Pushing the Envelope
Beginning in a few weeks, Los Angeles-area residents will be able to look at and pay their water and electric bills a new way: on the Internet.
Edison International’s Southern California Edison subsidiary and the Los Angeles Department of Water & Power are building Web sites that will enable customers to view graphical copies of their bills and pay them through debit links to their checking accounts.
Edison expects to make its Internet payment service available to 4.2 million residential and business customers later this month or in early March. The DWP, the nation’s largest city-owned utility, will also open its Web-based payment service in March, for 1.2 million residential customers. Both companies expect to charge customers about 20 cents per bill paid--less than the price of a stamp.
The California utilities are among a who’s who of national and regional companies that are offering Web-based billing or planning to do so soon, and experts believe the list will grow exponentially this year. Among the several dozen firms that have announced bill-pay Web sites during the last six months are American Express, Chase Manhattan, AT&T;, MCI Communications, BellSouth, SBC Communications and NationsBanc Montgomery Securities.
Since American Express began allowing consumer and small-business cardholders to view--but not pay--bills on its Web site in April 1996, 600,000 customers have signed up.
Other California companies jumping on the bandwagon include AirTouch Communications’ AirTouch Paging division, which on Feb. 1 opened a Web-based bill-payment service for its 3.1 million customers nationwide, and Pacific Bell, which hopes to have its site done by the end of the year.
Pacific Enterprises’ Southern California Gas subsidiary in December opened a Web site where its 4.5 million residential and business customers can view current and past bills, check their gas consumption or schedule services. However, SoCal Gas doesn’t expect to add bill payment to the site until the third or fourth quarter of 1998, spokesman Larry Pickett said.
Behind the scenes, banks, electronic-commerce leaders and a slew of start-ups are fighting for the right to help companies transfer paper-based billing operations to the Web. Intuit, maker of the popular Quicken money management software, and CheckFree, an electronic payments pioneer, want companies to post bills on their respective Web sites, which they hope to turn into one-stop payment centers consumers will visit to pay multiple bills. They’re competing against MSFDC, the joint venture between Microsoft and payments processor First Data Corp. that’s selling systems to banks, which also want to turn their Web sites into bill-payment centers. Companies that want to post bills on their own Web sites are developing proprietary solutions or working with vendors, such as CyberCash and Just in Time.
The competition to help companies get bills online is getting fierce.
“I can’t get off the phone with these people,” said Karen Barrett, PacBell’s Internet billing project manager. “Prices are dropping, and [vendors] are willing to wheel and deal to get us as a feather in their cap.”
Said Vernon Keenan, a Zona Research analyst: “Bill presentment will be a battleground for control of the consumer in 1998 between banks and companies who want to take the place of banks.”
For businesses, moving billing operations isn’t entirely for the convenience of their customers. Rather, it’s all about the bottom line. Of the 65 billion checks Americans write a year, experts estimate 40% go toward paying utilities, credit cards and other recurring charges. By moving these activities to the Web, companies hope to cut the cost of producing, mailing and processing paper bills, and improve customer service. What’s more, companies could leverage the increase in Web site traffic to sell banner ads and promote other products and services, company officials and industry analysts said.
However keen companies are to roll out online bill-paying, it’s hard to gauge how consumers will react. For the concept to catch on, consumers need to be able to pay all of their bills on the Web, not just a couple here and there, analysts say.
And companies that offer online billing, banks and their partners will need to address privacy concerns that inevitably arise when people are asked to put private financial information on the Internet, they said.
Access remains the most fundamental obstacle. Though an estimated 40% of U.S. households own personal computers and the number of Internet-equipped computers is growing, the majority of Americans still aren’t wired, putting any kind of electronic bill-payment option out of most people’s reach.
Even so, BankAmerica Robertson Stephens & Co. analyst Gary Craft is an optimist, estimating that by 2000, people will pay 500 million bills on the Web, up from 150,000 in 1997.
“From there, once adoption takes place, you’ll see a rapid ramp-up,” Craft said. “Most of the issues holding things back deal with bandwidth. The Internet has to be simple enough that it’s like firing up your TV.”
But nine months after beginning its Web bill-payment service, NUI Corp., a New Jersey energy company with 350,000 customers, had signed up fewer than 100 customers. Even so, officials aren’t discouraged.
“I think it’s a great technological advancement, but it takes a certain kind of customer to want to pay that way,” said Randi Mathios, NUI’s RapidPay project manager.
Con Edison, the New York power company with 3.1 million customers, is another Web bill-payment pioneer. Three months after initiating its program, Con Edison had collected 3,200 payments for about $1.75 million.
“We’ve made inroads, and as we continue to advertise and keep this in front of customers, they’ll take the plunge,” said James O’Brien, a Con Edison customer service manager.
Nonetheless, supporters believe Web-based bill payment has greater potential to stir the masses to change their check-writing habits than do existing electronic bill-payment programs. Those programs require consumers to use a financial software program, such as Quicken, to transmit payment requests to their banks, often for a hefty monthly fee. Such payments aren’t always truly electronic; about half the time, financial institutions or their billing service bureaus send the payment as a paper check, earning interest on the money while it’s in transit, what the financial industry calls the “float.”
At most Web sites for bill-paying, consumers don’t need software other than a standard Internet browser. Enrolling is similar to signing up for other direct-debit plans, in which payments are automatically deducted from an individual’s checking account at a set time each month. With Web-based bill-paying, an individual enrolls by printing out and filling in a registration form found on the site, and mailing it along with a personal identification number and voided check to the billing company’s customer service department. When the account is approved, the person can use the PIN to access a copy of his or her bill stored on a secure server and click on an icon to pay. In most cases, payments are instant and electronic end to end--no float.
Both Southern California Edison and the DWP contracted with Princeton Telecom Corp., a Princeton, N.J., bill processor, to run the back end of their Web bill-paying services. Princeton Telecom executives said they have contracts with 30 companies, 15 of which have been announced, including Lucent Technologies, Boston Gas, PSE&G; and Con Edison.
AirTouch hired El Dorado, Calif.-based International Billing Services, one of the largest bill-processing companies in the country, to provide back-end support for its service. AirTouch customers can sign up for the service on Web sites created by some of the company’s regional offices or by phoning a customer service agent, but the main AirTouch Web site hasn’t been updated yet, according to AirTouch spokeswoman Susan Rosenberg.
Pacific Bell conducted a Web bill-payment consumer trial last summer and is in the middle of a six-month trial with one large business customer, said Barrett, the company’s Internet billing project manager. The phone company is testing bill-viewing only, which could be commercially available by the end of the year.
Starting in March, 80 million AT&T; long-distance customers and 1.2 million AT&T; WorldNet Internet access customers can view their bills at AT&T;’s Web site and have payments automatically deducted from their credit cards. Customers who use AT&T; for both long-distance and Internet access will pay nothing; long-distance users who aren’t WorldNet customers will pay $1 a month, said AT&T; spokesman Mike Keady.
“We hope this will [encourage] people to sign up with WorldNet,” Keady said.
MSFDC has signed up Shell Oil, JC Penney and eight other companies for its bill-payment service, which initially will be offered through Wells Fargo and Key Bank.
CheckFree has bill-payment agreements with at least 15 companies and expects to announce other deals with large billers, “the top in the country,” in the next few months, according to Laurinda Wilson, a company spokeswoman.
One CheckFree partner is Chase Manhattan, which will begin posting credit card and mortgage customers’ bills online by the end of March. While they’re online, Chase customers can pay bills from all other CheckFree bill-payment partners, Wilson said.
“All of a sudden it’s very convenient, to have this through the bank [consumers] know and trust and not to have to go to 16 different Web sites to receive their bills,” Wilson said.
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Michelle V. Rafter can be reached at mvrafter@deltanet.com
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Where to Pay Bills Online
Several companies have begun to offer the option of viewing or paying bills online. Among them:
* AT&T; (https://www.att.com): Consolidated long-distance, WorldNet Internet access bill-viewing goes online in March.
* AirTouch Paging (https://www.airtouch.com): Bill paying available on regional Web sites; coming soon to company’s main Web site.
* American Express (https://www.americanexpress.com): Bill-viewing only.
* Chase Manhattan Bank (https://www.chasemanhattan.com): Bill paying to credit card and mortgage customers will be offered in March.
* Los Angeles Dept. of Water & Power (https://www.ladwp.com): Bill paying will be offered on its Web site in March.
* NationsBanc Montgomery Securities (https://www.montogomery.com): Building system to allow investors to view their financial statements.
* Pacific Bell (https://www.pacbell.com): Still in trials.
* Southern California Gas (https://www.socalgas.com): Bill-viewing only.
* Southern California Edison (https://www.sce.com): Bill payment in late February or early March.
