Serpentine Queues No More...

Whenever Sridhar Pillai goes to pay his telephone bill, he encounters a long

queue. It takes him at least an hour to get the job done. Elsewhere, Rajesh has

to pay his insurance premium. But going to the nearest insurance office means a

long drive.

These examples highlight the pressures that bills or payment

schedules impose on people every month, testing one’s time and patience. For

those who ask "is there a way out of this", the answer’s yes.

Welcome to the world of Electronic Presentment and Payment (EPP), which is

evolving into one of the fastest-growing applications on the Internet. Bill

presentment and payment in the electronic format in general is termed as

Electronic Billing. The concept was introduced in India in the mid 1990s

by a handful of multinational banks. Private sector banks such as ICICI and HDFC

later began offering limited bill payment services to their consumers. It was

only in 2000, with the launch of ICICI’s Billjunction.com, that the service

assumed a commercial dimension and provided a platform to customers to pay

various bills through a single bank account. 

The impending boom



Consider this–in 2001, 18 million households viewed bills online in the US

alone. This, according to Jupiter Media Metrics, represents 6% of total US

consumer bills. Moreover, by 2006, 50 million US households will use electronic

billing services. While an audit of the Indian market for these kinds of

services is yet to be ascertained, analysts however are unanimous in their

opinion about the market size, which is estimated at Rs 100 crore-plus.

Says Bikramjit Sen, COO, Bill Junction Payments, "Though

a relatively new concept, the idea of electronic billing has been very well

accepted by service industry players across the country. The scope for these

services is growing steadily. From being a value-added service a couple of years

back, this has now grown to become an essential service offering. Billjunction

today executes bill transactions for six of 10 banks in India, who offer

electronic billing to their consumers." Sen explains that Billjunction also

offers electronic bill payment services to a wide range of service providers,

enabling users to pay their bills for more than 80 unique services. ‘‘With

offerings for the SME, corporate and individual user, Billjunction has emerged a

leader in this booming segment," he adds. The perfect analogy for the

emergence of electronic billing services in India could be ATMs. While earlier,

banks highlighted the use of an ATM machine as a value-added service, it has now

has become an essential banking tool for most Indians.

According to Ravi Datanwala, MD, eazy2pay.com, "Online

billing is a concept which is fast gaining acceptance with  billing

companies as well as customers. Customers are keen to get these services since

it saves them a lot of time when it comes to paying their bills online. Eazy2pay

offers a slew of billing services like full bill presentment, bill payment

services, ASP service for billers and EBPP manger — a billing product."

Market scenario



Electronic billing is seen as a value proposition by enterprises. Most

service-oriented enterprises today are exploring the possibility of outsourcing

their billing functions. Says Datanwala, "The ASP model is best suited for

billers or banks. This brings in considerable cost savings since billing

services can go online without any additional burden on the enterprise’s

technical infrastructure or diverting existing staff to manage billing

functions."

While this is a long-term opportunity, vendors today are

mainly targeting individual consumers who pay bills like telephone, insurance

premiums etc. Comments Sen, "Ideally, every bill that is issued to a

consumer is a potential market. Typically, eBilling services attract users from

the techno savvy, working professionals’ segment. The 25-44 years age group is

predominant amongst our user base."

Electronic Billing Demystified Here’s a typical electronic payment process at Bill Junction. To begin with, the user has to register at www.billjunction.com. Once registered, he can add billers/payees from the list like BSNL, VSNL etc. Once the user selects the billers, a consumer reference number will be sent to the billers and the user account verified. Once Bill Junction receives the online payment invoice from the billers, it sends out a personal e-mail, alerting the user about the bill payment. The user then gives the payment instructions in the outbox and schedules the payments by choosing the payment option. Using ECS, Bill Junction pays the billers and sends out another e-mail alert notifying that the payment has been made.

While Bill Junction has the early mover advantage, players

like Eazy2pay have the advantage of being neutral non-banking service providers.

HDFC, meanwhile, has an electronic billing service called Billpay. The bank

offers it as free value add to account-holders, who can pay various utility

bills. However, Bill Junction, despite being an ICICI company, does not insist

on an ICICI bank account. Instead, it uses the RBI’s electronic clearing

services (ECS) mechanism that enables customers to pay bills through the bank of

their choice.

The RoI factor



Since electronic billing is an emerging frontier, most vendors feel that

quantification of investments will take a while. The emphasis now is more on

arriving at a critical mass. For instance, Ravi Dattanwla believes that actual

payouts in terms of RoI can happen only when subscriptions reach a figure of at

least 75,000 consumers paying two or three bills a month. Eazy2pay charges a

flat fee of Rs 100 per month with free registration. Bill Junction on the other

hand has put in place a two-pronged revenue strategy. It charges the consumers a

nominal processing fee and a transaction fee from the billers. Bill Junction’s

current customer base is around 1.5 lakh.

While subscriptions form the major part of the revenues,

market intelligence reports suggest that electronic billing sites can generate

additional revenue through advertising space and affiliate click- through links.

These kind of advertisements often get commissions from affiliates whenever

visitors click on that link and execute a particular action like filling out a

form.

From an enterprise standpoint, electronic billing is the

cost-effective alternate to paper-based billing. It translates into significant

cost savings to the company. According to a report published in Billserv, "Billers

need to identify all the factors that contribute to billing costs and ensure

that the billing solution selected provides a less expensive alternative and a

degree of savings. At the same time, it must smoothly transition consumers from

a traditional to an online culture."

The latest report from Gartner says that enterprises have to

determine a budget and identify a billing solution that brings in maximum RoI.

For instance, companies distributing 24 million bills annually and handling

7,80,000 billing related calls per year could invest up to $1.1 million to

deploy an in-house billing solution. A mere 9% adoption rate of the solution by

the consumers will yield a healthy RoI.

The road ahead



According to the recent Dataquest Top 20 report, Internet penetration in

India remains low–at about seven users per 1,000 people. Meanwhile, the

current subscriber base is around 3.7 million. Interestingly, the Internet user

base is around 7 million. The reason for the user base outwitting the subscriber

base is the result of widespread reach of cyber cafés and the low access rates.

This positive aspect will propel Internet-based application like electronic

billing in India. Notwithstanding country specific issues, vendors are confident

that electronic billing will take off in a big way.

The major driver for growth is the booming workforce of

skilled professionals hard pressed for time. This segment is the ideal group

that will adopt electronic bill payment as an essential part of their lifestyle.

Besides, the active endorsement of these services by billers has further helped

popularize these services among the masses.

Shrikanth G–Dataquest in Chennai