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 . . . 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 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 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 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 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 Online 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 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 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) 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 • 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 eBill 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 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 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 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 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 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 • 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 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 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 Model 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 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 Model 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 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 Model 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
Some Challenges to Greater Adoption • 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 Resources 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? Network with your peers Seek out a Steering Committee member Review material on the CEBP web site