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The Many Unseen Advantages of Electronic Billing

Electronic delivery of consumer bills is expected to grow
rapidly during the next five years, fueled by expanded usage of the Internet and home

To remain competitive, billers will need to offer
electronic bill presentment and payment to their customers, even though most of their
bills will still be delivered via traditional print and mail operations. The challenge for
billers is to manage these two delivery processes effectively.

Until now, billers have implemented EBPP as pilot projects,
apart from their paper-billing operations. As the volume of electronic bills grows, the
need to integrate EBPP with paper-billing operations will also grow.

This integration will simplify the movement of customers
from one delivery method to another, improve marketing efforts, ensure seamless customer
service, streamline data processing and measure the performance of the entire billing

While a pilot program can be a useful introduction to EBPP,
systems and processes that work in a pilot project may not scale to high-volume

Electronic bill delivery accounts for a tiny fraction of
all bills delivered, but it is expected to grow rapidly during the next five years.
Brokerage firm Piper Jaffray forecasts that 535 million bills will be presented
electronically by 2001 -- a compound annual-growth rate of 275 percent from 1997. This
growth will be enabled by growth in Internet subscriptions and home-computer usage.

According to a study by International Data Corp., the
percentage of all personal computers and network computers that access the Internet will
grow from 53 percent at the end of 1998 to 87 percent by the end of 2002. The percentage
of U.S. households with PCs is expected to grow from 45 percent in 1997 to 66 percent in
2005. Many of these households are already engaged in online banking, online investing and
automated bill payment.

Currently, about 47 percent of U.S. households use direct
payment -- including bank drafts and other forms of automated bill payment -- for at least
one type of payment, and another 17 percent say they would use it if it were available to
them. As EBPP becomes more available and familiar to consumers, its benefits are likely to
convert more interested observers into users.


The average U.S. home receives 10 to 12 recurring bills per
month, and EBPP can eliminate much of the time required to collect, sort, open, analyze,
pay, mail and file those bills.

Consumers also save money by avoiding postage, check and
service-fee costs. EBPP can also reduce biller costs, improve cash flow and expand
marketing opportunities. These variable costs typically range from 50 cents to 75 cents
per paper bill, or $500,000 to $750,000 for every 1 million bills. Electronic bill payment
also reduces the cost of handling paper remittances -- a cost estimated at $1 per bill.


Effective integration includes five components:

Managing Customer Delivery Preferences: If customers
can choose how they receive their bills, billers must be able to capture and track their
delivery preferences. Customers may receive electronic bills directly from the biller, or
from a third party, such as a bill consolidator or a financial institution. Billers must
be able to accept enrollment information from many sources, validate the information and
change the way that the customer's bill is processed and delivered.

Accessing and Processing Data from Legacy Billing Systems: Regardless
of the delivery method, the billing process begins by preparing customer data from a
billing system. These are typically legacy systems that produce a print stream of summary
data and transaction details for each customer account. For electronic delivery, the data
in this print stream must be parsed and converted into a format suitable for presentation
on the Internet.

For paper delivery, this print stream also must be
manipulated before printing to add finishing equipment instructions, to verify addresses
for postal discounts and to improve the appearance of the bill. This data-preparation
process can be integrated for electronic or paper delivery, using common tools for
print-stream manipulation. A single tool set for both delivery methods can reduce training
and support costs.

Implementing One-to-One Marketing Programs: Successful
companies build relationships with their customers through communication that is tailored
to each customer's known needs and preferences. Because a monthly bill or statement
is usually the primary communication that a customer receives from a company, it is a
marketing opportunity, as well as an administrative necessity.

Electronic bill delivery provides even greater flexibility
for implementing one-to-one marketing programs. Electronic inserts or advertising banners
can minimize the effects of paper's weight and space restrictions because they
require no postage and they can be changed as often as necessary, so that customers are
exposed to many different sets of messages. They can also be linked to other Web sites or
documents, so that much more information can be conveyed to the customer.

Supporting Customer-Service Requests: As delivery
options expand, it becomes more difficult for the customer-service representative to
answer questions about an individual bill. An integrated system should provide CSRs with
information about each customer's delivery method and allow them to access an image
of the bill as it appears to the customer. If electronic bill delivery is not linked to
customer service, then the postage and paper savings of electronic billing can quickly be
outweighed by the cost of prolonged customer-service calls.

Providing Management Feedback on Performance Measurements: Separating
electronic bill delivery from paper billing cripples management efforts to gain feedback
on the overall customer-billing process. Separate processes can result in redundant
reporting systems, inconsistent measures and inconsistent data definitions. Reports on the
status and performance of the paper-billing process should be integrated with feedback
from the electronic-delivery process to provide a comprehensive view of the entire billing


High-volume billers such as cable-television operations,
financial institutions and utilities will need bill-delivery systems that integrate
electronic- and paper-billing functions. This integration will simplify movement from one
delivery type to another, improve customer service, enhance marketing efforts, streamline
data processing and improve performance-measurement reporting.

Marketing campaigns will get a boost from the increased
flexibility and freedom from space and postal weight restrictions offered by electronic
billing. An integrated system allows billers to coordinate their paper and electronic
marketing efforts better.

Common software tools for print-stream manipulation enable
data preparation for print and electronic bills to be integrated, reducing training and
technical-support costs. Integrated systems also improve overall performance reporting by
reducing the likelihood of redundant reporting systems, inconsistent measures and
inconsistent data definitions.

Bill Walker is executive director for digital messaging at
Bell & Howell Mail Processing Systems