Goodbye, Paper Checks?

Home Office Computing, May, 1999 by Toni Kistner

TELL YOUR FRIENDS YOU heard it here first: The Internet's next killer app will be electronic bill presentment, also known as EBP, e-bills, or Web billing.

Even if you're among the 20 percent to 30 percent of households currently paying bills electronically, you still collect pounds of paper bills from your mailbox and tear open countless envelopes to learn the amount and due date. Imagine, by contrast, logging on to a site that presents you with credit card and utility statements and lets you pay each with the click of a "pay this bill now" button. The time, checks, stamps, and trees you'd save!

The Internet is making it possible for financial institutions--led by two competing EBP vendors, CheckFree and TransPoint, along with the nation's banks and billers--to let customers receive and pay bills from their PCs. Briefly, the two vendors' electronic bill presentment engines turn the contents of the usual billing envelope--including a statement, account information, and glossy marketing inserts--into HTML pages that it posts to a Web site. (CheckFree and TransPoint charge the biller for this service.)

When you log on to a site powered by either company, you'll be able to access bill statements. When you pay a bill, CheckFree, for example, sends your request for payment to your bank, and also pays your bank a fee to complete the transaction. CheckFree and TransPoint are middlemen, so you won't likely encounter either company yourself.

CheckFree (www. checkfree.com), which has provided e-billing capability to banks and billers for over a year, is shipping a new version of its EBP engine. Its challenger, TransPoint (www.transpoint.com), backed by Microsoft and First Data Corp., will launch its site this spring.

But unlike the last killer Web app--e-commerce, which requires only a Web site and some merchandise-successful Web billing takes a complicated choreography of consumers, banks, and billers. Consumers need compelling reasons to relinquish paper payments, and as it stands, three sticking points are sure to slow adoption.

One is biller support. Although both services boast extensive lists of partner banks and billers, chances are neither has signed on all of yours. Both companies claim a threshold of four billers is sufficient to gain consumer interest, especially if they include your mortgage lender, electric, telephone, and principal credit card companies.

A second issue involves competing front ends. Warren Dent, senior VP of marketing and business development for TransPoint, says, "The best place to get your bills [will be] a bank Web site," offering account and billing information in one place.

But because banks are traditionally "sluggish" to respond to new technology, says Jupiter Communications analyst Robert Sterling, portal companies such as AOL, Excite, and Yahoo may come in and steal the show. And although sources say a deal between CheckFree and Yahoo is imminent, Dent wonders, "Will consumers trust Yahoo with their money?"

The third hang-up is interoperability. No matter how convenient it may be to add bill payment to your Yahoo visits, for instance, the only billers waiting there will be CheckFree partners, not TransPoint's. For consumers to pay most or all of their bills from one site, future iterations of the rival engines must be compatible, so users can access TransPoint billers from a CheckFree site or vice versa.

Although TransPoint says it's pushing CheckFree to adopt an Open Financial Exchange (OFX) protocol, both agree that interoperability is years away. That means you could wind up paying some bills here and some bills there--not a convenient prospect.