The Ascent Group, Inc.

Billing & Payment Options

Driving Customers Paperless

Billing and payment options for customers have grown considerably in the last 5 to 10 years. Bill presentment has expanded from paper bills delivered through the U.S. Postal Service to email, mobile phones, and the Internet with the option to receive bills on company websites, at banks, or special payment portals. Payments too have expanded from the days of walking in-person and paying by check or cash or mailing your paper check through the U.S. Postal Service. Now customers can pay by cash, check, credit/debit card, electronic fund transfer, ACH transfer using ATMs, IVRs, mobile phones, and the Internet. In a few short years customers have been offered and have come to expect many billing and payment options.

Consumers now understand the benefits of online bill payment. A recent study conducted by the Marketing Workshop and Harris Interactive found that four out of five households with Internet access now use online banking services, primarily to access balance and account history and transfer money between accounts. Forrester Research predicts that the total number of U.S. online bill payment households will increase from 48 million to 63 million over the next 5 years. The rush to accept online payments has been a major driver of Electronic Bill Presentment & Payment (EBPP) programs for many. The focus appears to be shifting. Electronic bill presentment is now being pushed more urgently, in the hopes of reducing printing and mailing costs, and saving a few trees.

Companies are also trying to tap into the mobile banking services market which is expected to increase 10-fold by 2011. While the greatest growth in mobile transactions is predicted in China and the Far East, Western Europe and India are also expected to grow quickly. While acceptance has been lagging in the U.S., a growing range of new mobile banking products and services are being introduced, such as bill payment and presentment, funds transfer, and account management, which should help entice customers into the fold.

EBPP Quest—Slow Going

The Ascent Group recently conducted research into billing and payment practices. We asked companies about billing services and payment plans, including Electronic Bill Presentment and Payment (EBPP). While we confirmed that companies from many industries are actively implementing EBPP options for customers, we also confirmed that customer adoption (based on volume) for paperless billing and electronic payment is still quite low—averaging 5.8 percent for ebill (of total bills issued) and 6.9 percent for epay (of total payments received) for all industries. While electronic payment transaction volume is still low, the number of customers paying through the Internet has doubled since our initial study in 2004 (from 6 percent to 13 percent).

These EBPP options are there for customers, as all of our participants accept payments through the Internet (up from 38 percent in 2004) and nearly half now offer paperless billing (up from one-third in 2004). We just have to wait for more customers to make the switch.

Mail is still the most popular channel for consumer bill payment among our participants. On average, 40.7 percent of customers pay by sending a check in the mail. However, this percentage has been steadily declining over the past 5 years. In our 2004 survey, mailed payments represented 68 percent of consumer payments.

Our study participants indicated that most customers still prefer to pay with paper check by mail—both business customers and consumers. Surprisingly, many consumers and business customers still pay face-to-face—more than 21.1 percent of consumers and more than 16.7 percent of business customers.

However, the percentage of payments received through electronic means is growing and slowly displacing the paper check payment. A study by the Federal Reserve Bank, NACHA, and the TowerGroup noted that check volume is decreasing, mainly because of the growth in acceptance of alternative payment methods. According to Aite Group, paper checks and money orders’ share of bill payments are projected to fall from 54 percent in 2006 to 37 percent in 2010.

When EBPP was first introduced, most companies offered online payment options while continuing to send paper bills to customers. Now, companies are looking for ways to encourage the adoption of EBills and discourage paper statements.

While many consumers are eagerly paying online, they are not quite ready to give up the paper bill. A study by Forrester revealed that only 16 percent of consumers have opted to eliminate the paper statements. These findings are consistent with our study’s findings—only 5.3 percent of customers have signed up for electronic bill presentation.

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