Two new services that promise to turn consumers' bills from unwelcome chores to bargaining tools say they will be live any day now. Inc. of Seattle and Zingbill of Durham, NC, have somewhat different models, but both envision a central role for banks in their systems, which are designed to turn online bill payment into a forum where billers attempt to poach the competition's business.

Seeing from consumers' payments what services they use at what price, companies such as utilities, telcos-and banks themselves-can step in to offer consumers better deals. The two parties will be connected through either XpenseWise or Zingbill, whose services will be offered as an adjunct to online bill payment on the Web site of the consumer's bank. Both vendors emphasize that the consumer's identity will be disguised should he or she follow an on- site instruction along the lines of "click here to save on your monthly bills." Analysts say we are likely to see more of such services., a Los Angeles-based competitor to Zingbill and XpenseWise, which was not consulted for this story, claims to have 200,000 users since its April launch.

Both XpenseWise and Zingbill said early last month that they would be live later in the month. Attempts to register at both sites at the start of the month were unsuccessful. Zingbill has a static site that references "household and utility bills," whereas XpsenseWise mentions bank and investment products and offers a demonstration of how its service works.

"We will have live consumers in the system and will be taking offers through a major regional bank starting September 20," said John Teer, the 27-year old former undercover police officer who formed Zingbill out of frustration with his own bill paying experiences.

Teer, Zingbill's chief executive officer, created Zingbill's reverse- auction software with the help of Trifolium Inc., the Raleigh, NC, firm that helped develop First Union Corp.'s Internet banking system.

XpenseWise does not use a reverse-auction approach and it places a far greater emphasis on bank products than does Zingbill. Established last December by former Proctor and Gamble executives, amongst others, XpenseWise' backers include units of Toronto Dominion Bank Financial Group and Washington Mutual Corp. Venture fund TD iCapital was among those that recently committed a total of $3.8 million in first-round funding to XpenseWise. More banks are expected to sign up shortly.

XpenseWise is not exclusively bank owned, but Stephen Litzow, co- founder and chief executive officer, stresses the idea that XpenseWise will not bypass banks to deal directly with consumers by noting, "The banks own XpenseWise."

Both XpenseWise and Zingbill offer banks the prospect of a happier customer, one whose bank not only allows him to pay his bills online, but who saves him money on those bills. XpenseWise goes one further by emphasizing the opportunity a bank participant has to get a bill-paying customer to switch other financial business over to it. Whether it is a car loan, a mortgage, a credit card, or an insurance bill that is being paid on the site, XpenseWise gives the host bank a chance to tempt the consumer with better terms.

Even consumers who do not pay their bills online can avail of the benefits of XpenseWise, if they are willing to key in information on their current obligations: for instance, the duration and rate of a home-equity loan, or the long-distance phone minutes typically used per month, and how much each costs. The manual approach is called XpenseWise Direct, the one for online bill payers XpenseWise Automatic.

XpenseWise is seeking a patent on its system, which uses artificial intelligence to compare consumers current billing arrangements for various services with the alternatives, resulting in a proposed best fit for the consumer in question. By contrast, Zingbill's reverse auction allows the competition to bid on the consumer's business, but it is then up to the consumer to sift through their varying offers and decide which is best.

XpenseWise Automatic notifies consumers of where they could potentially save money on their bills, providing, for example, a comparison sheet of loan terms under different consolidation arrangements. XpenseWise can even automatically prompt the customer on how to reinvest his savings (in the bank, of course) after switching from his current lender to the bank. A service agreement is then drawn up to reflect the new terms.

Both XpenseWise and Zingbill place limits on the extent to which consumers can play system participants off of one another in search of a better deal. Once a bill reduction has been achieved by the consumer there is a waiting period before he can request another bill reduction. The wait varies by product category with XpenseWise and by acquisition fees with Zingbill, which says it will take successful consumers off the bidding platform for between six and 10 months.

Zingbill's Teer said the Sept. 20 launch would be "relatively quiet," pending the official announcement of a "full consortium." He says Zingbill is in negotiations with "seven or eight more financial institutions," which he can't name. The company was earlier reported to have signed up three Internet banking providers, including Netzee Inc. of Atlanta, which has 500 corporate customers. It was also targeting 30 biller participants by fall.

Teer said in late August that Zingbill had completed its production development system and was ready to go. "We are now waiting on our partners to update and convert their systems," he added. Zingbill now has 10 employees in addition to a dedicated software development team at Trifolium.

XpenseWise describes its system as a marketing platform that makes it possible to continually collect and model individuals' usage, credit and data preferences so that financial institutions can create an increasingly sophisticated profile of and better serve each consumer. XpenseWise says its database will help banks identify customers' bank product holdings and needs and sell them additional bank products.

The bank has total control over the billing categories presented, though XpenseWise notes that the host bank can benefit by understanding also what financial products are held with competing banks.

Although Zingbill does not intend to charge the initial round of bank participants to use its service, XpenseWise imposes both licensing and transaction fees on banks.

Costs, revenues

Zingbill's Teer says the system will also be free to early bank users that access Zingbill through Internet banking vendors, such as Netzee, that are Zingbill partners. "A second round of banks," he says, "will only pay incidental costs of implementation, but will not have any substantial costs." Banks that join after that will pay "inital system access license fees and customization costs" he says, adding that "these fees vary depending on the volume of consumers at that bank."

XpenseWise's Litzow says banks will have to pay a fee "in the range of $50,000 to $250,000" to license its system.

When it comes to consumers switching billers through the XpenseWise system, banks will be both paying out and being paid. That depends on where the business is going. If a consumer switches some sort of financial business to the bank, it pays XpenseWise between $25 and $400, depending on the product. "This," notes Litzow, "is typically less than it currently costs the bank to acquire a customer."

If, on the other hand, the consumer is switching from one cellular phone carrier to another, the telco that wins the business pays XpenseWise a fee (also in the $25-to-$400 range,) of which 15% goes to the bank since it facilitated the transaction.

With Zingill, whenever consumers switch to a new service provider the company that wins their business pays Zingbill $40, of which Zingbill then shares 40%, or $16, with the bank that gave them access to the consumer.

"As the market matures and service providers can quantify the benefits, Zingbill anticipates raising the acceptance fee," Teer says, "but we want to ensure that our customer acquisition fee remains well below the cost incurred to acquire new customers through traditional marketing methods."

Should consumers be uninterested in paying their bills through their banks' Web sites, but eager to use XpenseWise's service, they won't be able to, Litzow says. He suggests consumers wouldn't be interested in doing business with XpenseWise directly. He cites as evidence many focus groups held in the company's initial development stage that found, for security reasons, consumers were only interested in dealing with an established, trusted entity-the bank.

The bank could have another, internal conflict over these services- upsetting billers that are cash management clients, says Brook Newcomb, a senior analyst at Forrester Research Inc., Cambridge, MA. "This runs into the issue of, How do you balance competing interests of consumers and billers?" he says. "If I am an existing biller, I am not happy with the bank that is going to allow my competitors to outbid me."

Yet services such as XpenseWise and Zingbill are expected to proliferate because they take advantage of what the Internet arguably does best: facilitating comparison shopping.

Both XpenseWise and Zingbill say that protecting consumers' privacy is very important to them-so much so that even participants are not privy to consumers' personal identification information. Only when a customer agrees to make a provider switch is his name disclosed. Consumers' data is only used to the consumer's advantage in finding him better offers but is never sold to a third party, the duo say. Additionally, they say, a bank customer must choose to participate in either infomediary service and has access to his profile at all times.

Both Xpensewise and Zingbill see their services as a means for banks to draw their customers online-a compelling proposition given the associated cost saving opportunities and customer retention benefits.

Electronic bill presentment and payment (EBPP) is considered a critical application to accelerate online banking. The two companies trot out supporting statistics. By 2004, Forrester Research predicts that 13% of all consumer bills in the United States will be presented and paid electronically. Within the decade, Gartner of Stamford, CT, predicts that 70% of U.S. households will pay bills electronically. "This is the first real incentive for consumers to do online bill payment and presentment," says Teer.

As for the retention benefits, an analysis by Lehman Brothers Inc., New York, of First Union Corp.'s retail customers found those who banked online were 2.8 times more profitable than other customers and only one-fifth as likely to switch banks. Moreover, a Gartner survey last year found that consumers' number one Internet wish is the ability to view and pay bills with a single click- preceding banking/investing online and online shopping.

Asked where they differ from each other, Zingbill's Teer says, "We have a dynamic real-time auction, whereas XpenseWise works from a static data base."

XpenseWise emphasizes that it completes the switchover transaction online. "With Zingbill, it's not automatic and the consumer still needs to do the work," says XpenseWise's Litzow. He adds, "Zingbill can't sell bank products."

It's just now time for that theory to be tested.

Deirdre Heslin is a freelance writer based in New York.

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