The next big thing in electronic billing may be e-mail.
At least two vendors — Striata, a South African electronic billing company, and Transactis Inc. of Bethesda, Md. — have developed ways to present and pay bills by e-mail. Both say U.S. customers have tested it or are planning to offer it to consumers next year.
Striata and Princeton eCom Corp. in New Jersey announced an e-mail billing service in July. Last week they said that CPS Energy, San Antonio’s municipally owned natural gas and electricity company, plans to begin using it next month; and that Westcon Group Inc. of Tarrytown, N.Y., a business-to-business communications company, plans to do so next year.
Transactis’ chief executive, Thomas Kohn, said that a New England utility has tested his company’s BillMail service — and that a top-five card company, a top-10 utility, and a top-five telecom plan to begin using it during the first half of 2006.
Though both systems use encrypted attachments to e-mails for billing and payment, there are some differences between them.
In the Striata-Princeton eCom service, consumers enroll through the e-mail attachments they receive. After entering their payment information once, they can pay later bills with just a click.
In the Transactis system, consumers enroll on a Web site they need not visit again. They pay e-mailed bills by entering a username and password each time.
In the Striata-Princeton eCom service, Striata’s software will create the e-mail invoices. Payments will be routed through Princeton eCom’s bill-payment system, just like payments initiated at banks’ or billers’ online payment Web sites. Princeton eCom will also be responsible for marketing in this country.
The U.S. service will be “one of the first instances in the world where payment is actually generated from the secure e-mail bill itself,” said Garin Toren, Striata’s chief operating officer.
The Striata e-mails have several security features, he said: they are digitally signed, electronically postmarked, and carry enough personal information to prove to the consumer that the invoice is legitimate and not part of a phishing scam.
Ron Averett, Princeton eCom’s chief executive, said e-mail “is just another form of presenting content and executing payment, just like the biller-direct model and just like the aggregation model.”
He said that it takes 60 to 75 days to implement the system with a customer, and that the concept has proved appealing to billers. CPS and Westcon are new Princeton eCom customers, he said.
In Transactis’ BillMail service, the payments are processed through Transactis or the billers’ current bill-pay vendor. Eric Fox, the company’s vice president of business development, said that if criminals learned a BillMail username and password, all they could do with them is pay the consumer’s bills.
“A bill paid via BillMail is safer than one paid through any other channel, including paper,” he said. “All financial data is held securely and separately.”
Gwenn Bezard of Aite Group LLC says e-mail billing “is very attractive — but the devil is in the details.”
“The devil is going to be the fraction of the volume that does not go through or the fraction of the volume that people tag as spam,” said Mr. Bezard, a research director at the Boston market research company. If an e-mail bill fails to arrive, he said, billers could follow up by calling the customer or sending a standard paper bill — but either course would add to the cost of billing.
If these delivery problems can be addressed, Mr. Bezard said e-mail bills could eventually match or beat online bill payment sites in popularity with billers.
“Billers, especially in some verticals like utilities, are growing frustrated with the level of adoption of bill payments on their Web sites” and may be eager to consider an e-mail alternative, he said.
But he said that though the idea of delivering bills by e-mail “has been around for some time … it’s still in a very early stage.”
Mr. Toren said that Striata considered various delivery issues when it developed its system, and that it has a 98.6% success rate.
“Our technology allows the biller to detect that, first of all, the bill was delivered to the consumer; and second of all, that it was opened by the consumer,” Mr. Toren said.
It also reports all links that were clicked in the bill and whether the customer paid it, he said. Striata recommends that billers keep mailing paper bills “until they have confirmation that the [e-mailed] bill was received and that it was being used,” he said.
Mr. Kohn said Transactis works with Internet service providers to guarantee that its bills are not mistaken for spam. It also tests the system with consumers to make sure their home computers are not marking bills as spam, he said.
Cathy Graeber of Forrester Research Inc. is not sold on the idea of e-mail bill delivery.
“I don’t see the big attraction,” said Ms. Graeber, a principal analyst at the Cambridge, Mass., firm.
It is telling, she said, that the first users are utilities. Partly because consumers tend not to feel compelled to examine their gas bills, utility companies have “not been as successful as the credit cards or cell phone carriers in getting people to their site to view their bills,” she said.
(Transactis’ Mr. Kohn said that with current online bill-pay methods, “credit card companies, banks, and telcos have, on average, 10% to 25% adoption into their online billing programs, while utilities have only 3% to 5% on average.”)
Ms. Graeber also said Striata’s use of personal details in the invoices to assuage recipients’ fears of phishing may not be the best approach.
“We’ve seen a lot of different phishing efforts doing the same thing” with names they have obtained.
And even if the bills get through recipients’ spam filters, there is no guarantee they will be opened, Ms. Graeber pointed out.
“Twenty percent of online consumers say their concern about phishing has caused them to no longer open e-mails that say they’re from their financial providers,” Ms. Graeber said. They may be just as reluctant to open e-mail from billers, she said.
