A Reality Check on Electronic Bill Presentment and Payment
By Bryan Yeager on March 7th, 2011
For the past decade, consumers have been moving many of their day-to-day activities to the Web. Millions of people have adopted communication technologies like instant messaging, e-mail, and social networks to engage with each other in a virtual way. Online shopping is more prevalent than ever, and is becoming even more diverse. Moreover, people are using the Web to manage all of their financial activities, from managing investments and checking accounts to paying bills.
With this general increased Web adoption, many analysts, journalists, and technologists have predicted that we would see a huge shift in the move to people receiving and paying bills entirely online (and thus, the reduction or elimination of paper-based bills and statements). It makes sense; consumers are moving many common activities entirely online, and organizations are looking at ways to curb costs (with paper bills and statements being an obvious target for cost reduction). Has this shift actually occurred?
Last year, InfoTrends set out to investigate current state and future opportunities in the area of Electronic Bill Presentment and Payment, commonly referred to as EBPP. In a study entitled The Future of Electronic Bill Presentment and Payment in North America, we surveyed 1,032 consumers on attitudes and adoption of electronic presentment and other online transactional activities, as well as 123 billers in areas like banking, financial services, healthcare, insurance, telecommunications, and utilities. In addition, we conducted 15 in-depth interviews with key stakeholders to get a clearer picture of the changing market dynamics of EBPP. Some key findings include:
- Despite predictions of a massive online shift, adoption of electronic presentment by North American consumers is approximately 11% of total bills and statements. InfoTrends estimates that over 26 billion recurring bills and statements are delivered via the postal services and paid through traditional methods each year; these traditional methods result in a cost of (conservatively) over $16 billion per year in printing and postage alone.
- While there are many driving factors for electronic presentment, it is clear that, by and large, consumers prefer to receive printed bills and statements over their electronic counterparts. The printed copy acts as a physical record back-up, as well as a physical reminder to pay a bill on time. While there are e-mail and text message equivalents to payment notifications, the printed copy still cuts through the clutter more than any other channel.
- Cost reduction remains a top priority to drive billers and payment processors to adopt and promote the use of electronic presentment. Delivering information to multiple channels, especially in the growing mobile space, is also another top priority that is catalyzing the shift to electronic presentment.
- There are notable differences in adoption of EBPP by billers depending on the industry. Financial and telco organizations have the greatest level of electronic presentment adoption, while healthcare has not taken to EBPP as quickly. We find that these differences can be dependent on the demographics of the customer base, as well as regulations in certain markets and marketing initiatives companies may be pursuing.
- In spite of the printed copy’s solid standing in general, consumers between the ages of 18 and 24 are more likely than other demographics to receive and pay bills by electronic means exclusively. Many in this age group are comfortable performing many other activities natively and exclusively online, and also may be influenced by other factors, such as environmental impact perception of turning off paper-based communications.
What does all of this mean? For billers and payment processors, it means flexibility. Organizations need to provide consumers with the ability to receive communications in the preferred medium. That means offering a holistic set of communication preferences to customers that include print, Web, e-mail, mobile text messaging, mobile Web access, and mobile application access. This variety of options need to be delivered with a great customer experience across each channel. Not only can all of these channels be leveraged to provide straight transactional information to the consumer; they can be used as a customer touchpoint for educational, informational, and promotional purposes.
Even though electronic presentment only currently comprises 11% of all bills and statements, InfoTrends predicts that adoption will increase and reach 22% of total bills and statements in North American by 2014. As noted, the 18 to 24 age group has the most significant adoption of electronic presentment; as that group matures, it is likely that they will only become more comfortable with electronic delivery and payment. Furthermore, banking and financial services institutions in particular have been making a more concerted push over the past few years to get customers to switch to electronic presentment. Again, these efforts are f0cused largely at cost reduction, although promotions to get consumers to switch to electronic presentment have included messaging around being environmentally friendly.
While many institutions are using sweepstakes, incentives, and other promotions to get people to move to electronic presentment, some have begun charging fees to customers to receive printed statements, which we feel could be a factor in speeding up EBPP adoption. Nevertheless, there remains a negative perception by consumers of companies instituting these fees, so they will have to battle that perception to have this shift take hold. There are also new “digital mail” services popping up like Pitney Bowes’ Volly, Hearst Corporation’s Manilla, doxo, Zumbox, and others. These services, while in their infancy, offer the chance for consumers to consolidate and manage all their bills electronically in a centralized interface, which may also play a factor in shifting consumers to adopting electronic presentment.
As consumers diversify the channels they use to interact with businesses, those businesses need to be proactive in delivering flexible access to that information from print through mobile and more. While billers and payment processors are focused on reducing costs with electronic presentment and print suppression, they need to strike a balance with customer preferences and demands. There is still a significant base that prefers printed and mailed communications, and that base cannot be ignored. If you’re interested in learning more about the full EBPP report, please contact Matt Swain.