CooperKatz :: TowerGroup

Needham, Ma, November 13, 2000 – TowerGroup today released highlights from new research on consumer-oriented electronic bill presentment and payment (EBPP). The research tracks current investments by billers, banks and other stakeholders in the billing and payments process—and estimates the significant savings and revenue opportunities that will accompany the shift to EBPP:

By the close of 2000, U.S. consumers will have received 15.4 billion bills—the bulk of these generated by major billers in four categories: telecommunications, finance, insurance and utilities.
TowerGroup projects that the volume of "roundtrip" bills and corresponding payments will climb from less than 1% in 2000 to only 10% by 2005.
TowerGroup estimates that current annual expenditures for billing and bill payment total US$86 billion across the five major stakeholders in consumer-oriented bill presentment and payment—banks, billers, third-party vendors, consumers and the United States Postal Service.
TowerGroup research shows that a conversion from paper-based transactions to electronic bill presentment and payment (EBPP) would save billers US$5.5 billion a year, at today’s transaction levels. U.S. consumers would also benefit, reducing their bill-related costs by 26% (on a net basis after paying bank fees) and saving US$4.4 billion.
Banks and third party vendors have the greatest potential to generate new revenue in conjunction with EBPP. TowerGroup projects that banks could add US$7 billion in new revenue with full conversion to EBPP, while third party vendors could generate an additional US$15.7 billion.
As EBPP is adopted, the US Postal Service will experience the dissolution of a substantial revenue stream and the need to replace that revenue through new sources. With a full conversion to EBPP, TowerGroup projects USPS bill presentment/bill payment-related postage revenue would fall to two-thirds its present level.

The research was conducted by TowerGroup e-banking senior analyst, Beth Robertson.

Robertson noted that while major stakeholders are still moving relatively slowly in converting to EBPP, change is now imminent.

"Biller migration to EBPP has begun to accelerate over the last year, as technologies to support electronic delivery have reached greater maturity and companies have freed resources previously directed toward Y2K. Consumer demand remains low, but as a larger number of high-volume billers convert to EBPP, other firms will be encouraged to try the technology. This will create a snowball effect and build consumer interest in EBPP as a wider variety of bills are available online," Robertson said.

"A leading driver of biller conversion to EBPP is potential cost-savings. As companies and other stakeholders recognize the significant expense reduction and revenue creation opportunities to be generated by EBPP, the depth of product capabilities and delivery alternatives will continue to grow. TowerGroup research shows that banks will at first lag behind billers and third-party software vendors in reaping the financial rewards of conversion. Banks can build on their current customer and transaction processing franchises to recognize considerable new revenue and retention opportunities," she added.