Online Billing, Part 1: Leaving the Paper Trail Behind
Weeks before hearing that Apple had cut the price of its iPhone, the gadget's first buyers were met with a different surprise: an AT&T phone bill that in some cases was almost the size of a Stephen King novel. The wireless carrier meticulously detailed every connection and every data exchange. Some customers received bills several hundred pages thick, delivered in cardboard boxes.
AT&T has since stopped sending long bills, although the company said the billing change had nothing to do with the consumer backlash. While a big box of printed cell phone bills may be comical, it highlights the situations that consumers face in deciding to switch from paper bills to electronic billing.
The push to move consumers from paper billing to electronic billing has been languishing for years. No more than 15 percent of households with Internet access receive their bills and banking statements exclusively online.
Despite the cost of paper, printing and postage, many merchants still cling to traditional billing methods as well. Some provide their customers with both paper and e-bills, with an option to opt out of monthly mailings. Few merchants have completely adopted paperless billing.
"Acceptance of e-billing is not as favorable yet as we would like. The telecomm arena is one area where clients and consumers are not converting from paper billing as much as they should. Many say they do not want the hassle of learning how to set it up," Mike Bodetti, president and CEO of TnT Expense Management, told the E-Commerce Times. His company provides of telecom expense management services.
Slow to Convert
In theory, say e-billing proponents, a close connection should exist between paying bills online, doing online banking and receiving electronic billing instead of paper bills. That ideal, however, is not often reflected in reality.
"Two out of every three households with Internet access pay bills online. Half of all households do on-line banking, so the tipping point is already passed," Eric Leiserson, senior marketing analyst for CheckFree, told the E-Commerce Times. CheckFree provides financial electronic commerce services and products to organizations around the world.
The next step for consumers is switching to e-billing to eliminate paper bills, he noted. However, reaching that goal could take a long time.
In August, document process automation firm Esker published the results of a survey which asked more than 150 North American billing and invoicing managers about their companies' practices and preferences in delivering customer invoices. It revealed that 28 percent of customers refuse to accept invoices in any form but postal mail.
Esker's study also suggests that many businesses are not concerned about saving money on printed billing and postage costs. Many organizations spent significantly more time on the invoice transmission process for postal mail, due in large part to a lack of automation of postal mail processes, despite the availability of solutions to accomplish this.
Not Just Consumers
Esker's research shows it is not only consumers who are slow to embrace the concept and benefits of cyber billing. Results from a previous survey indicated that 81 percent of companies questioned said mail is a critical delivery path for sending billing and invoicing documents to their customers.
Of that group, more than half had not considered outsourcing this process. The Esker survey revealed that on average two to three employees spend 106 hours per month generating and sending physical mail with invoice-related correspondence, including reminders and re-sends. Of the time it takes to generate and send each invoice, only around 15 percent is spent on actual calculation of an invoice, with the remainder dedicated to printing, addressing, stuffing and mailing the materials.
"Businesses moved relatively quickly to accommodate companies who asked for electronic invoicing -- not only to meet their preferences, but also because of the major efficiency gains that e-mail brings," said Renee Thomas, director of field marketing for Esker. "But the fact remains that there are thousands of companies who still like getting their invoices in hard copy format in the mail. And regardless of how large or small a company you are, to compete in today's marketplace, you need to take a customer-centric approach."
Companies need to ask themselves if they are being as efficient as they can be in accommodating those preferences, she said.
The switch to paperless billing also has an appeal to environmentalists. For one thing, fuel consumption would be drastically reduced.
Perhaps the most significant savings that paperless billing could achieve would benefit the environment directly. Electronic bills would cut down on the consumption of trees. If all U.S. households viewed and paid their bills online, the reduction in paper would save 16.5 million trees a year, according to a recent report published by Javelin Strategy and Research.
Often, however, consumers see traditional paper billing as safer, if not more convenient, than receiving their bills online.
"I just almost had my power turned off because my power bill was going to my husband's e-mail address, and he ignored it thinking I still got a paper bill. I prefer to still receive a paper bill in addition to an e-mail reminder," Sally Herigstad, CPA and author of Help! I Can't Pay My Bills, told the E-Commerce Times.
However, saving the environment along with saving billing costs is often not what counts with consumers or their vendors.
"If billers want to save on paper, try sending less inserts. Or use a folded-over postcard. I would be impressed," Herigstad said.
One stumbling block for consumers debating whether they should switch to cyber billing is the issue of safety. Even consumers who pay their bills online hesitate to abandon paper completely and forgo receiving a printed copy, according to billing management experts.
"Online billers and banks are taking on increased measures for safety," said CheckFree's Leiserson.
Still, consumers cannot let their guard down with cyber billing. Certain types of bills, such as credit card and phone service invoices, can pose higher risk when delivered online because of the heavy amount of personal information they contain, cautioned TnT Expense Management's Bodetti.
"If a company is doing its job with meeting compliance regulations, then there isn't a problem," he said.