Optimizing the Customer Experience when paying online

Any business, no matter what size or type, needs to pay careful attention to the customer experience when they are asking individuals to visit their web site and pay online (whatever products or services they may be offering).  The focus should therefore be on giving the best possible customer experience and converting first-time visitors in particular to become happy and repeat customers. There are several ways in which businesses can improve things and in this brief article we will be looking at six of the most critical ones.

1. Every site needs to be easy to navigate. Fundamentally, any site structure should be what customer needs, not how the organization wants it to look like for internal purposes. Simple, clear and clean page design (with as little clutter as possible) focused on moving customers toward completion of their goal should be the focus.

2. Make it easy for the customer to pay. Many web sites offering products and/or services seem to be almost embarrassed to mention payment and both hide prices in obscure pages within the site and fail to give site browsers and easy way to check out. And there is no excuse for this approach today. If this is not available as a direct part of the web site design, a redirect or hosted page at which customers can view a bill digitally or make a payment in many ways is available from multiple sources.

3. Communicate product or service offers clearly. Companies need to use clear, concise wording to describe what they are offering. Once again, clear prices are critical, including any extra costs that may be applicable. If this is not the case site browsers are much more likely to abandon the site’s shopping cart (a massive problem for many organizations when they have already done so much work to get a customer so close to buying!).

4. Implement methods to improve your site conversion rate. Conversion rate is the measure how many browsers become buyers.  Conversion rates average 2.5%-3% but rates that reach 8% are not uncommon and some sites report conversion rates of even 20%. The very informative article "How To Sell More on the Web: 30 Tips To Increase Conversion Rates For An Ecommerce Site" will give you several ideas to improve your conversion rate.

5. Manage customers when they are about to abandon their shopping carts. By the time an organization has got a customer into its site shopping cart, they have done the hard work and need to close out with losing them at this last hurdle. Assuming the payment checkout experience has been designed to be a smooth and painless one, one extra step to be taken is to offer direct incentives if a customer still wants to abandon his or her purchase-this may be a further price decrease or more benefits or features (or even additional product or service).

6. Provide incentives to register (and come back). Even the most established web sites are struggling with increasing their goal of building a large pool of repeat customers. On average, it is estimated that 95-97% percent of those who visit sites on average never return, even when they have paid.  To prevent this, provide as much incentive as possible for customers to register so that future emails and alerts can be sent to visit the site again.

Summary

Ultimately, any businesses aiming to succeed online must rise above their resource constraints and strive to provide quality e-service. The above 6 actions sound easy to implement (and they are) but very few organizations bother to spend the time to do so. Any organization that takes the time and makes the above changes to their web site will therefore reap considerable commercial benefits.

Innovation in On-line Billing

Last month the Javelin E-commerce research company released its annual report on who they see to be the “innovators” in the on-line Billing space (at least as it relates to US experience). These are many of the companies that are not the Billers themselves (or merchants with the facility to render a bill directly at their own web site and to readily accept online payment at the same site) and the Banks and/or Credit Unions (or what Javelin calls FI’s) who offer an online BillPay service to their customers.

Let’s start with a few quotes from the report:
“A number of innovative companies are seeking to overhaul and streamline the chore of paying bills with services that potentially could steal market share from the dominant models of paying bills at Financial Institutions (FI)s or directly at biller sites. Success for the upstarts will not come easily or soon, however. These innovators not only are competing against one another in a crowded field with piecemeal offerings, their survival will depend on changing entrenched consumer habits for paying bills at FIs, at biller sites, and by mail.”

“Billpay innovators have the potential — at least on paper — to offer a package that combines or exceeds the strengths of FI bill pay and the biller‐direct model. Those strengths include the ability to view and pay all bills in one place, oversee all account balances in one place, pay from any account at any FI, and file away documents from all sources.”

“BillPay Innovators lack the necessary four-part combo: money management, bill‐pay capabilities, archives, and mobile access. To convince consumers that they are a compelling bill‐pay alternative, innovators must offer a package that combines the control of money management, the practicality of bill pay, access and control via mobile devices, and the convenience and security of electronic archives.”

In summary then, Javelin concludes that independent online billing companies may have a possibly disruptive influence in the future, but it’s not yet happened, it will take a long time, the impact will be small, consumer habits will be difficult to change, the new functionality that will be available is not that compelling and there is a lot of competition rendering the effort relatively unprofitable. In other words, this is not a very positive outlook. Unfortunately, this overall conclusion is based on faulty assumptions leading to spurious and incorrect forecasts and in this article we will briefly suggest why this is the case and take each of these four overall objections one by one.

1. The market penetration of a well-run cloud-based online billing business will take a long time and the impact will be small. The argument here is that Bank Bill Pay and “Biller direct” has already “locked up” much of the market and the small innovative online billing companies now have only the “crumbs from the rich guy’s table”. This assumes that both merchants and consumers are happy with these two currently available options. For a start only the largest billers typically have an online presentment and payment solution and even it may be slow and not easy to navigate (and creates a different user experience for the consumer for every merchant that has such a site). On the Bank/FI side, online bill payment is offered but presentment is either not available at all in most cases or is only at summary single line level (so the consumer can’t view a full digital bill). The consumer may also only be able to pay bills for large merchants and only from their checking account. Both of these parts of the market are therefore only “technology interludes”. They will be quickly swept away by a full and integrated digital portal-based technology and this is available from several of the innovators right now.

2. Consumer habits will be difficult to change It is true that consumer behavior is hard to change but it is not impossible. Look at the significant shift to internet banking in the last decade (which is what has mainly driven online bank bill pay in recent times). However, more significantly the pain is not essentially on the consumer side in the bill presentment and payment area-it is on the merchant side of the equation. Merchant pain here is considerable and long standing. Many merchants have been sending out paper-bills for decades and collecting payment by offline means (like cheque and cash) for as long. Even where they can take credit and debit cards they need to have a response team or call-centre, which is costly. But perhaps most significant (and this envelopes even those merchants that have switched to emailed invoices), the big merchant challenge is reconciliation, most of which is done manually and may require two, three or even four sets of data-keying. Online billing reduces this task to almost zero time and therefore on-going cost. And with a sophisticated cloud-based online billing and payment solution it also means no up-front capital cost and the avoidance of the months of time it may take to integrate with the local accounting software being used. This is a very big win for merchants and allows them to offer incentives to customers to switch to online payment or face extra costs if they do not. From a consumer perspective this not only quickly changes the thinking but if the online solution allows them to also get a bill on the phone as a text message, as an email or they can still print it if they wish, the resistance is likely to fast melt away.

3. New online bill presentment and payment functionality will not be very compelling Javelin are magnanimous enough to recognize that some of the innovators technology is “impressive” but then fail to draw the conclusion that it will be valuable. Once again, we have to look at the value to both consumers and to merchants themselves and when this is done, the benefits are substantial. There is insufficient space in a short article such as this to list the range of features offered by many individual innovators technology companies but if we look at Payswyft as one example, the consumer has the ability to see full bill detail instantly, 365 days of the year and 7 days a week, pay by almost any method (including cash remittance) can calendarise payments and set up automatic debits, can receive customized alerts, and track all bills (which they can progressive see from multiple merchants in one place under one login and password). And for the merchant, bills or invoices can be securely sent immediately they are ready in digital form (which cuts down delivery time and lost or undelivered problems), increased payment options are offered to consumers and accelerated cash-flow is created (as consumers on average pay earlier with an online transaction). This is not to mention the call-centre and reconciliation cost savings mentioned above. Even these few features are worth huge amounts of time and money for consumers and merchants and are therefore anything but trivial.

4. There is too much competition amongst these small innovators making substantial profit making unlikely Much of the payments industry see so-called “innovators” as either non-bank businesses trying to get into the payment space (like accounting software companies) or businesses that are supplying online billing software of some kind (which will always face a high integration hurdle). What they miss is the few companies that are neither of these-truly focused e-commerce, billing or payments companies that are mainly offering a cloud-based or hosted solution. Apart from a large company like PayPal who are trying to offer this kind of service in this sphere (and they have the financial muscle to be highly disruptive without facing much in the way of competition), most companies that are competing here are relatively small at the moment and there are not that many of them. This means that there is a chance to offer quite a differentiated service in particular geographies and within certain market verticals. In addition, there is potential for one or two of these to emerge as a market leader very quickly (most likely in the next 12-24 months) and create a “sea-change” in attitudes and behavior at all levels.

As if the counter-arguments to Javelins conclusions above are not enough to convince us that a big change is coming soon, there are many other compelling benefits that are available right now that will mean the innovative cloud-based bill presentment and payment company will make large inroads into this very large market. This includes the immediate availability of an e-commerce version of bill pay on any merchant web site that wants it, the scope to offer the same service for B2B transactions (and not just B2C which is often the only focus if research in this area). In addition, the ability of the innovator to now offer secure document delivery is not just a more convenient storage option (for consumer and merchants) but means that all online payment related documents like credit card statements and payment confirmations and notices can all go online and be delivered at a fraction of their current cost. Last but not least, all of this technology is available in the mobile sphere too, meaning that merchants can render electronic bills on a smart phone or tablet computer anywhere they have a connection and consumers can pay them on the same devices wherever they are (any place and at any time).

In conclusion, the world of bill presentment and payment has changed little for more than 50 years. The innovators are going to change this world dramatically and the time for this to happen is now.

What to Look for in an Online Bill Presentment and Payment Service

Online bill presentment and payment services are offered by not only many major billers and large banks nowadays but also by a range of smaller innovative financial services companies. All of these services claim to be broadly equivalent, with each of them offering a variety of bill presentment, management and payment features to make a consumer’s life apparently simpler and more efficient. However, these different services vary greatly in what they offer and in some cases the features they claim to have are not at all equivalent. A consumer therefore needs to take care to ensure that he or she selects the service that is most likely to fill his or her needs and in this brief article we therefore offer some hints on what to look for.

Below are what we see to be the main criteria by which any consumer should ideally evaluate any online bill presentment and payment service.

Bill Presentment
Bill presentment means the ability to see a bill in an online system of some kind. For most services this means either being able to see the bill in an email attachment (usually as a PDF) which is not really an online rendering at all (as it is just an electronic version of a paper bill). Some services offer a single line item bill view ahead of paying it. This is useful but far short of a full bill presentment. As a result, the most advanced services are offering a full digital bill which is one that is not only supplied in its entirety (even if it runs to several pages) but can be saved, sent on/forwarded or clicked on to effect payment.

Bill Management
Bill management features aim to keep a consumer on target for paying bills on time (or even early). A good service–provider should offer different alerts (ideally both email and/or SMS texts) that tell a consumer when his or her bills arrive, are due, are paid and are overdue/late (and in some cases the consumer can choose when and how to get these alerts). In addition, the consumer should always be able to view the details of the bill regardless of its format. Other useful features to look out for include a bill payment calendar and online notes. In the most sophisticated services bill storage is unlimited meaning that the consumer can store his or her bills indefinitely.

Payment Features
Good online bill paying services will often include a variety of payment features. However, many banking services may only offer bill payment from a checking account and large billers with online bill pay portals may only allow ACH and the major credit cards. The independent services are therefore more likely to offer much greater payment choice, and in some cases payment by online wallet, instant bank transfer and even cash (as well as almost all available credit and debit cards). A good service may also allow a consumer to choose which payments he or she wants to make each month individually and which he or she wants paid automatically (with a controlled payment like a direct debit).

Ease of Use/Setup
Apart from the site being user-friendly, online bill presentment and payment services at a given portal should be easy to setup and use, otherwise they don’t provide the convenience they promise. This should ideally mean the ability to pay a bill as a guest or first time visitor without registration on the service. And if a consumer does register, the system should remember as much data as has already been entered and the consumer should not be required to enter his or her payee and/or account information more than once.

Admin and Reporting convenience
Although consumers mainly pay their bills one at a time, they may want to more than this. A site which allows this functionality (and needs only one login and password for many bills) therefore has an advantage. This should include lots of analysis and reporting capabilities, looking at historical cumulative bill payments, aggregate data and even overall spend totals that may well be useful when it comes to end of year tax returns.

Service availability/Help/Support
Look for a service that is available 24 hours a day 7 days a week because most consumers will wish to pay bills outside normal office hours. There should also be good customer service support offered, both with available documentation and FAQ’s and a free call number when a consumer needs to talk to a customer service representative.

There are clearly other criteria that may well apply to choosing an online bill presentment and payment portal but these are the main categories under which a consumer can evaluate each service that is offered.

What do Postal Price Rises Really Mean for Billing Costs?

It was recently announced that a first-class stamp in the UK will rise in price from 46p to 60p (a 30% increase) and a second-class stamp will go up from 36p to 50p (a 39% increase). This reflects a worldwide trend in postal prices increasing dramatically (as less and less letters are sent in the mail and therefore make the post office burden so much harder to cover) and causing those businesses which bill their customers in the mail to have to bear the extra costs. For a larger biller (perhaps doing 50,000 bills a month) this adds £84,000 p.a and for a small business (doing say 2,500 bills a month) it adds £4,200.

These are significant relative costs in a channel that already presents additional challenges for merchants over other options. This includes the need to have to print and fold invoices and have to stuff them into envelopes, wait the 2-3 days until they are delivered (excepting a small percentage that never reach the customer’s given address!) and even get lost somewhere along the delivery route (and therefore have to be resent). Postal delays, go-slows and strikes can also impact significantly on businesses, and none of these factors does anything to help critical cash-flow (assuming that the customer does not lose their paper invoice and manages to pay on time).

So, what can businesses do about yet more costs that have to be absorbed in these difficult economic times? The obvious answer is to ask customers to accept an online invoice and cut out paper and envelopes and all mail costs completely. In the above two examples this not only removes the respective £300,000 and £15,000 annual postal costs completely, but by the time you add in the extra internal costs of printing, folding, stuffing, and envelopes probably saves twice as much-or around £600,000 and £30,000.

Unfortunately, if the above step of switching to ebilling were easy, every business of any size or type would be doing it. In reality, the inhibitors have historically been many including the often immediately prohibitive need to spend up-front capital on ebilling software (and pay annually to maintain it). In addition, the introduction of a new online billing system typically disrupts normal operations for months (often costing significant time and money) in order to transition to the new approach (not forgetting that customers also have to be converted to use the new system too). This all assumes that you have the customer email addresses to which you can send the bills or invoices of course. In the past, these kind of inhibitors have added too much cost and/or hassle for most businesses and they have no choice but to stay with their traditional way of doing things-until now that is.

In recent years, third-party online ebilling portals like PaySwyft for example, have been developed which overcome many of the problems described above. First and foremost this kind of portal offers almost an immediate opportunity to send full digital invoices to customers (often within days of signing up to use this “cloud-based” service) and on a pay-as-you-go basis, meaning there is no need for any capital outlay or annual software maintenance costs. And because every merchant has a unique merchant number or ID, customers can go to the portal to pay a bill without a business having to know their email address. Customers can then pay instantly, or register at the site (which means that a business progressively “scrapes” the email address for customers (who will often want to use their email or SMS alerts to remind them when bills are due). This means that customers can be weaned slowly but surely away from paper over time, as they become increasingly comfortable that all their bills are stored, emailable and printable whenever they like, and they can therefore safely turn off the paper bill they get in the mail. Best of all, the business not only starts to save the cost of sending paper bills and the postage costs but gains the added advantage of having a fully integrated set of payment options (often greater in diversity than they offered previously) that are now available (such as every credit card for instance). This aids cash-flow, lessens calls to the business to pay by phone and massively helps bill and payment reconciliation.

Summary
The transition to online billing is always a challenge but by using a portal-based system hosted in the cloud, it is many times easier than it was and can almost immediately start to save substantial time and cost. And now that postal expensive are going up so significantly, all businesses have even more reason to therefore consider making the change now.

Will an “iTunes” Type of Web site for ebilling Ever Come into Being?

Last month an interesting article was published on a blog which made a very useful reference to on line music, and iTunes in particular, in relation to ebilling. In his article the author suggested that if we thought about bills in music terms:
• CDs (and the artists that produce them) are like paper bills;
• Listening to music online is like logging in to a portal to view and pay your bill; and
• Downloading a song (file) to your chosen device from iTunes is like receiving your bill as a file (attachment) to your PC, tablet, iPhone, Android, Blackberry etc.

This article rather strangely goes on to conclude that all music and bills should be delivered by email attachment so that customers can open it/them on all their different listening or reading devices.

Despite that fact that this article seems to get a little lost quite quickly, it does draw a useful general analogy and it is therefore worth looking at the core question that it hints at but never answers-will an iTunes type of web site for ebilling ever come into being (and how of course)?

First and foremost let’s get the comparisons right here:
• Songs (or “albums” of songs) should be compared to bills in general
• Artists should be compared to merchants (and some of both are very large and some are tiny)
• Record companies should be compared to banks
• Music listeners should be compared to customers or bill payers
• CD’s (or Vinyl) should be compared to paper-delivered bills
• Online Audio type files (MP3’s, WAVs etc) should be compared to online emails with attachments
• An online store (like iTunes) should be compared to an online bill-payment portal

You’ll notice that we do not yet talk about a delivery device like a smart phone or tablet in the above table-we’ll cover this later.

The Music Scene
If we look back at recent history, up until as little as 10 years ago, the music industry had been operating in similar fashion for decades. Artists produced songs and approached record companies to back them. If they were successful, the record company would help getting the song(s) to market on vinyl as a single or a long play record, getting the songs played on radio and elsewhere so that people would buy what they liked in main street record stores. Innovation in the music industry was very slow to come. Vinyl eventually became CD’s and radio went slowly from analogue to digital. However, the biggest changes were in listening devices, which became increasingly portable. This was led by Sony’s “Walkman” in 1979-the first step towards MP3 players which led to the huge industry paradigm shift-the iPod-introduced in late 2001 (and the new iTunes music store two years later in 2003).

When Apple arrived on the music scene the portable MP3 scene was ripe for change to something simpler and more appealing to customers. In this sense, the iPod, iTouch and finally the iphone and iPad all became the simplest and most user-friendly way to listen to music (both on a live streaming basis and recorded). As a result, the music industry has been almost completely transformed commercially and listeners (or at least those with a 3G/4G connection and/or access to the Internet) have more choice and convenience than they ever had before.

The Billing Scene
So how does this compare to the billing sector? Like music, billing has operating in similar ways for decades. Bills (the song comparison) have been and still are delivered mostly in very traditional ways, especially by small and medium sized merchants (the artist comparison). This is by paper in the mail as the simplest format (a bit like the vinyl single) or by mail with a plain PDF attachment (the CD comparison). In some cases, the email with attachment may be a little more dynamic and sophisticated and can collect signatures for example (used in the B2B billing world). This is more comparable to the MP3 or wav files in the music world.

Although a dominant player like Apple and a site like iTunes has yet to “explode” in the billing world, we are getting very close to it happening now. For some years, online bill payment has been available at a merchant’s web site, although this does make for some inconvenience for customers when they need to pay a lot of bills (or listen to a lot of songs from different artists at different record companies). Online bill payment has also been available at bank sites for many years now and has become quite well-used by the same people who took quickly to Internet banking. Unfortunately, full digital presentment is not normally available via this channel, so both of these valuable innovations are comparable to the “Walkman”-they have taken us some of the way but there is room for improvement.

The private “cloud-based” bill presentment and payment portal is a much newer innovation in the last 2-3 years, and is much closer to being the billing “paradigm shift” we talked about earlier. In this system, customers can see bills from a given merchant (an artist in music terms) and subscribe to get all the bills they send (or songs they release). Because this is non-merchant owned or bank owned (the equivalent of sometimes cutting out the record companies), customers can see many merchants (or artists), and thus have the capacity to ultimately start to see all of their bills in one place. Naturally, paying bills is never a fun activity like listening to music but the quicker and more easily you can deal with them the better (and you can get back to what you like doing much more speedily). Having all your bills in one online place (with free back and storage and easy retrieval whenever you need access) is the equivalent of getting all of their songs in one playbook-just as iTunes allows now. Customers can then keep these bills (or songs) permanently stored in one place and revisit them whenever they like. These bills are all fully digital and do not have multiple file formats that have to be tackled (much as Apple made MP3, WAV and other music file formats an irrelevance to the listener).

Perhaps most importantly, customers can access their bills at the portal from any device that is connected to the Internet by some means-a computer, a smart phone, a tablet etc. And because this is all digital, customers can use all of the currently available and evolving technology that is available such as bookmarking, flexible sorting (like assembling playlists) and using SMS alerts for example (to prompt the customer when there is a bill to pay or a credit card to update, just as you would when a new song or album by an artist has been released). Of course this is not to exclude other ways of getting a bill in any other format that may be wanted-you can still send an email or a PDF or even print them if you like.

Summary
We are not suggesting that bills are anywhere near as much fun to ‘access’ as music and you will of course listen to the same song a lot more than you will use the same bill. However, we think the broad analogy here is a useful one. Our general conclusion is that the online bill presentment and payment portal is already here and like iTunes will transform the bill payment sector over the next few years just as Apple did. There are a few innovative companies that are competing to be the “big gorilla” at the moment but it is inevitable that one of these will emerge soon as the dominant player in this space. A few early adopters (the merchants or artists as they would be in the music scene) already understand this and are quickly getting on board. For these merchants this is a relatively painless transition, with no capital outlay and they can be in the online bill presentment and payment space almost immediately to reap the benefits.

Will Mobile Devices Soon be the Dominant Channel for Payment Transactions?

In the last 9-12 months, those of us in the financial services industry might be forgiven for thinking that the main issues to face and gain advantage from in the near future is going to be who will win the lion’s share of the mobile market when it comes to payment transactions. This arises because of the huge rise in smart phone sales all over the world in the last few years and in more recent times, the fast growth of tablet computer devices (both of which create great mobility for customers). While both of these innovations are certainly exciting and possibly “game-changing” in this article, we will briefly explore whether they will soon really become the dominant payment channel of choice, as many people seem to believe they will. We will therefore look at arguments for and against this prediction.

The arguments for the case
Without doubt, along with wireless access internet innovation, smart phones are a transformational technology. This technology allows individuals to perform many everyday tasks that previously were done via traditional telephony or even on paper in some instances. The same can be said for the newer but just as ground-breaking tablet computers. The added value here is that the larger screen format allows what was previously done mainly on a personal computer in one location to be done almost anywhere because of the high level of portability and touch screen convenience. As we all know, very soon even aeroplanes will allow the use of both smart phones and tablets via the internet (and the last bastion of true peace from cell phones and computers will disappear).

Of course the two “gorilla issues” here are the use of NFC or Near Field Communication technology which allows the smart phone to become a credit or debit card, and the linked facility of a smart phone as an electronic or digital wallet, capable of storing value and therefore having the capacity to readily make may payment transactions including person-to-person payments.

NFC has a short range of about 1.5 inches. This makes it a good choice for secure transactions, such as contactless credit card payments. Smart phones can therefore “tap and go” using infrastructure already in place for credit card systems such as MasterCard’s PayPass program or Visa’s payWave.

Smart phones can now also replace customer loyalty cards, not only by storing retail store credit card information, but also automatically select the right customer loyalty card information for a given consumer purchase.

The “digital wallet” concept could extend to coupons and other offers. Consumers can now download coupons from a web site, which they exchange by having their phone swiped at the point of purchase. The retailers benefit from being able to track who their coupons are sent to and how they are used.

If you add in the benefits of smart phone tickets (for trains, buses an car parking for example) and the use of phone-based barcodes (as infrastructure allows) we can quickly see how this technology will dramatically change the consumer purchase experience in many areas (especially at the retail level) and help many merchants to gain efficiencies and save costs.

The arguments against the case
In considering the arguments against the proposition that mobile technology is soon going to be the dominant channel for payments, it is worth establishing a few facts about smart phones and tablets. Firstly, there were around 450 million smart phones sold around the world in 2011. As there are about 5.5 Billion mobiles phones in total (which means that around 80% of the world population own one) smart phones represent about 8% of the total-a number expected to go to 12% within 5 years and 20% in 10 years-meaning around 1.2 billion smart phones will be owned by 2022.

As far as tablet computers are concerned, there were around 75 million of them sold in 2011 (compared to 440 million PC sales), with predictions of at least 250 million in 5 years and 750 million with 10 years (although these figures are much more speculative of course). As a percentage of all computers (there are around 1.3 billion computers in use in total in 2011), this means that tablets represent about 4% of the market today, predicted to grow to 7% in 5 years and 15% in 10 years. The reason that % growth of tablets is much slower proportionally than smart phones by the way is that PCs have a much longer life, with companies and individuals holding on to them for 4-5 years or longer before upgrading or changing.

Given the above, it is difficult to see how mobile technology can quickly become the dominant channel for payment, even before we consider other issues. At best in 5 years time only 12% and 7% of consumers (with each technology respectively) will be able to pay on their tablets and smart phones (and only if they wish to of course). This is higher in the younger age groups naturally and is still a lot of transactional volume but not dominant by any means.

To add to the above, about 75% of all payments transactions today take place “offline”. In other words, bills are sent out by physical mail or email (with PDF attachments) and are still paid over the counter with cash and debit/credit cards and by cheques in the mail or by phone or voice over IP. Larger payments are made via internet banking via direct debit and by businesses via bank payment systems such as wire transfer for instance. It is hard to see any of these processes changing quickly, especially in the B2B space, although cheque volumes will continue to decline at the expenses of electronic payment for both consumers and businesses.

Perhaps the other major disadvantage of mobile technology is one of available infrastructure. All smart phones and tablets create much greater accessibility but are only useful when they are connected. 3G and 4G is expensive today for large data packets and access to the Internet relies on old-world “hubs”-most of which rely on old copper-wire systems. NFC technology is perhaps less encumbered as it is more like “Bluetooth” but it still needs a device with which to communicate, and in a payment situation this means that every retailer needs a reading device. Installing such devices is happening of course but it will take time and will only penetrate those market verticals where it makes sense.

So what does it all mean?
Now that we have all of the above figures and facts on both the plus and minus side what does all this mean for payments? Well, its obvious that the times are changing and in the consumer world we will see very fast rises in payments being made not only online in years to come (at the expense of more traditional methods) but a large proportion of these will be made on smart phones and tablet computers, especially in the under 30 population. However, as a proportion of the total transactional volume it is likely to be much slower than the media hype suggests. This is because retail (where much of the take-up will occur, makes up only 10% of the consumer transactional volume. Consumers themselves, of course, are typically only half of the total market transactional volume and less than a quarter of the payment value. The rest is taken up by Government and Business and both of these are likely to take many years to adopt mobile technology into mainstream payment systems-perhaps 15-20 years. For this reason, and the fact that we continue to leverage old system payment “rails”, we can conclude that mobile devices are interesting and growing as a payment option but will be far from dominant for a few years yet. Smart phones (with NFC technology) are therefore likely to slowly replace the “bricks and mortar” retail market (helping customers to migrate from a plastic card to a mobile device). And as both smart phones and tablets are effectively mobile enabled PC’s that will make all forms of payments easier and increase/accelerate on-line payment activity this will be a good thing for both merchants and consumers when it comes to the ease with which future payments can be made.

Are PDF Invoices better or worse than old-fashioned paper invoices?

A recent study published by AIIM on progress towards the paperless office makes interesting reading as it relates to current billing practices. The study is worth taking note of because apart from AIIM being a credible non-profit research business which has been around for almost 70 years, as the chart below indicates it was a very large survey of companies of almost all sizes. In addition, the study went to companies in multiple sectors all over the world (although around 50% of the companies were in the US).

What the Study Showed
As we all know, the capability to exchange PDF files as e-mail attachments is said to have reduced the volume of paperwork traded between companies and small businesses considerably. However, this study says that the reduction is minimal at best, but quite possibly creates more paperwork than it saves.

In specific terms, the study revealed the following facts about PDF as invoices
• Over three-quarters of people surveyed say one of the first things they do with a PDF-based invoice… is print it out.
• From the 77% of the 395 respondents that print out their invoices, 16% scan the invoices right back into the system for use as……PDF attachments.
• 10% of people print out their PDF invoices multiple times.
• 10% of people say they print out at least one copy for archival purposes.

The chart relating to this data is shown below:

What is happening to Invoices?
Although many of the larger companies in the survey seem to be pressing to have all-electronic billing and payment systems, it seems that we are still a long way from this ideal (perhaps as few as 2-3% of companies have a fully digital system which includes no printing and only digital storage systems). However, many businesses are at least trying to save on postage and paper costs by sending invoices as PDF files, or as faxes. However, even here the invoices are often printed out as paper, sometimes at both ends, which almost completes defeats the object. Such practices obviously do not generally result in a reduction of paper within the receiving business in particular. As we saw from the statistics earlier in total, 77% of respondents are likely to print at least one copy of a PDF invoice, and 16% admit to printing it out and then scanning it in for capture, as do 31% receiving a faxed invoice.

Are new more “intelligent” PDF’s the answer?
Most respondents to the AIIM survey were referring to the basic PDF files generated by their Acrobat software, which are obviously less feature-rich than intelligent PDFs have become in recent years with functionality such as XML files being included with all the relevant invoices and embedded payment buttons and even digital signature capture systems. Although this is undoubtedly an improvement, the adoption of these more function-rich PDFs has been very slow and in most cases has had little impact on the rate at which companies of all sizes continue to print out and scan invoices. This is partly because, a PDF is still regarded as paper in real terms-it may be electronic but it is not easy to digitize in ways that are useful for data transfer and exchange. Full digitalization is therefore the goal of many organizations and this is why scanning remains popular. In this regard, when asked what the biggest drivers are for scanning, responses were mainly about data-exchange, availability and flexibility (as the chart below from the survey indicates).

So what are the implications?
PDF’s are very convenient as a way to send documents electronically but far less so when it is an invoice. The speed of the sending process is better than physical mailing but so many people are printing it out anyway, it is far short of being the “path to digitization” that companies of all sizes want or need. Fully digital invoices seem to be a much more attractive option and when an invoice can be presented in full in third-party cloud-based portals such as those such at PaySwyft, any company gets all of this immediately.