The e-billing and payments market continues to grow at a much slower pace than most analysts expected, including us. Currently, electronic alternatives are just not compelling enough to unseat the paper king. But as millions of users get their first taste of email-based payments through PayPal, we expect similar email-based systems for major bills to grow quite rapidly in popularity (Table 1 & 2). Finally, Checkfree continues to dominate the electronic bill pay processing industry (Table 7).
 

Table 1
Bill Presentment & Payment Forecast (U.S.)

billions of transactions

Source: Online Banking Report estimates, 5/00,+/- 35%; Tower Group for 2010 bills viewed online forecast, 1/00

¹Excludes bills that are available for viewing on a Web site, but are not accessed by the end-user

²Includes bills paid online that are received through snail mail

Table 2
E-billing & Payment by Business Model (U.S.)

millions of transactions

Source: Online Banking Report, 1/99

¹Only includes bills received (aka presented) and paid by the user via the given method, a purely speculative estimate provided as an illustration of how many ways the bill presentment pie will be divided; complex and unpredictable market forces will shape the actual results; does not include electronic payment of bills received via snail mail

²The bill pay center may be co-branded with a bank, but the user will think of it primarily as a service of the portal (e.g. Yahoo!)

³In year 2002, an estimated 10 million users will pay about 4 bills/mo presented to them online, for a total of 500 million payment transactions; in year 2006, 20 million users will pay 6/month for 1.5 billion total payment transactions

Table 3
Payments* by Type (U.S.), 1998

billions of transactions and dollars

Source: Greensheet 1999 Check Study, 8/99, Faulkner & Gray Credit Card Directory 2000, 8/99; NACHA, 4/00

*Includes commercial, consumer and government

Point-of-Sale (POS)

Table 4
POS Payments by Type

percent of transactions

Source: PSI consumer Trends and Opportunities in Financial Services Distribution Systems nationwide study of responses from 3,217 US households, Dec ’99.

ACH Usage

Automated clearinghouse (ACH) transactions are fully electronic and primarily displace paper paychecks and paper checks for monthly insurance and loan payments. ACH volume has been growing at 16% to 17% annually for most of the ‘90s and now accounts for 6.2 billion total payments per year. It’s an impressive total, but still less than 10% of the total number of paper checks. The one consumer area that has become highly electronic is the payroll sector. In 1999, 56% of private payroll and 97% of federal government paychecks were deposited electronically.

Table 5

ACH Volume (U.S.)

millions of transactions and trillions of dollars

Source: NACHA, 4/00; Green Sheet, 8/99; CAGR = compound annual growth rate

¹business-to-consumer and business-to-business payments

Table 6

ACH Penetration Rates

percentage of each transaction type paid via ACH

Source: NACHA, 1999 data

Table 7
Monthly Volume by Bill Pay Provider (U.S.)

millions of transactions and billions of dollars

Source: Online Banking Report, 3/00, 3/99 and 12/97, from company reports          
(e) Online Banking Report estimate, plus/minus 25%
¹Remote payments originated from any front-end including: dial-up PC, MS Money, Quicken, Managing Your Money, financial institution Web, third party Web, telephone; does not include preauthorized ACH debit. MasterCard RPS and Visa ePay volumes are not listed separately because they are included in the volumes originated at the processors above; does not include P2P payments from PayPal, X.com, etc.     
 ²Assumes 17 billion bills paid each year