Since its inception around 1984 ,the Electronic Bill Presentment and Payments (EBPP) business has seen a continuous evolution in terms of business models , technology components and services offered by bank . Governments have taken key initiatives to ensure that clearing houses and regulatory bodies support the growth of homegrown EBPP Models. It has emerged as a key change-driver in the way corporates manage the end to end billing and collection cycle and paved way for a new wave of consumer-centric digital payments and product innovation .
Biller Direct Model – The biller presents his bill data on his website and the consumer logs in and pays .In this model , the biller assumes primary responsibility of presentment of an interactive bill on his website .He may create variations such as email based bill summary notifications with embedded hyperlinks. It becomes the onus of the biller to ensure timely bill presentment and meeting the challenges around the same in terms of formatting , translating , user experience .The biller also has to integrate with a bank gateway or alternative e-commerce channel facilitate payments .This model although most effective is an expensive proposition and sees huge scope of improvisation around cost control and shared services.
Consolidator Model – A single website where the consumer can go to a single place to pay his bill across multiple billers and view statements across his accounts. The biller sends the bill summary to the consolidator and almost outsources the collection cycle to the consolidator .The consolidator conducts follow ups and maintains aggregated statements for the consumer.
Thick Consolidator Model is where the bill payment is facilitated within the same website.
Thin Consolidator Model is where the consumer is redirected to the biller’s website to pay.Often billers who are active participants in the biller direct model do not want to refrain from giving the consumer the benefit of the consolidator model .This is where the think consolidator model seeks adoption.
Internet Post Office Model – Where a single hub becomes the one stop shop for all consolidation and payments. This is where the biller , consumer and the financial institution log on to present ,pay and aggregate. This is a model that is emerging and gaining fast adoption.
EBPP Technology Components
If we look at key technology components that facilitate the Biller driven EBPP cycle of raising debits, they can be broadly classified into the following
EBPP Portal – Billers can upload and view outstanding receivables , check statements , communicate with customers .This is coupled with the back office EBPP systems that sit within the bank.The portal could be a bank ,biller of IPO style website.
EBPP Connector – A robust 24×7 connectivity software between the bank and the corporate that ensures secure bi-directional communication and allows the corporate to send across billing data in a convenient format.
Pre-Processing Hub – Once the data is transmitted, the files are parsed , data extracted , validated and sent to downstream systems .
Mandate Management Software – Holds written or electronic authorization for billers to debit consumer accounts with appropriate restrictions of date , frequency and amounts
ACH Processor – Holds mandate authorizations and can connect with the regional or national clearing house seamlessly and send out debit requests , refunds and cancellation instructions
Lockbox – Retail or Wholesale lockboxes that may be physical or electronic in nature. Acts as a collection centre for the bank.
The Value Proposition
Significant cost reduction for billers as it allows companies a chance to move towards paperless billing. Eliminating paper automatically reduces the risk and cost of handling , dispatch and archiving. Manual processes that cause significant delay in the bill collection cycle are also automatically minimized.With scale the benefits of cost become more evident and over time it has emerged that high volume billers such as utility and insurance companies tend to benefit most from EBPP.
Customer experience and loyalty is also a key factor why most companies invest in web technology or integrating with the most in-demand consolidation models or schemes.
With the consumer now being able to self service himself by viewing and paying bills at a time and method convenient for him , it increases the overall customer satisfaction . With embedded tools to view , compare , analyze , drill down and forecast billing , usage and saving the consumer gets value added services and a far more advanced experience from the paper based billing. Moreover, standardization of the experience and multilingual interaction ensures that success model in one country is rapidly replicated in another transcending global barriers , technology hurdles and sometimes can also be extended to meet customer support challenges through a centralized model. It also opens up a world for communication that is leveraged for targeted customer segment based marketing.The consumer is far more empowered today as he can pay, inquire ,view and compare bills on the go with EBPP now finding its way into digital payment methods and devices.
There are statistics that state 75% billers experienced savings by converting to EBPP and 17% consumers vouched for overall satisfaction scores for their billers went up.
Increasingly ,central banks have shifted focus to create fraeworks for bill presentment and payment to come under a nation centralized authority that ensures standardization , interoperability and access to billers and cosumers. After Saudi Arabia’s success , India is the next to launch its Bharat Bill Payments System. More about it in another post.