased by 33% in the last year

  • Over half of Smartphone owners are interested in MBPP

Source: Consumer Trends Survey, Fiserv, Inc., 2011


Biller benefits to customer ebpp usage at their websites and fi online bill pay sites
Biller Benefits to Customer EBPP Usage at Their Websites and FI Online Bill Pay Sites

  • Reduce costs: Postage, printing and processing

  • Increased customer satisfaction and retention

  • Enhance customer interactions and increased usage of online self-services

  • Improved cash flow/receivables management

  • Cross marketing opportunities

Base: US Online Households

Source: Forrester, 2009

Source: Consumer Trends Survey, Fiserv, Inc., 2011


Bill Pay and FI Online Bill Pay SiteseBill Users Are More Loyal, More Satisfied and More Profitable to Banks and Credit Unions

Median Customer Profit Amount

EBPP delivers more effective and efficient customer interactions and service

  • Higher Customer Satisfaction

  • Lower DDA churn rates

  • Higher average balances

  • More Targeted and Dynamic Cross-selling Opportunities

  • Lower processing costs for servicing

Av. # of Online Payments

SunTrust Attrition Rates (Indexed)

Source: Online Bill Pay Longevity and Value Study, for Top 10 US Bank, Aspen

Source: Forrester


Online billing and payment is a green technology
Online Billing and Payment is a Green Technology FI Online Bill Pay Sites

Environmental Impact of EBPP Viewed as Important by 48% of Users

Past Media PR and Consumer Advocacy the Green Benefits of EBPP

New York Mayor Bloomberg with Bette Midler Planting Trees Funded by ConEd e*Bills

Source: Consumer Lifecycle Survey, 2010


Ebpp observations
EBPP Observations FI Online Bill Pay Sites

EBPP is not a standalone service or “killer app”

Instead, it is part of a broader solution around commerce, relationships and information delivery (“Household Treasury Services”)

One size does not fit all

Know your market segments and what drives them to adopt new ways of doing business

Adoption occurs as a continuum and adapt sequentially

Adoption begins in contained markets

As consumers usage increases, it is likely that there will be increased demand for a variety of delivery options.

Security needs to be continually addressed

Consumers won’t replace a complete, offline application for an incomplete anything


Cebp resources
CEBP FI Online Bill Pay SitesResources

eBill Benchmarking Study

(http://cebp.nacha.org/Initiatives)

Electronic Bill Information Delivery Service (EBIDS)

www.nachaebids.org

eBill messaging/video eBill adoption campaign with PayitGreen

(http://cebp.nacha.org/Initiatives)

Publications (http://www.nacha.org/eStore)

Marketing Electronic Billing and Payment to Consumers

Biller’s Guide to Using ACH Applications for Consumer and Corporate Receivables

Walk In Payment Guidelines

Exception Processing Guidelines

http://cebp.nacha.org/c/Resources.cfm/AID/514


Business to business
Business-to-Business FI Online Bill Pay Sites

Electronic Invoice Presentment and Payment (EIPP) is the process by which companies present or receive invoices through the Internet and make payments to one another for goods and services.

Also referred to as Electronic Invoicing and Payment (EIP)

  • Strictly Business-to-Business (B2B)

    • Domestic

    • International

  • Accounts Receivable

  • Accounts Payable


Marketing FI Online Bill Pay Sites

Delivery

Procurement

Logistics

AP/AR

Processing

Invoicing

Payment

Approval

Cash Flow

Evaluation

The B2B Supply Chain Offers Many Opportunities for Electronic Efficiencies

Raw Materials

Manufacturing

Distribution

Wholesale

Retail

Source: TowerGroup


Motivations for b2b eipp
Motivations for B2B EIPP FI Online Bill Pay Sites

  • Improved cash flow management

  • Shortened transaction cycles and accelerated revenue cycles

  • Increased productivity

    • Automation in AR and AP

    • Workflow optimization

    • Supply chain integration

  • Reduced direct billing costs (e.g. postage, printing, reconciliation)

  • Automated dispute notification - enhanced customer service

  • Ability to send/receive electronic payments


Eipp presentment models providers
EIPP Presentment Models/Providers FI Online Bill Pay Sites

Biller (Seller) Direct

Payer (Buyer) Direct

Consolidator

Biller Service Providers (BSPs)

Examples:

Bottomline, DST Output,

Amex/Harbor Payments,

Financial Institutions

Payer-Focused Providers (PSPs)

Examples:

Bottomline, Direct Commerce,

iPayables, Amex, JPMorgan Xign Corp.,

Financial Institutions

Consolidators

Examples: Bottomline, Direct Commerce,

iPayables, Amex,

JPMorgan Xign Corp.


Biller seller direct model
Biller (Seller) Direct Model FI Online Bill Pay Sites

Other

Payers

Biller

(Seller)

Biller’s web server

Payers visit biller’s website

to view invoices.

Payer

(Buyer)

View Invoice

Debit Origination

(for ACH payment)

Payer FI

Biller FI

Source: NACHA CEBP


Biller seller direct model1
Biller (Seller) Direct Model FI Online Bill Pay Sites

Biller controls customer data and experience

Enables cross-sell/ marketing

Allows customers to initiate payment online

Provides opportunity for more predictable cash flow, and improved cash flow forecasting

Reduced DSO

Offers potential for automated AR update

Low implementation costs

Biller may offer incentives to enroll

Enhances dispute functionality

Can automate review, routing, and approval

BENEFITS

CHALLENGES

  • Biller responsible for all start-up and operational costs

  • Must convince payers to participate

  • May have integration issues with payers’ AP

B

I

L

L

E

R

P

A

Y

E

R

  • Payer must access many biller websites

  • AP integration

  • Compliance with biller payment options


Payer buyer direct model
Payer (Buyer) Direct Model FI Online Bill Pay Sites

Payer FI

Sellers submit invoices through

Payer’s website.

Other

Sellers

Payer

(Buyer)

Biller

(Seller/

Supplier)

Submit Invoice

Buyer's web server

Credit Origination

Biller FI

Source: NACHA CEBP


Payer buyer direct model1
Payer (Buyer) Direct Model FI Online Bill Pay Sites

Provides opportunity for more predictable cash flow, and improved forecasting

Reduced DSO

Payer controls EIPP application

Ability to integrate internal systems – notably AP

Automates review, routing, and approval

Enhances dispute functionality

CHALLENGES

BENEFITS

S

E

L

L

E

R

  • Seller may need to send data to many payer websites

  • Must integrate AR

  • Compliance with payer payment options

  • Requires process change or programming for the Seller

P

A

Y

E

R

  • Payer is responsible for most costs

  • Must convince sellers to participate


Consolidator model
Consolidator Model FI Online Bill Pay Sites

Payer FI

Sellers submit invoices to

Consolidator, which are reviewed

and paid by Payer.

Other

Payers

Other

Sellers

View Invoice

Submit Invoice

Payer

(Buyer)

Biller

(Seller/

Supplier)

Submit Invoice

View Invoice

Consolidator

Credit Origination

Biller FI

Source: NACHA CEBP


Consolidator model1
Consolidator Model FI Online Bill Pay Sites

Reduces number of trading partner sites

Leverages shared infrastructure, common processes and services

Seller can present electronically with minimal resources

Automates review, routing, and approval

Enhances dispute functionality

Provides opportunity for more predictable cash flow, reduced DSO, and improved forecasting

Potential for automated AR/AP update

BENEFITS

CHALLENGES

  • Must convince trading partners to participate

  • Compliance with consolidator enrollment, presentment and (potentially) payment processes

  • Integration of AR/AP with consolidator

  • Non electronic invoices

S

E

L

L

E

R

P

A

Y

E

R


Adoption of e invoicing solutions
Adoption of e-Invoicing Solutions FI Online Bill Pay Sites

29


Methods used to trade b2b invoices
Methods Used to Trade B2B Invoices FI Online Bill Pay Sites

30



Some challenges to greater adoption
Some Challenges to Greater Adoption FI Online Bill Pay Sites

  • Electronic Invoices and Payments requires cooperation between two;

  • Benefits are experienced with large scale acceptance

    • security,

    • adaptability in the infrastructure of e.g. billers, payers, etc.

  • Need for “pervasive platform”, not “island platforms”

  • Some innovations seem to be more driven by regulatory pressures


Cebp resources1
CEBP FI Online Bill Pay SitesResources

State Tax Change Portal

http://www.nachataxportal.org

Billers’ Guide to Using ACH Applications for Consumer and Corporate ACH Receivables – 2nd Edition

https://www.nacha.org/member-apps/index.cfm?action=store.product&ProductID=123&ProductCategoryID=29

B2B AP ROI Cost Calculator

http://admin.nacha.org/userfiles/File/Council_for_Electronic_Billing/Resources/AP_ROI_-_calculator_-final_draft.xls


You still have questions
You still have questions? FI Online Bill Pay Sites

Network with your peers

Seek out a Steering Committee member

Review material on the CEBP web site


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