Just Thinking

For years, we've heard how electronic bill presentment and payment (EBPP) is poised to become the next killer application for the financial industry, that it will eventually transform the hidebound postal billing cycle into an easy and instantaneous one-button procedure.

The reason why many technology experts believe EBPP will come to rule the payment process stems from the success the medium has had in the business-to-business sphere. Indeed, some 30 billion electronic payments now occur each year, most through B2B transactions that take place through credit and ACH networks. Recent statistics show that roughly 40% of all payment traffic is now electronically generated. (For more on B2B EBPP, see Ivan Schneider's cover story.)

But for EBPP to rule the payment waves, it must capture a larger slice of the consumer marketplace. Studies show that the EBPP penetration rate among consumers is still well below 10%. For the most part, people still pay their bills through written checks sent through the mail.

There are a number of reasons for this tepid consumer response to EBPP, foremost is the lack of a compelling reason to shift from tried and true postal delivery. As is the case with many life-changing technologies we now comfortably use, something has to happen to push people out of habit, and get them to try something new.

According to some industry observers, this "something" may have just happened. Unfortunately, it's the anthrax attack on the U.S. media and federal government. The combination of mail-phobic consumers, combined with government and business desire to protect the billing cycle from terrorist disruption will, supposedly, create an irresistible drive toward universal EBPP adoption.

It's a compelling, but flawed, argument. I have no doubt that fear of potential contagion may get some people to try EBPP. But how long will they stick with EBPP if they find the electronic system difficult and confusing to use? How about if their payments are "lost" or are not registered by the receiving party? Does EBPP keep its luster when they realize that fees for electronic billing are, in some instances, higher than writing a check? And what if there are no further attacks on the postal system, the terror abates, and everything returns to normal?

Fear is a lousy way to sell a customer on a product or service. It also can't overcome a business plan that is in need of further improvement.