EBPP in Western Europe and the US 2004 – Computer Business Review

Published: 26 Feb 2004, Publisher: Datamonitor

Introduction
Early forecasts on adoption and growth of electronic bill presentment and payment solutions were optimistic. But despite the potential benefits of this new technology, the predicted growth in Europe has yet to appear, and even in the US providers have struggled to demonstrate healthy business. This briefing examines the reasons behind this and looks at the market’s future prospects.

Scope

* Covers the EBPP markets (B2C only) in the US and Western Europe, particularly focusing on the UK
* Utilizes information from primary interviews with leading market players, such as CheckFree
* Estimates the current size of the EBPP markets in the US and the UK, and compares it with the market’s potential size
* Assesses EBPP strategies of prominent market players in the US and Western Europe

Highlights
Out of the two main models, the biller-direct approach to EBPP has had much more success with consumers. However, industry experts agree that the future lies with the thin version of the consolidation model, as it allows billers to maintain close customer contact, while offering consumers the convenience of consolidated bill viewing.

Despite the competitive advantages EBPP can bring, growth of the market has been below expectations. Though the US is the global market leader, Datamonitor estimates that EBPP accounted for less than 10 per cent of all US bills. In the UK EBPP solutions have yet to catch on, with less than 1 per cent of all bills delivered and paid online.

One of the reasons for the indifferent EBPP growth in Europe are existing payment infrastructures. Direct debit, for example, demands minimum effort from consumers and is cheaper than online payment processing. However, online billing offers long-term advantages of targeted marketing and cross-selling which cannot be ignored.

Why you should buy this report

* Gain understanding of how different models of electronic bill presentment and payment work
* Identify competitive advantages EBPP solutions can bring to your business
* Develop successful EBPP strategy through the assessment of benchmarking examples

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Table of Contents
ABOUT DATAMONITOR
CHAPTER 1 INTRODUCTION

* What is this briefing about?
* Scope and definitions
* Who is the target reader?
* How to use this briefing

CHAPTER 2 EBPP EXPLAINED

* There are two main models of electronic bill presentment and payment
o The biller-direct approach establishes EBPP capabilities on a billler’s own website
o The consolidator approach relies on a central aggregator
o The consolidator model of EBPP offers two different approaches: thick and thin consolidation
o So far, the biller-direct method has proved more popular, though the future momentum lies with the thin version of consolidation model
o The biller-direct model is popular with billers and consumers
o Billing direct ensures hands-on control of the customer by the service provider
o Despite apparent inconvenience, the biller-direct model has been popular with consumers
o But the lure of bill consolidation can ultimately prove too strong
o The ‘thin’ version of the consolidator model has the best chance for widespread EBPP acceptance
* Various types of players are currently contesting the market
o Traditional billers can benefit from the cost-saving aspect of EBPP
o Third party providers have established a strong position in the market
o FS companies have multiple roles in the EBPP process
o Retail banks are a major source of recurring bills to consumers
o Retail banks are also involved in the provison of payment services to billing companies
o Retail banks can also act as providers of consolidation services to consumers

CHAPTER 3 EBPP – STRUGGLING TO SUCCEED

* EBPP implementation can provide companies with a number of competitive advantages
o Cost-saving is one of the most compelling arguments for EBPP
o EBPP offers competitive advantages through delivery of superior customer service
o EBPP offers valuable opportunities for targeted marketing
o EBPP offers enhanced cross and up-selling opportunities
o EBPP helps in attracting more affluent customers
* Despite the potential advantages of EBPP implementation, the current market is struggling in terms of its size
o The US market is far more developed in terms of EBPP use and adoption
o While in the UK EBPP accounts for a fraction of all consumer bills
* If EBPP were implemented fully, the potential cost savings would be substantial
o Though the potential savings can be huge, only the most advanced EBPP models can offer them
o But the majority of European countries are far away from eliminating paper bills completely

CHAPTER 4 YET, TURNAROUND IS EXPECTED

* Introduction
* A number of obstacles has prevented the EBPP market from growing more rapidly
o Consumer attitudes towards EBPP have been lukewarm
o Customers are not there yet in terms of the e-adoption curve
o US customers have been put off by charges
o Security of online payments presents a worry for consumers
o European consumers can enjoy more convenient regional payment infrastructures
* A number of prominent players have been driving the US EBPP market forward
o CheckFree – the global leader in the provision of EBPP solutions
o CheckFree offers a choice of EBPP solutions to consumers and billing companies
o CheckFree enters European EBPP market
o Datamonitor Cards Team View
o Bank of America – the largest online customer base in the world
o Partnership with CheckFree has ensured a prominent presence in the EBPP market
o Datamonitor Cards Team View
o A number of other companies are also contesting the EBPP market in the US
* European companies have been slower in establishing a business case for EBPP
o Alliance & Leicester – giving UK consumers a taste of consolidation
o Datamonitor Cards Team View
o The UK Post Office – a less successful attempt at consolidation
o Bills Online( service was aimed at providing a one-stop-bill-shop
o Datamonitor Cards Team View
o Companies in different European countries are in various stages of EBPP development

CHAPTER 5 CONCLUSION

* Online bill presentment will drive the future growth of EBPP, but a lot will depend on consumer take-up
o The future EBPP growth will come through online bill presentment
o Online bill presentment offers a solution for European markets with existing non-electronic payment systems
o But the growth can only be achieved with the help of consumers
o Future generations will place less importance on paper bills
o Datamonitor Cards Team View

CHAPTER 6 APPENDIX

* Definitions
o EBPP
o The biller-direct model
o The thin consolidation model
o The thick consolidation model
o Direct Debit
* Research methodology
* Further information
o Relevant links
o Relevant reports
o Current reports and briefings
o Future reports and briefings
o Datamonitor Financial Services Consulting
* Datamonitor Retail Banking team
* How to contact experts in your industry

List of Tables

* Table 1: EBPP accounted for less than 10 per cent of all B2C bills in the US in 2002
* Table 2: EBPP accounted for 0.2 per cent of all B2C bills in the UK in 2002
* Table 3: Potential cost saving from EBPP implementation
* Table 4: Billing companies could save billions, if they were to implement a 100-per-cent switch to EBPP
* Table 5: Proportion of customers paying their bills online
* List of Figures
* Figure 1: The biller-direct model requires customers to view and pay their bills directly through their service provider’s website
* Figure 2: The ‘consolidator’ model relies on central aggregator to present bills and provide payment capabilities for customers through its website
* Figure 3: Sweden is the most advanced country in terms of EBPP adoption, as it has the highest proportion of customers paying their bills online
* Figure 4: A number of other US companies are also active in the EBPP market
* Figure 5: A number of European companies are in different stages of EBPP development