The Realities of Electronic Bill Payment and Presentment

The “I” word is being used to sell to consumers, yet do residential customers believe it’s the best place to get customer care, or to receive and pay their bills?

In an Insight Research Corp. survey released in early 2000, 1,022 consumers connected to the Internet at home were asked how they prefer to resolve billing and customer service problems with their telephone or communication service companies. They were given the choice of resolving them exclusively by using the Internet, resolving them with support over the telephone, or either over the Internet or the telephone. 47 percent choose conventional telephone support and 45 percent preferred either. Only 5 percent chose to resolve problems exclusively on the Internet.

Problem Resolution Preferences, 1999

Judging from these results, it appears Internet users are not yet ready to rely on customer support online exclusively. Electronic bill payment and presentment (EBPP) and online customer care for service providers isn’t necessarily a scenario of “If you will build it, they will come.” Yet our analysis suggests it will substantially reduce a service provider’s operating expenses. The savings that carriers will realize from just the adoption of EBPP by their residential customers will grow from $38.6 million in 2000 to $403 million in 2004, based on most estimates of consumer adoption rates.

The Here and Now

American households receive an average of 12.5 bills per month. Although there are about 28,000 billers, 350 of them—or about 1 percent—account for 65 percent of all bills. The Wall Street Journal estimated in January 1999 that only 9–14 percent of the 15 billion consumer bills paid each year are handled electronically. While many such payment transactions are processed through direct debits from banks for mortgages and insurance payments, and thus fall outside our definition of EBPP, it does give some indication of the impact that ubiquitous EBPP will have on the American household.

Carriers may be touting their online billing option on their paper bills, envelopes and bill inserts, but the message isn’t necessarily being carried across to their call centers. The call centers are not facilitating the online billing registration process. Insight’s researchers found that representatives at the call centers either did not know online billing was being offered, nor could they directly sign up the consumer for the service. The researchers were directed to a Web site, or mistakenly transferred to the ISP division of the carrier. Moreover, some carriers are offering special pricing promotions for consumers who sign up for online billing, plans that can invalidate the customer’s existing pricing plans.

Insight noted that the telephone service providers are concerned that customers will not pay their phone bills unless they receive a monthly paper bill. They have addressed this concern in the methods of payment they are accepting for paying online bills. Customers receive e-mail when their statements are posted online to remind them to go look at them. Payment is by direct debit of the customer’s bank account or by credit card for almost all the telcos studied. BellSouth, besides allowing payments through CheckFree and TransPoint, also offers the option of paying via the online system of the customer’s bank. Southwestern Bell allows payment by CheckFree’s e-bill, and U S West includes electronic funds transfer as one of the payment methods. Bell Atlantic customers can view their statements online, but payment is by check or direct debit of the customer’s bank account.

All the online bills have been designed to look like a paper bill. MCI’s is an exact replica. None of the phone companies are currently charging their customers for using online billing. Southwestern Bell, however, will levy a charge for sending a paper bill if the customer has signed up for its online billing service.

Despite the examples, however, EBPP remains only a minor component of most carrier’s offers to consumers. Though all the carriers’ Web sites had lists of frequently asked questions, we found that some FAQs made no mention of the online billing service as a way of paying phone bills. In fact, some Web sites made it quite difficult to find out about the online billing service. For example, in the case of Southwestern Bell, the customer must know the exact name of the service. U S West is the only company studied that offers its online bill in a language other than English.

Only a few Web sites made it possible to order products and services online. Customers can learn about them there but must order by phone. SNET and Southwestern Bell reps call to verify orders placed online. Attempts to order items from BellSouth got “under construction” messages. On some of Sprint’s product pages, the customer can click on “Chat Live Now! With a Sprint Rep,” but that option is available only during business hours.

AT&T is the only site presently using its statement to provide online care. By double-clicking on a phone number, the name the phone is listed under is presented. Customers can dispute calls just by double-clicking on the cost, a feature that many would agree is truly a service.

Three Web sites—those of Bell Atlantic, U S West and BellSouth—permit reporting telephone problems online. Bell Atlantic’s site also allows customers to track their trouble reports. The company kept its promise that a repairman would call within two hours.

Lessons Learned from the Banking Industry

Banking is one industry that has entered the online environment with consumers earlier than most. A study released in 1999 by Cybercitizen Finance proves the importance of using the Web well. It found that one-third of U.S. online banking customers stopped using the service in the last year. Further, they found that even though 3.2 million people opened online accounts, 3.1 million stopped using them. These customers are probably lost to the bank because of their dissatisfaction, but they are not lost to the industry or service. They are likely to continue trying services until they find one that meets their needs.

Many lessons can be learned from that industry for telecom providers. Among the things to avoid:

· Customer confusion accessing the bank
· Charging a fee for using the online service
· Inadequate security
· Poor visibility of screens with too much information
· Links that did not work
· Poor information on products and services, and the inability to order them online
· Lost customers inquiry e-mails
· Lack of 24-hour service
· Long response times for customer inquiries
· Not keeping adequate account history online

Conclusion

According to Jeetu Patel, vice president of research and CTO for Doculabs, “It will probably be five to 10 years before EBPP is standard. Most systems are immature, with the majority of the products not where they need to be at this point.” He explains that it takes time to integrate Web initiatives with legacy systems, because each must be handled case by case, depending on the resource allocation and integration required. In order to adopt electronic billing, telcos will have to transfer data from up to 40 different systems, a daunting task. Moreover, moving traditional, non-customized, sometimes confusing bill formats to the Internet is a recipe for failure.

Robert Rosenberg is president of The Insight Research Corp., a telecommunications market research and strategic analysis firm based in Parsippany, N.J. Insight recently released a study entitled, “Online Customer Care and Billing,” For more info, visit www.insight-corp.com.