Convincing consumers to adopt online bill pay and electronic bill presentment and payment (EBPP) solutions is the foremost challenge for participants in this market. This is a tough task because for decades consumers have received paper statements and mailed their checks to pay bills. However, market adoption of online bill pay and EBPP solutions is likely to increase once aggregators (banks and financial institutions), direct billers, other vendors, and consumers are convinced about the cost and time savings that arise due to these solutions. Currently, no direct biller or financial institution controls more than 30 percent of customers using electronic/online billing solutions. In fact, this provides a huge opportunity for billing solution providers to quickly increase revenue by focusing on existing customer base as well as potential users.

This strategic analysis service (SAS) from Frost & Sullivan presents a critical evaluation on adoption of electronic/online billing solutions in the United States. It studies two individual billing solution markets-online bill pay and EBPP-and their participants that includes: aggregators (mainly financial institutions that allow customers to pay bills online) and direct billers (product/service providers that allow customers to pay online for goods/services rendered).

Growing Internet Access to Drive Market Adoption of Electronic Billing Solutions

Significant growth in Internet access is likely to encourage the use of online bill pay and EBPP solutions in the coming years. "By 2010, more than 50 percent of the bills are expected to be paid electronically, which is an enormous increase from the current estimate of 10 percent," says the analyst.

"Rising instances of accessing the Internet through wireless applications such as mobile phones and laptops is likely to be the key reason behind such prolific growth," adds the analyst. Time is another critical market driver. Internet-savvy young Americans prefer to pay their bills electronically so that they save valuable time, and in some cases, money too.

Electronic Billing Solution Providers Need to Keep an Eye on Average Price per Transaction

Vendors of EBPP and online bill pay solutions have witnessed steady revenue growth in the past few years and this trend is expected to continue in the future. However, they have to keep an eye on the widening gap in the growth of electronic transactions and the corresponding revenue.

"Both e-Bill presentment and electronic transactions are growing at over 40 percent annually whereas billing solution vendors' revenue is increasing merely by 15 percent," says the analyst. This creates a market environment where average prices are rapidly decreasing. However, vendors can resort to automation to overcome this challenge and achieve economies of scale.