PayMyBills.com’s home page is tremendous, equaling the "NextCard standard” of just 25 words on the entire page.

The 17 words and three pictures across the top do a far better job explaining the electronic bill payment process than most 1,000-word bank brochures.

Finally, don’t you wish you had thought of this tag line?

live life! we’ll pay the bills.

They say business on the Internet moves fast. That hasn’t been the case in online banking until recently. In the span of just three months, we’ve gone from zero to three companies selling what we’ve dubbed scan-and-pay bill presentment. It’s an online marriage of pay-anyone electronic bill payment and a scanner; with everything posted to a Web site and tied together with email. A brilliant end-run around the behemoths promoting electronic bill presentment, which has been slow to come together given the massive size of the key participants, the large billers.

CyberBills was first to launch in March, earning an OBR Best of the Web designation (see OBR 3/99), PayTrust began a limited launch shortly thereafter, followed by a nationwide rollout in June. Then on July 19 PayMyBills.com debuted and also picked up an OBR Best of the Web designation.

Both CyberBills and PayMyBills come out of California; CyberBills from the Valley, PMB from LA. PayTrust is the East Coast wild card. All three companies are backed by venture funds.

The companies are trying to get a head start on bigger firms such as Checkfree, Microsoft, and Yahoo! to become the preferred place for consumers to receive and pay their bills. At first, they will be operational nightmares: changing addresses of client billing statements, scanning bills, emailing payment due notices, and mailing paper check payments. But as more and more bills are converted to electronic format, the economics will become far more favorable.

It’s too early to handicap these three companies. We like the user interfaces and branding of CyberBills and PayMyBill.com, but PayTrust can make up that ground relatively easily. The winner will be the one that can execute on the vision the best. And we think a crucial part will be distribution. These small, unknown companies need established partners to gain credibility and reach larger audiences. None can afford the massive investment in educational advertising it will take to attract a significant user base. After all, how many people are going to hand over their billing statements, account numbers, and personal data to an unknown company in California?

Look for one or more to lock in a portal deal by giving up a chunk of equity. At press time, CyberBills announced a distribution deal with Xoom.com, which has 9 million registered users.

All three will likely seek partnerships with financial institution partners. CyberBills has announced two such distributors, American California Bank (San Francisco; $58 million) www.acbank.com and Southwest Resource Credit Union (Baytown, TX) www.srcu.org The other two are interested in working with banks, but declined to disclose the results of discussions with potential partners. All have names that could work well in a co-branded offering, e.g., <www.yourbank.com/paymybills>.

Several types of companies are likely to be very interested in working with scan-and-pay providers:

• Credit card companies wanting to expand their services and move bill payments into the credit card receivables. (Note: The PayMyBills FAQ even addresses the question of, “Can I pay my bill by credit card,” saying, “not at this time,” making it sound like it may be in the offing.) NextCard would by a likely early entrant, especially given its existing relationship with PayMyBills.com fellow idealab! company eWallet.
• Web financial portals looking to offer a valuable service with little out-of-pocket cost; one that can be used by anyone without severing ties to existing bank or CU accounts.
• Small business portals looking to provide value-added services to their constituents. We think it’s an outstanding small business service and plan to use it internally (see OBR 9/98)

Scorecard: Scan-and-Pay First Impressions

Source: Online Banking Report subjective evaluation, 7/10/99

Price Comparison

Source: Online Banking Report, 7/99

¹CyberBills prices by number of active payees, not by number of payments; so the monthly cost could be substantially higher if the user doesn’t remove payees from active status. CyberBills also offers a $3.50/mo option for five payees and a $29.95/mo option with 25 payees and other premium services (see OBR 3/99 for details).

²Cyberbills free trial is limited to one payee only.

Banks, large and small, are in an excellent position to negotiate favorable licensing deals with scan- and-pay providers. An endorsement from a leading consumer bank could be a key ingredient in vaulting any one of the three into market leadership. Even smaller financial institutions, if they banded together, could strike a similar arrangement. (Note: As a subscriber service, we are volunteering to serve as a matchmaker in building a scan-and-pay buyer’s consortium. If you are interested, email your name, company, and phone number to scanandpay@netbanker.com . We will pass your name on to other interested financial institution parties, and send their names to you. Other than that, all replies will be kept strictly confidential. Financial institutions only, please.)

Since our March review (OBR 3/99), CyberBills has upgraded its look and feel and added an all-important product demo.

CyberBills launched a sister site, StatusFactory.com, offering the same services but with different positioning. Frankly, we don’t get it. To us, the CyberBills brand and Web site is far better.