Canada’s one-on-one EBPP showdown

: Canada is bracing for an electronic bill presentment and payment (EBPP) battle, as e-route and EPOST square off in one of the world’s most concentrated banking markets. Charles Davis reports Unlike the US, where literally dozens of EBPP players are lining up a dizzying array of products and services, Canada’s EBPP market appears to be a one-on-one competition. US leaders are watching intently for answers to some of EBPP’s most pressing questions. Indeed, the EPOST/e- route scenario will almost certainly answer one question common to many countries: whether post offices can secure a significant share of the EBPP in competition with the banks EPOST is a web-based service from Canada Post Corporation and Cebra – a subsidiary of the Bank of Montreal that offers e-commerce solutions – where individuals and businesses can receive mail, conduct financial transactions and access information. It is, in essence, an electronic version of the physical post office. Telus Corporation, one of Canada’s leading telecommunications companies, announced an investment of C$30 million ($19.4 million) in EPOST in November 2000 in exchange for a 5 percent stake. Customers can sign up free for an electronic post office box (EPOB) at the EPOST website where, in addition to exchanging e-mail with other subscribers, they will receive everything from catalogues and flyers to bank statements and bills- which can be paid on the site. To broaden the appeal, EPOST is stressing the service’s security – users need 128-bit encryption to access the site, and each piece of mail is stamped with Canada Post’s virtual postmark. Over 130,000 Canadians have registered for EPOBs. At EPOST, consumers can choose to receive bills and other forms from 19 billers including Telus, Canadian Tire, Petro Canada, RadioShack and Sears.
EPOST expects to include new billers soon, such as The Bay, Zellers, Manitoba Hydro, Centra Gas and Alberta Treasury Branches. E-route was set up by six financial institutions in 1998 to provide services for online banking customers. Its Webdoxs electronic document presentment service allows customers to receive and pay bills through their banks’ e-banking sites. The service’s founders were Canadian Imperial Bank of Commerce, Royal Bank of Canada, Scotiabank and Toronto-Dominion Bank, National Bank of Canada and Quebec’s Mouvement des caisses Desjardins. The only major Canadian bank not involved is Bank of Montreal. Webdoxs is now available as an option on the participating banks’ online banking websites. Since the beginning of the year, some 175,000 customers have signed up for the service. E-route has signed up Ford Credit Canada, Chevron Canada, Bell Canada and Bell Mobility as billing customers for the service. Several other organisations, including the Visa card operations of the participating banks and several electrical utilities, have also signed. Both e-route and EPOST are starting with strong hands as they seek to entice the country’s 10.7 million bank customers. The banks that formed e-route accounted for about 77 percent of Canadian deposits by October 2000. Bank of Montreal accounted for another 15 percent, while Canada Post has a network of about 23,000 retail points of access throughout Canada. Experts say the lacklustre demand for EBPP in Canada will give way to rapid growth over the next four years. Electronic bill presentment providers earn a fee for each bill delivered to the consumer. In 2000, worldwide revenue for electronic bill presenters was estimated at less than $50 million. With more than 800 million bills a year mailed to Canadian consumers, billers stand to save substantial sums of money by cutting out the old paper-based processes. But, as executives with both organisations conceded at competing press conferences held to announce developments, convincing consumers to receive their bills through a website will be a challenge. “Right now, awareness levels among consumers is low,” said Peter Melanson, chief executive of EPOST. “But awareness levels among business is very high.
As the world’s first electronic post office, EPOST is digitising the mail and defining a new market space in Canada. Our primary focus at this time is to build density in the electronic mailbox so that EPOST offers consumers a valuable service.” The backers of e-route and EPOST are bullish about the potential for their services in Canada even though adoption rates for such services in the US seem stuck at about a 2 percent penetration rate. Much of the potential for growth in Canada’s EBPP market stems from the nation’s incredibly high rate of Internet banking acceptance. Four million Canadians bank online and are able to pay the bills now mailed by those businesses and others at a bank’s website. One key difference between the US and Canadian models is cost. In the US, consumers have to pay a fee to receive their bills electronically, whereas both EPOST and e-route are free to the Canadian consumer. In addition, market research released by EPOST indicates that billers in the US rate e-billing a low priority whereas almost every company that sends bills to consumers in Canada thinks highly of e-billing’s potential. FIGURE 1:
ONLINE HABITS AND PREFERENCES IN CANADA Consumer usage Have Internet access 58% of which:
Buy products and services online 30%
Bank online 26%
Pay bills online 24%
Trade online 12% Consumer preferences
Consumers interested in EBPP 35%
Online consumers interested in EBPP 47% Where do you want online bills presented?
Bank website 52%
Biller’s website 32%
Canada Post website 7% Source: Optus/Angus Reid, May
2000
ISSN 0954-0393; Page 10 Copyright 2001 Lafferty Publications Ltd © 2001 Resp. DB Svcs. All rts. reserv.
$$ELECTRONIC PAYMENTS INTERNATIONAL, 30th April 2001