Several years ago, analysts and industry experts expected that electronic bill presentment and payment would be a common practice in American households by 2001. Such has not been the case.

But over the past two months, some EBPP companies have become more aggressive and are making deals that are changing the way the game is being played.

User adoption has increased over the years, but only marginally when compared with expectations. Of the 15.9 billion bills that will be delivered to consumers in 2001, less than 1% will be paid electronically, according to the Needham, MA-based TowerGroup.

Now a shakedown is underway and electronic bill payment and presentment may be closing in on what some refer to as stage two.

"It’s fair to say we are approaching the second plateau of electronic bill presentment and payment," says John Perry, chief executive of NJ-based Spectrum LLC. Spectrum — founded about two years ago by First Union Corp., Wells Fargo & Co. and J. P. Morgan Chase & Co. — provides a "switch" service to connect banks with other participants in electronic bill payment and presentment (Spectrum is lining up customers but is not fully functional at present).

Electronic bill payment and presentment initially was typically offered in a biller-direct model. Consumers could go straight to a biller’s Website, such as a local gas company, and pay their bills. But participants say consumers want to receive and pay all their bills from a single site. Banks believe that, because of their extensive contacts with both billers and payers, and their reputation for integrity and their transactional capabilities, they should be the consolidators.


Wheels within wheels, within wheels. That’s the best description of what it takes to merge two electronic bill presentment and payment companies.Take Princeton eCom’s acquisition of Intuit’s Quicken Bill Manager. Although both eCom and Intuit are software companies, they need still another to quickly integrate the two. If they had tried to do it by themselves, it might have taken months.

So Princeton eCom hired Philadelphia-based Diginexus to roll Quicken’s software into eCom’s existing electronic bill presentment and payment infrastructure. Diginexus then created an open platform so other billers and billing services can have access to the former Quicken Bill Manager customers.

Even if the public agrees, putting the necessary pieces together is no easy task. As a result, a number of niche technology companies have been formed to plug in the gaps and create the required links.The infrastructure needed to pay and present bills electronically is not as simple as in a paper world, says John Korvin, president of, a company in the EBPP business. "With paper, you had two parts, with the post office as the intermediary," he says. "Nobody in EBPP is really doing the full end-to-end thing."

First, the biller has to find a way to distribute its electronic bills to all its customers. To do so, it usually signs up with an agent that can implement the full distribution. But no agent on its own has such broad customer contacts, and usually makes arrangements with other distributors. Checkfree provides such a "switch" along with its other services, and others, including MasterCard and Spectrum are gearing up to offer switch services.

Because of the excitement and high expectations a few years ago regarding the growth of electronic bill payment and presentment, many small companies popped up in a modern version of the Gold Rush. Some developed bill presentment and payment software and others developed links with billers. Now that the sad reality has sunk in, many of these smaller companies are faring poorly, or don’t have the capital needed to make a success of the business.

As a result, consolidation is taking place as the market is being weaned from the bottle. An example is Metavante Corp.’s recent acquisitions of Cyberbills Inc. and Derivion Corp. (see June issue). Milwaukee-based Metavante provides a broad line of back-office banking software, while Cyberbills provides electronic bill presentment and payment software, and Derivion has signed up some 85 large billers.

"The market is still developing, causing some smaller, less financially stable companies to be acquired," says Elizabeth Roberts, a TowerGroup analyst.

Some attribute the tortoise-like speed of consumer acceptance of electronic bill presentment to glitches caused in part by the process’s behind-the-scenes complexity.

Korvin says the shakedown is normal for a still-immature industry. "It’s time to be realistic instead of overly optimistic," says Korvin. "That’s why we’re starting to see more and more alliances among different types of EBPP companies. And there’s likely more to come."

Since the beginning of May, electronic bill payment and presentment companies have been teaming up at a rapid pace. Spectrum announced a string of partnerships with major banks, such as Citigroup, and with such EBPP companies as Avolent Inc., Princeton eCom and

These link-ups and the entrance of other big players, such as MasterCard, are creating new competition for Atlanta-based Checkfree Corp., which has dominated the field as the only end-to-end company, says TowerGroup’s Robertson.

Princeton eCom, for example, recently acquired Quicken Bill Manager from Mountain View, CA-based Intuit. Until its acquisition, Bill Manager had been using Checkfree for its back office EBPP services. Princeton eCom will now provide those services. It has not been disclosed how many customers Bill Manager has signed up, but Intuit has 22 million consumers using its financial products.

So competition is starting to heat up. And more acquisitions and alliances are expected in upcoming months. It is clear the companies involved in providing electronic bill presentment and payment are changing. But, more importantly, it remains to be seen whether consumers themselves will change their bill paying practices as well.

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