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Friday, 7 January 2011

What are the benefits of e-billing to customers and merchants?

E-billing is something of a “catch all” phrase which can often lead to much confusion for both the potential customer and the merchant who may want to adopt it. So let’s propose what is hopefully a helpful definition:

“E-Billing is the presentment of a bill or invoice by electronic means (usually via the Internet) allowing a customer to immediately choose from a range of alternatives to make payment. This should be facilitated in a user-friendly way and with the minimum of time and effort for all concerned.”

An e-billing process should consequently represent a substantive improvement over paper-based or other “off-line” billing/invoicing methods, and be more effective and efficient to both the customer and to the merchant.

There are three kinds of e-billing:

The first of these is e-billing via a bank web site (tied to a customer account). This is typically very limited in as much as a bank will not electronically present the bill or invoice, and in many cases may only allow customers to pay the large billers (such as utilities). They may also allow only cleared bank funds to settle bills and not credit side options, and offer limited or no bill history/storage options.

The second kind of e-billing is via e-mail (typically as a PDF attachment). This process is dependent on not only having an email address for the bill recipient but requires that the bill is printed and settled in the same way as a posted paper-bill. While this method saves costs in terms of postage and paper, in reality it is little different to the old-fashioned paper-based process that it attempts to replace.

The third kind of e-billing is the digital kind, whereby a bill is presented on a portal web site (such as www.payswyft.com) as a fully clickable document (for both bill detail, and payment). E-bills presented digitally look very much like the ones that are posted or emailed as attachments but are truly “live” or clickable documents that can be analysed, forwarded, and stored (as well as paid) electronically.

If we now return to our definition above, we can consider both the customer (or bill-receiver) experience and the merchant experience to see what each of the three kinds of e-billing offers in terms of efficiency and effectiveness.

The customer or bill-receiver experience
In all three kinds of e-billing the service is typically free to consumers and they avoid having to physically open envelopes and sort each bill individually.

In bank site e-billing, the consumer cannot see his or her bill (which would depend on some very clever technology with every biller –small to large, to allow this to happen). Hence the bank site e-billing option is very much concerned with payment only (and even this may be constrained). Hence, we might score this method for the customer at 3 out of 5 in terms of efficiency and 2 out of 5 in terms of effectiveness.

In the e-mail attachment process, the individual gets to see his or her bill quickly but can rarely do much else with it. This means that he or she may have to print, copy, store and even pay the bill using other systems or even by off-line means such as writing and posting a cheque to settle it. Hence, we might score this method for the customer at 2 out of 5 in terms of efficiency and 1 out of 5 in terms of effectiveness.

In the fully digital e-billing process, the consumer can print a bill only if they wish to, forward it, store it and pay it flexibly on-line (and in the same system and/or on the same web site). In addition bill storage and analysis is much more flexible. This saves both time and money for the consumer. Hence, we might score this method for the customer at 4 out of 5 in terms of efficiency and 5 out of 5 in terms of effectiveness. Clearly this is much better than either of the other options.

The merchant experience
In all three kinds of e-billing, the service is certainly potentially more effective and efficient than paper-based solutions but this is unlikely to be enough for a merchant who wants to invest in this approach.

In the bank site e-billing process the merchant will not be able to give customers an electronic bill (and will therefore have to continue to present it by post or email attachment). In addition, they may pay the bank for their merchant account (with fixed and variable costs) and not necessarily get additionally payment options for customers unless they pay what may be quite high per transaction fees. Hence, we might score this method for the merchant at 3 out of 5 in terms of efficiency and 1 out of 5 in terms of effectiveness.

In the e-mail attachment process, the merchant can save paper and postage costs (but only when consumers are prepared to turn off paper-based bills) and get some efficiency of delivery in terms of speed (as long as they have accurate email addresses of course). However, the reconciliation process is still likely to be unchanged and there may be little change in speed of payment by customers. Hence, we might score this method for the merchant at 2 out of 5 in terms of efficiency and 1 out of 5 in terms of effectiveness.

In the fully digital e-billing process, the merchant gets to upload their bill in pretty much the same format as they would have posted it (and probably save a little money on the cost side here). However, the far greater benefits will typically come from considerably better reconciliation and faster settlement (because of greater consumer-friendliness and more payment options being made available). Hence, we might score this method for the merchant at 4 out of 5 in terms of efficiency and 5 out of 5 in terms of effectiveness.

Summary
E-billing is more efficient and effective than paper-based billing for both the consumer and the merchant. However, not all e-billing solutions are alike and digital billing represents a major won-win for everyone.

5 comments:


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