Demonstrating a way to make money on a service many banks view as a cost, Hearst Corp. on Feb. 28 launched a beta version of its bill presentment and payment site Manilla.com.
Manilla, which is free to consumers, aggregates consumer bills, reward programs and subscriptions and sends reminders when bills are due each month. One of the ways Hearst, best known as the publisher of Redbook, Good Housekeeping and Marie Claire, among other titles, plans to generate revenue through Manilla by also zapping a reminder to users when their magazine subscriptions are due to lapse. Hearst says it may do additional things such as cross-sell other magazines and offer special discounts for early renewals.
Citigroup Inc. is one of the first billers to work with Manilla. It has agreed to pay Hearst a portion of the money it saves when credit cardholders switch off paper bills to view them online instead. In return, Manilla allows the card issuer to place advertisements on its digital bills.
For billers, “we’ve created something that allows them to save money and keep engaged with their customers,” says Jessica Insalaco, executive vice president and chief marketing officer for Manilla.com. (A Citi spokesperson says the company would not discuss Manilla during its beta test. Comcast Corp., a cable company, has also signed on to work with Manilla.)
Manilla is offered by invitation and only presents bills, though it can take users directly to a biller’s site and log them in so they can pay. Manilla will go live for all consumers by mid-year, and on-site bill payments eventually will be added Insalaco says.
Though many consumers already pay their bills through online banking, Manilla’s strength is a cleaner, streamlined interface, Insalaco says.
“Consumers … have over 20 accounts they have to manage every month, and they get 35 pieces of mail per week and umpteen e-mail,” she says. This clutter “is a very common pain point, and we think Manilla solves a lot of these problems,” she says.
For its part, Hearst is making a bid to leverage its assets as a media company, carefully looping in the 50 million women who consume the company’s content each month and who are the chief target for the new product while situating itself in the increasingly crowded document storage space, which is aimed at getting consumers to turn off paper, the company says.
Some observers say that even if Hearst can improve upon the bill-pay experience, many in its target audience may not want to switch away from their banks’ service.
Ron Shevlin, a senior analyst at Aite Group LLC, says many consumers would be deterred by the enrollment process. “Once you’ve set up all your billers, it is a pain to change,” he says.
“Banks and billers have been trying to get consumers to pay bills online for years,” Shevlin says. “While there has been a pretty good adoption rate, the rate of growth is slowing down.” Slightly more than one-third of online-banking customers pay bills online.
Still, about 65% of the top 100 U.S. banks offer e-bills to their consumers, according to a 2010 online banking report from Aite. While one-third of online bill payment consumers receive e-bills, about half of consumers who pay bills online were unaware that their financial services company offered electronic bill presentment, Aite research indicates.
Emmett Higdon, a senior analyst at Forrester Research Inc., says there are other firms that offer banks the chance to earn money through online banking and bill pay, which they may favor over Hearst’s pitch of cutting costs associated with paper.
“Banks are going to be more interested in monetizing … [online banking] directly through programs like Cardlytics,” a company that offers merchant-funded rewards and does not take consumers away from the bank’s site, Higdon says.
Other analysts say Manilla’s ability to potentially archive all consumer bills in one place would be extremely useful, especially since most banks don’t provide an archiving service for outside billers. “The archiving piece is so important here,” says Nicole Sturgill, a research director at TowerGroup in Needham, Mass. Most consumers are not likely to need to look at archived bills frequently, but when they do need to, it is generally for some critical need, such as at tax time or to check details related to a mortgage payment, she says.
Andrew Frank, a research vice president for media at Gartner Inc., says the Manilla service is a clever way for Hearst to try to maintain control over subscriptions in an environment where providers of services through electronic devices are all taking their cut for subscriber content. He points to Apple Inc.’s announcement recently that it would take a percentage of revenue from subscribers renewing via the iPad.
“The magazine industry, and Hearst, has a strong interest in a platform to control the terms of the subscription process and the relationship with the consumer,” Frank says.
Through Manilla, Hearst also will leverage its ownership of CDS Global Inc. of Des Moines, Iowa, a subscriptions marketing and reminder service that touches some 60% of all magazine subscriptions in the U.S., Insalaco says.
One competitor in the document-storage space says Manilla could suffer from combining a subscriptions agenda with document storage.
“We are a pure-play, with no agenda that might conflict with television, cable companies or financial institutions,” says Steve Shivers, chief executive for doxo Inc. of Seattle. In contrast to Manilla, doxo enables bill storage by signing up both billers and consumers.
Both agree to turn off paper, and in exchange for that doxo gets a percentage of the paper savings on each transaction. Manilla uses account aggregation to acquire customer bills and then notifies consumers their paper bills will be shut off after 30 days, though consumers can still turn paper back on.
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