Internet Payments Will Drive E-Payment Growth

Tampa-based PSI Global believes that growth in electronic bill presentment and payment (EBPP) services via the Internet will drive a rapid upswing in electronic bill payment volume over the next five years. By 2005, PSI Global says, one fifth of all bill payments will be electronic, with the bulk of that activity represented by Internet EBPP payments. EBPP transactions are expected to grow more than 200 times their 1999 level to a total of nearly 5 billion bill payments.

``Once Y2K issues are resolved and resources are freed-up, we expect to see an increasing number of billers turning their focus to EBPP,'' said Beth Robertson, vice president and director of billing and payment research at PSI Global. ``Internet technology offers significant potential to companies seeking to improve and target their delivery, control expenses, and provide valuable ancillary services to their customers.''

While longer-term growth for EBPP will be substantial, PSI Global predicts that volume will remain below one billion items for the next few years. Just 5% of the high-volume billers in the United States currently offer EBPP, and 24% say they plan to offer the service within the next two years.

``While these percentages indicate significant activity, actual volume is very low,'' Robertson said. ``Many billers offer or will offer EBPP in a pilot mode initially, or they will provide only statement-viewing capability without the full round-trip of bill payment.''

Her firm's research indicates that bill volume in the United States will reach nearly 18 billion items this year, while bill payment volume will climb to 23 billion. A vast majority of these transactions represent interaction with the leading billing industries in the country - specifically the insurance, communications, credit card, lending, and utilities sectors.

``Because bills generated by these industries touch virtually every household and business in the U.S., a ripple effect will be created as billers in these segments adopt EBPP," Robertson said. ''Once core bills are widely available on the Internet, other Billers will want to provide that access as well."

Research performed by PSI Global shows that electronic transactions will account for just over 1.5 billion items or 7% of all bill payments this year. The majority of these payments will be made using the Automated Clearing House (ACH). Payments initiated via EBPP are expected to account for just 1% of electronic bill payment activity in 1999, but widespread introductions will build this method's contribution to 68% of electronic bill payment volume by the year 2005. Throughout the period, use of the ACH will continue to expand as well, as it is one of the payment alternatives that can be offered to customers paying bills using the EBPP channel.