They may not be any more fun to pay, but online invoices are making it easier for consumers— and saving companies big money
Like lots of people, Mark Reynolds maintains a constant battle with the paper that floods through his mailbox. In his case, it’s the kitchen counter that starts to disappear when he can’t keep up with the onslaught. To help stem the tide, the owner of a pet business in Dunnville, Ont., near Hamilton, uses the Web to do most of his personal banking. But he is eagerly awaiting the next wave: the ability to pull up a central Web site, check the contents of a bill, click a button and know that a bill has been paid, all without ever seeing an envelope, writing a cheque or visiting a banking machine. “I find it really simple to bank on the Web,” says Reynolds, 39. “I’ll be first in line to use any service that allows me to pay my bills the same way.” Welcome to the brave new world of electronic billing. An estimated 2.5 million Canadians pay some of their bills through online banking, after receiving paper invoices in the mail. According to one recent study, more than 80 per cent of Canadians who bank online are interested in both receiving and paying their bills over the Internet— so called e-billing. But so far only about 100,000 consumers are using an e-billing system, mostly because it is a brand-new technology. And while speed—and sometimes cost savings—will likely motivate consumers to sign up for the new systems, businesses expect to profit handsomely as the trend gains momentum. “This is going to be huge,” says Jordan Worth, an Internet analyst with Toronto-based International Data Corp. (Canada) Ltd. “By cutting out paper, stuffing envelopes and the mail, companies can cut costs from about $1.50 to $2 to a few cents per bill.”
E-billing could also create a gold mine for sales
and marketing departments: a utility that provides power, for instance, might try to use an e-billing site to coax heavy users into purchasing energy-saving appliances. But while some consumers don’t mind being targeted this way, others object strenuously. In fact, the federal government recently passed privacy legislation setting out guidelines for companies that provide services over the Web. The new laws prevent companies from collecting any personal financial information— income, say—that is not direcdy related to the service they are providing. Consumers must also be informed about how the information they provide will be used.
Despite such concerns, the rush to e-bill is on. Dushyant Sharma, 31, has been running flat out since he arrived in Toronto from India in 1996. After teaming up with Atlantabased partner Greg Rabie two years ago, Sharma founded Derivion Inc., one of the most aggressive of several software developers that help companies translate their paper bills into Web-friendly format. The company has grown from four programmers into a 220-employee enterprise with offices in Markham, Ont., and Atlanta. Derivion has 60 clients, 49 of whom have signed up in the past six months—including the first two in Canada: Microcell Solutions Inc., marketers of Fido cellular phones, and Northwest Territories Power Corp.
Sharma won’t divulge the company’s revenues (it has obtained $80 million in venture capital). But he says Derivion charges corporate clients about $55,000 to set up an electronic billing system and a further 45 cents every time a customer pays online. Dérivions clients have about 1.5 million customers using e-billing. The company expects that number to grow to about 10 million within the coming year. Sharma, a landed immigrant who is about to become a Canadian citizen, takes pride in the fact that although the bulk of his business is in the United States, the company has kept its research and development arm in Canada. Only U.S. sales and marketing employees are located in the Atlanta office.
“The talent pool in Canada is so great,” he says. “We have found there is no need to move to the United States.”
Canadian companies are also jumping into the emerging market for Web sites that consolidate an individual’s bills in one place. Such sites list a consumer’s creditors, such as utilities or credit-card companies, although they could include almost anyone specified by the consumer. In most cases, clicking on an icon or a creditor’s name will display current, unpaid bills. And unlike many paper bills, electronic ones often allow customers to check details such as the particulars of a telephone call or credit-card purchase. All that’s left is to enter when and how much should be paid.
So far, the two biggest players are Canada Post Corp.’s Epost, formed as a joint venture with the Bank of Montreal in November, 1999, and its main competitor, E-route Inc., a 1998 creation of six major Canadian financial institutions, including the Toronto Dominion Bank, the Royal Bank of Canada, CIBC and the National Bank of Canada. The Bank of Nova Scotia joined last month.
Epost, which has been operating an active Web site for eight months, delivers more than just bills, including catalogues, government forms and brochures that consumers have specifically requested. Customers get a free post office box on the site, and delivery times are certified as if they were a postmark. Paying bills online, though, can incur a charge, depending on how they are settled. E-route is still at the pilotproject stage, but is expected to be widely available by the fall. Unseen by consumers, the E-route system will allow people to list various creditors in a single location—a Web site run by their bank—and to view bills, check particulars and pay with the click of a button.
It may sound convenient, but some experts warn that ebilling could hold hidden risks. Angie Barrados, a researcher at the Ottawa-based Public Interest Advocacy Centre, says companies could use consumers’ personal financial information in ways they have not anticipated. “This is potentially a very powerful marketing tool,” she points out, “because it allows organizations to put together a profile of spending habits. A lot of people consider that to be sensitive information.” There could also be unwelcome pressure to use Webbased billing systems by offering discounts that are not otherwise available, she says.
Security issues also trouble some consumers. Ottawa-based security expert Chris Davis, who helped track down a Welsh hacker who confessed to stealing 26,000 credit-card numbers,
warns that no system is 100-per-cent secure. Having a lot of information about an individual in one location, where it could be vulnerable to attack by determined individuals, increases the potential for abuse, he says. “So far,” he adds, “there haven’t been any big hits to the e-billing system, but there is no doubt that it will happen at some point.” And no doubt someone will offer insurance against that—just click to pay.
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