Cyber Checkout: Internet Billing Stands and E-Commerce Rules

Darryl Dobin, executive vice president and chief marketing officer of San Francisco-based Avolent, a provider of B2B and B2C Internet billing software, answers readers’ questions about Internet billing standards and billing options

Q: What should a large traditional incumbent corporation consider when trying to choose between building its own or buying an electronic bill presentment and payment (EBPP) solution?

A: Build versus buy is a common question today among billers looking to deploy solutions. There are a number of important issues to consider in this decision.

First is time to market. Often, a packaged solution can give you a faster deployment time than building in-house.

Another issue is the ability to control and enhance the application. In-house construction will give you ultimate control over enhances and bug fixes, though it comes at a high price to people and resources. A packaged solution allows you to focus on the customer experience rather than the low-level code.

A third issue to consider is standards. Supporting EBPP standards such as open financial exchange and interactive financial exchange is not a trivial task. Sophisticated parsers and application logic must be built to accommodate the transactions designed for bill distribution and payment.

Finally, you must also keep the total cost of ownership in mind. A packaged solution may appear to cost more up front than a custom-built solution, but total cost of ownership will be significantly lower over time. Software vendors invest millions in addressing factors like support for changing standards, availability of modern technology, periodic upgrades and high performance. Billers can leverage that expertise instead of taxing the in-house staff.

Q: My company is looking at EBPP for business we conduct outside the United States. We are concerned about the legal, cultural and language implications. What should we be concerned with? Are there vendors that specialize in this type of work?

A: International EBPP is a new area for most EBPP vendors and billers alike, and there are many issues to consider.

First, the role of consolidation is unclear. In some countries where cell phone use is dominant, consumer aggregation may be performed on the cell phone rather than on the Web.

Second, the business put in charge of consumer aggregation seems to be a random decision. In many countries, the telephone company or the postal service appears to have as much or more traction with consumers, and as a result they can play the role of the consumer portal.

Third, payment systems are much different. Since direct debit uptake is high in many countries, the value proposition of receiving and paying bills electronically is unclear. It may be that e-billing is used more as a customer care tool than a mechanism for paying bills.

Q: What are some of the key criteria for evaluating an EBPP solution? What kind of return on investment (ROI) can I expect to report to my CEO? How does EBPP integrate with other commerce applications?

A: Some of the key criteria for EBPP solutions include:

* Support for standards—specifically open and interactive financial exchanges.

* Ability to integrate to legacy systems via print-stream conversion. This is important if you have advanced function presentation, Xerox Metacode or other print stream as the only way to retrieve billing data.

* Modern Internet technology. Look for Java and XML-based solutions because they attract the best developers and are best geared for scalability and performance.

Unless you are engaging in business-to-business EBPP, your ROI is going to be slim. The primary reason is low consumer adoption, which will increase slowly over time. A better approach is to understand the business implications of implementing this type of application: addressing the high-value Internet-centric customer base, providing better levels of customer service, adding the ability for cross-sell and up-sell and using an EBPP service to be competitive with similar companies in your industry. A recent Gartner Group report indicates that many billers are deploying EBPP for potential revenue creation (selling more products and services to online customers via an interactive electronic bill) and for competitive advantage.

Q: I am a student studying for a master’s in business administration from a Top 20 school, and I used my summer internship to work on an EBPP rollout for a highly respected e-commerce company in Austin, Texas. Where do you see the best opportunities for employment as a result of the EBPP revolution? What do you think are the most attractive areas of focus for EBPP startups?

A: The best employment opportunities appear to be in technology and service companies related to the EBPP industry. This includes EBPP software players, service bureaus or ASPs, and banking spinouts (such as WingspanBank.com) that are investing heavily in creating successful lines of business. The most attractive areas for startups are, of course, in the same areas. There are also going to be opportunities in consultancies specializing in e-commerce solutions as EBPP becomes a recognized part of an overall solution for a financial services organization, telecommunications company, utility or manufacturer.

Q: We have 55 possible bill overlays on our bill statement. This has created a problem for our EBPP vendor to support. Our vendor has solved the issue by hard coding our bill. I view this as a maintenance nightmare and have held up the project. Is this a common problem for the EBPP vendors? Or is our bill statement too complex for EBPP to work?

A: Complexities in the print stream are often difficult to tackle. This is one of the reasons that both vendors and billers prefer to get billing data farther upstream if at all possible, where the billing data has not yet been merged with the printer formatting content. Good billing solutions that provide print-stream conversion provide a function called flattening whereby all the overlays in the print stream are processed and the resulting output looks like the printed bill. From there, data elements are defined. By flattening the print stream prior to manipulation, you can avoid many of the challenges around overlays. There is never a good reason to hard code a bill, which will cause significant problems in maintaining and enhancing the bill. Look for functionality in your EBPP solution that encompasses these capabilities.