Fiserv Takes on the E-Billing Market - How Can We Get Them to Turn Off Paper?

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$4.4 billion.

By 2014 electronic bill payment was gaining wider acceptance, with penetration driven by convenience over traditional payment methods, savings on postage, and improved perceptions of payment security (see Exhibit 2 for adoption rates). Electronic bill payment was now so pervasive and advanced that most consumers could use their bank’s Web site to pay anyone, including individuals, electronically.

E-Billing: Opportunities and Challenges

E-bills are electronic versions of paper bills sent to consumers by billers. Billers offering e-billing services included utility companies, cable/satellite TV providers, and financial services firms. E-bills were offered the same due date as paper bills, and contained at least the same information (but also sometimes more). Fiserv developed the technology to allow consumers to receive and view e-bills at a biller’s Web site.

Initial feedback from billers reassured Black that they were strongly in favor of converting their consumers from receiving paper bills to receiving e-bills. This enthusiasm was driven in great part by the significant financial savings offered by e-billing. Most billers sent monthly bills to consumers. Processing and sending each of these paper bills cost an average of $1.25 per bill, (and managers expected that mailing costs were likely to increase over time due to postal rate increases). When billers convinced a consumer to no longer receive paper bills, they immediately saved 45 percent per bill. Furthermore, a comparison of consumers who received paper bills versus similar consumers who used e-billing showed that the latter made 10 to 20 percent fewer calls to customer service, thanks mainly to the reduction of human error in submitting and processing transactions. This created additional annual savings of $2 to $4 per e-billed consumer.

Billers also saw e-billing as an opportunity to enhance their environmental practices. One energy company reported that, after converting 130,000 consumers to e-billing, it was able to save thirty-one tons of paper (the equivalent of 753 trees). Thanks to a reduction in production and delivery costs, e-billing also led to considerable water savings and greenhouse gas reductions.

Billers were also interested in the possibility that e-billing might increase consumer satisfaction and therefore decrease defection to a competitor. One study showed that more than forty-five percent of consumers reported increased satisfaction with their biller after they started

viewing and paying paperless bills. In that same study 25% said they would also be less likely to switch to a competitor (see Exhibit 3 for a results summary). Also, because identity thieves often got their information from materials taken from mailboxes and trash receptacles, e-bill consumers enjoyed greater security than consumers who received (and had to dispose of) paper bills.

Recognizing these many benefits, a majority of billers not only offered e-billing to their consumers but also provided it at no charge. Nonetheless, although consumers who tried e-billing expressed high satisfaction with the service, less than 20 percent of online consumers used e-billing as their primary way of viewing bills. Black wondered what was holding up the adoption process.

To better understand consumer perceptions of e-billing, Black commissioned several primary consumer research studies. Just as Black had used market research to help banks target key segments and effectively position electronic bill payment, he hoped to use research to generate recommendations for billers to convert paper bill–receiving consumers to satisfied end users of e-bills.

E-Billing Market Research

Online Interviews and Segmentation

Black hired a well-known market research firm to study and segment the market for e-billing. As a first step, the firm conducted 1,236 thirty-minute online interviews with a random sample of U.S. e-billing users and potential users. (All respondents had regular Internet access and spent at least one hour online weekly.)

Survey respondents were asked a number of questions about their attitudes and behaviors relating to finances, family life, and professional pursuits. These responses were statistically analyzed, producing six distinct groups with different attitudes and behaviors. These groups are listed and described in Exhibit 4.

Focus Groups

Black also conducted focus groups with potential consumers who did not use e-billing. Eight groups of eight individuals (sixty-four total) were given a description of e-billing and asked a series of questions about their willingness to use it. Although focus group participants expressed moderate interest in e-billing overall, they also had several questions, including:

 “Does e-billing automatically pay the bill too?”

 “Who sends the e-bill? The bank or the company I have to pay?”

 “Can I sign up for e-billing through my bank or do I have to ask all the individual companies?”

 “What exactly is the benefit of e-billing?”

Participants also expressed their opinions on e-billing’s benefits (e.g., “Getting bills electronically is simpler and quicker than getting them on paper”) and drawbacks (e.g., “A paper bill is a physical reminder to pay it; an e-bill doesn’t give me that”). One feature that many participants said would help motivate them to use e-billing was “divisibility,” or the ability to receive e-bills without being required to stop paper bills.

Concept Test

As a final step, Fiserv conducted a formal concept test of e-billing. The firm contacted 2,000 individuals who were not using e-billing (but who were representative of the overall population of consumers) and encouraged them to try it for two months and then respond to a survey about it. The offer provided a general description of e-billing and allowed consumers to continue receiving paper bills during the trial period. 3 percent of the overall sample expressed interest in the offer. When a similar sample was offered $20 in gift cards to try e-billing, 53 percent of the total sample expressed interest.

After using e-billing for two months, 73 percent of participants either agreed or strongly agreed with a statement indicating their willingness to adopt e-billing for the long term. Follow-up interviews suggested that the trial period helped ease initial confusion about e-billing and skepticism about its value. For example, one participant noted, “I admit I didn’t really know what I was signing up for when