In an announcement that reflects growing interest among billers in offering electronic payment options, Princeton Telecom Corp. said it has formed alliances with two of California's largest utility operations.
Southern California Edison, serving 4.2 million residences, and the Los Angeles Department of Water and Power, with 3.5 million, bring to 30 the number of companies and agencies that have hired Princeton Telecom for electronic delivery of bills and receipt of payments.
Princeton Telecom posts billing information on its Web-server computers. Consumers can learn what they owe by using the Internet or the telephone. By clicking a computer mouse or pressing a telephone keypad, payers can specify the amounts and dates of their payments.
"We bring many billers to the presentment server," said company president Donald C. Licciardello, referring to the computers on which Princeton Telecom warehouses billing data for 70 million accounts. The company processes 550,000 bill payments every month.
That compares to an estimated seven million monthly payments by Checkfree Corp. of Atlanta, a competitor that has been trying to stake out a leadership position in the emerging field of bill presentment.
Princeton Telecom has announced that it will also process bill payments for MSFDC, the joint venture of Microsoft Corp. and First Data Corp. that is shaping up as a key Checkfree rival.
Consumers of the Los Angeles Water Department, known as LADWP, and Southern California Edison can receive their billing information over the Internet or through the telephone for free after receiving an identification number.
Both pay the Princeton, N.J.-based vendor 20 cents for each bill processed. Southern California Edison and LADWP pass that fee on to consumers, but it is waived when customers permit payment via automatic debits.
Princeton Telecom also charges billers 10 cents for each transaction entered into the companies' accounts receivable systems.
Founded in 1983, Princeton Telecom promotes itself as an unbranded middleman between the biller and the bill presenter-which could be anyone from a financial institution to a third-party provider to the biller itself.
Comparing his company's approach to bill presentment with the straightforward business model of book publishing, Mr. Licciardello said, "The author is the biller who has debt, and the publisher is Princeton Telecom, and we publish the debt to the network. The presenters-the Yahoos, the financial institutions-are the bookstores, who call on us for content."
"We give the content for free, but if their consumer clicks through, we charge presenters 15 cents a payment because their customer wants us to process the payment," he said. He compared the 15 cents that a bank would pay to the reported $3 per customer each month charged by Checkfree.
Although electronic information from LADWP and Southern California Edison is currently limited to amount and date due, both utilities intend eventually to include payment history and usage statistics.
"We view Princeton Telecom's Pay-by-Internet as a good first step," said Ken Perry, Internet project manager for Southern California Edison, a subsidiary of Edison International.
"We are working with companies including Checkfree and MSFDC to deliver the bill electronically," said Mr. Perry.
"We are responding to our customers' request and anticipate a pent-up demand," said Edward M. Petok, project manager at the Los Angeles water department.
Although Princeton Telecom currently offers bill-payment services for bank customers of First Data Corp., most of its work is focused on helping billers collect payments more efficiently.
"If all billers had the same accounts receivable system, there would be no need for Princeton Telecom," said Gary R. Craft, an analyst with BancAmerica Robertson Stephens in San Francisco. "One format would map automatically into the biller's file, and billers could do it all themselves.
"But the world of billers is so complex, and so crucial to most organizations, that the need for service providers is very, very high," Mr. Craft said.