U.S. Continues to Lead EBPP Market

The United States will continue to lead the world in the introduction and adoption of electronic bill presentment and payment (EBPP) services through 2005, research by TowerGroup found.

EBPP services have a history of lackluster growth, but TowerGroup believes adoption of the services is set for acceleration both within the United States and around the world. The research found that while the United States will maintain its lead in creating EBPP volume through 2005, markets in both the European Union and Asia-Pacific regions will make significant gains.

One of the enablers of increased EBPP usage will be wireless devices, according to TowerGroup, which will serve as a critical delivery channel in regions where PC and landline phone penetration aren’t as popular as North America. The need to streamline B2B interaction and costs will create a strong global impetus for the conversion to electronic billing. Outside of North America, broad penetration of mobile phones (between 50 percent and 80 percent in the European Union and some Asia-Pacific nations) has led wireless services to assume a substantial and increasing role in meeting data and Internet access needs. Ultimately, wireless services will support much of the growth of EBPP in Europe, Asia and other world regions.

“Access to transactional functionality via wireless channels will help drive the evolution toward EBPP, which has already begun in markets such as the combined European Union,” said Ed Kountz, a senior analyst in TowerGroup’s Mobile Financial Strategies service. “Today, virtually all of the 288 million wireless phones in Western Europe can send and receive data via either SMS or WAP, with more than 120 million handling basic text or more sophisticated messaging transactions during 2000.”

Global development of EBPP has been led by the United States, which has played a key role in the introduction, delivery and adoption of these services. By the end of 2001, approximately 88 percent of global “round-trip” electronic billing transactions will have been conducted in the United States. Yet the U.S. market, which produces nearly 30 billion bills and invoices per year, represents a fraction of the international potential for EBPP services. In 2001, consumers worldwide received more than 103.7 billion bills, while their business counterparts will receive nearly 49.6 billion bills and invoices.

The European Union generated nearly 6 million round-trip electronic presentment and payment transactions in 2001, and TowerGroup expects this figure to grow to 1.2 billion by 2005 — in part through wireless access. Together, North America and the European Union generate 62 percent of the world’s business bills and invoices. This concentration of volume will contribute to the acceleration in electronic billing conversions in the B2B arena at an overall rate that is greater than the rate of B2C conversion. By 2010, TowerGroup predicts that global B2B electronic presentment and payment volume will exceed B2C electronic billing activity.

According to TowerGroup, close to 50 million consumer bills and more than 10 million B2B items will be presented and paid via electronic roundtrip transactions globally in 2001. By 2005, these numbers will rise to more than 2.4 billion items, respectively, for both consumer and B2B transactions.

“Many countries lack the income and infrastructure to support broad Internet access over the near term,” said Elizabeth Robertson, a senior analyst in TowerGroup’s e-Banking service. “As a result, EBPP conversion potential will continue to be focused in North America over the next five years. Yet other global markets — including the EU, Japan, Australia, Singapore, Hong Kong and Taiwan — will also demonstrate significant growth in electronic bill volume during this period.”

As for consumer adoption, research by Gartner predicted that 32 million Americans would view credit card and other statements online by the end of 2001. This would be a 60 percent increase over the 20 million who did so at the end of 2000. Gartner expects the number of consumers viewing bills electronically to reach 64 million by year-end 2003.