electronic payment systems 20-763 lecture 14 electronic invoice presentment and payment

20-763 ELECTRONIC PAYMENT SYSTEMS

FALL 2001

COPYRIGHT © 2001 MICHAEL I. SHAMOS

Electronic Payment Systems20-763

Lecture 14Electronic Invoice

Presentment and Payment


FALL 2001


Electronic Billing

• U.S. consumers pay 18.2 billion bills per year– Occupies 2.4 billion man-hours

• U.S. businesses pay 26 billion bills per year– Generating bills costs $20-35 billion per year– Postage costs $17 billion

• PayNet demo, checkFree demo, iBill on-line checks demo

• Example providers:– BlueGill, Logica, Netscape, PayNet, TransPoint

• Key for customer retention (convenience)


FALL 2001


What is EIPP?• Statements or bills rendered in electronic form on Web (1)• Multiple bills consolidated at one site (2)• Customers visit the site to view their bills (3)• Customers review bills and schedule payments (4)• Remittance information returned to biller electronically (5)• Payments routed from the customer's bank account to the

biller’s account (6)

SOURCE: VALERIE KRAMER, PNCBANK


FALL 2001


EIPP Participants

DATA PARSINGBILL FORMATTING

BILLER HOSTING

PERSONAL FINANCE SYSTEM,AGGREGATOR,BANK

PAYMENT AND REMITTANCEPROCESSING SOURCE: EBILLING.ORG

DATA FLOW

MONEY FLOW

BILLINFO

PAYMENTORDERS


FALL 2001



EIPPEIPP


FALL 2001


Biller Direct Model

• Biller hosts its own site to present bills• Works through a financial institution to reach the

settlement system to process payments• Requires payors to visit the biller’s site• Various vendors provide software to assist in internal

development


FALL 2001


Biller Service Providers (BSPs)

• Acts as agent for billers• Technically enables electronic invoice presentment• Warehouses invoice data• Payment and remittance processing• Players:

– some banks– EDS, IBS (Interactive Business Systems)– CheckFree, Transpoint– BlueGill

– Paytrust


FALL 2001


Consolidator Model

• Bills from multiple billers are presented on a consolidated site

• Site can be hosted by a financial institution or third party

• Benefit to payer is one-stop bill payment• Key to success is critical mass of billers


FALL 2001


Thick versus Thin Consolidators

Biller #1BillingAppl.


BillData

BillData

Conso-lidator’s

WebPage

SummaryData


Biller #1’sWebPage

Conso-lidator’s

WebPage

URL linkfor detail

Thick -data consolidated

Thin - links to Biller’s site



FALL 2001


EIPP Issues

• Retain familiar bill format• Information extraction• Bill presentation• Personalization

– understanding customer bill review and payment habits

• Settlement mechanism


FALL 2001


The e-Billing Process Connect to biller legacy systems Extract bill data Convert to Web output formats Integrate with third party systems and databases

Provide access to bills on biller’s Web site

Provide access to bills on consolidator Web sites

Facilitate credit card and direct debit payments

Process payments and post to customer and biller accounts

Bill Extraction& Conversion

Internet BillPresentation

Internet BillPayment

Internet Customer Care

Provide customer account management

Facilitate 1:1 marketing and e-commerce programs

Integrate bill analysis tools and applications

SOURCE: LOGNET


FALL 2001


BillMiner Architecture

BillMiner System

Internet

ConsolidatorSystem

PaymentSystem

AccountsReceivable

System

End -User

Data StreamBiller

Application

LegacySystem

ConversionModule

SemanticAnalyzer

CustomerQuery

System

PresentationEngine

ManagementSystem*

Auditing &Licensing

UserEnrollment

System

BillDatabase

Advanced Features Module

SOURCE: LOGNET


FALL 2001


EIPP Projections


FALL 2001


SOURCE: KILLEN & ASSOCIATES


FALL 2001


Customer Interface

• Designing electronic bills– Typically varies from paper– Input from marketing– Requires internet expertise – May require regulatory approval– Possible legal issues– Advertising

• Enrollment process…on-line is best!• Requires a fully structured and integrated customer

service model



FALL 2001


Data Management

• Extracting data from legacy systems– Various vendor tools can assist– Can be a significant work set– Account for on-going billing data stream changes

• Integrating remittance and payment data into the A/R system– Will create additional payment streams



FALL 2001


Financial Aggregation

• Idea: allow access to all assets through a single portal

SOURCE: VERTICAL ONE


FALL 2001


Financial Aggregation Issues

• Account consolidation– Different accounts in one bank– Different accounts in different banks– Combine brokerage, insurance with banking

• Web BillPay– Requires registration of vendors

• EIPP


FALL 2001


Mobile Aggregators

SOURCE: VERTICAL ONESEE ALSO YODELEE2GO WIRELESS BANKING: EDS


FALL 2001


Future of Electronic Payments


FALL 2001


Money Supply Chain and Value Chain

• Where does it come from?• More electronic flow• Role of banks?

– Can money be transferred without banks?

• Financial intermediaries• Banks, insurance companies, stores, stockbrokers• Agents (sports figures have them because they’re rich)

– all vying to park your money

• Increasingly, payment will be viewed as part of the supply chain. (Just one more piece of data.)


FALL 2001


Role of Cash

• Will never vanish– Portability– Offline use– Authorized by government

• Increasingly useless– Risk of theft– Not sufficiently liquid! (Must deposit in bank. How?)

• Role of stored value cards


FALL 2001


eCash

• Where does the technology stand?• Security• Anonymity, pseudonymity, privacy

– Rivest: anonymity may be a value-added feature

• Double spending– Chaum’s protocol– Does not work completely offline

• Not for large transactions– Possibility of detection not a deterrent

• Outside the banking and Federal reserve system• Decline in importance of offline transactions


FALL 2001


Ubiquitous Computing

• Limitations on processor speed/size• Solution: more processors• Computers in walls, desks, cars• Seamless movement of money (e.g. EZ Pass)• Will money exist in several forms?

– Accounts, e-scrip, cash, e-cash?

• PDAs


FALL 2001


Checking

• Holdover from paper processing system

• Future view : check is just a type of payment order for moving notational money

• More research needed on clearing and settlement systems

• Instantaneous clearance & settlement. Why not?


FALL 2001


Micropayments

• Transaction cost vs. transaction value• Rivest prediction: method of choice for purchase of

information over the Internet• Aggregation• Hierarchical approach

– Aggregate amounts < .01 cent until they reach 1 cent

– Aggregate pennies until they reach dollars, etc.• Alternative economic models

– Subscriptions, taxes


FALL 2001


Microcredit

• Small loans in underdeveloped nations (e.g. < $50)

• Commercial banks unable to serve the needs of low-income households and microenterprise

• Cost of granting credit, servicing loan. Low return.

• Apply micropayment principles to microcredit

– Hierarchical aggregation


FALL 2001


International Aspects

• Currency conversion

• Controlled currencies

• Banking laws

• Alternative monetary systems

• Credit cards, checking: minor importance

• Availability of credit: major importance


FALL 2001


QA&

electronic payment systems 20-763 lecture 14 electronic invoice presentment and payment

Documents

valerie kramer

payment data

multiple bills

payment electronic billingu

electronic payment systems20

electronic billstypically

electronic invoicepresentment

electronic form