Electronic billing the next big thing?

Until recently, Filipinos were accustomed to have an actual person sent by the utility companies to deliver their bills and, preferably, collect payment right at their doorsteps. Perhaps, this was a convenient set-up for the consumers, but not for the billing companies, which realized how risky and costly it was for them.

The big billing companies no longer want to risk having their collectors held up by criminal elements or repeatedly visit a household to collect bad debts. Their solution was to force the consumers to pay to them directly and this required putting up collection centers nationwide.

But the maintenance of collection centers proved costly as well. The billing companies also realized that at the end of the day, they end up holding all the money instead of having it safely deposited in banks. This prompted them to tap the banks to do the collecting on their behalf. Today, Filipinos are used to paying their bills through a bank, either over the counter or through an automated teller machine.

High-tech evolution

But the the billing and payment mechanism in the country is becoming more high-tech. The envelope is being pushed by the banks themselves, which are currently competing to provide the best online banking facility, which should favor electronic billing to include not just presentment but also settlement.

At present, the banks are interested to be the ones to settle the bills for their depositors, which means they have to make the big billing companies send the bills to them directly. It sounds easy but it’s not when a myriad of legal, technical and business issues that still need to be resolved are considered.

Fortunately, banks and billing companies agree that electronic billing, with presentment and settlement going hand in hand, is the future.

Teody Suarez, EastWest Banking Corp.’s executive vice president and chief information officer, believes that soon banks will automatically do bill presentment and settlement for billing companies and their consumers. He says this is because the utility companies will again realize that they cannot throw away good money anymore by preparing and delivering bills themselves.

In this regard, Suarez says EastWest Bank’s electronic billing facility is ready to go live as soon as they get the nod from the top billing companies in the country. But the utility companies are not going to be quick in accepting any bank’s proposal yet. As early as now they already complain of possibly paying service charges for every bill that the bank can settle on their behalf. The billing companies also point out that banks have certain policies like the seven-day float which will make their money "sleep" during that period before funds can actually be remitted.

Hard copy bills

In the case of the Manila Electric Co. (Meralco), the recent deregulation of the power sector leaves it waiting for the new implementing rules and regulations (IRR) from the government, which may or may not allow it to do away with hard copy bills. Edgardo Cuevas, head of Meralco’s billing department, says the Energy Regulatory Commission (ERC) requires that hard copy bills still be issued by Meralco as basis for service disconnection notices. Without the actual paper bills, Cuevas says, it will be hard to prove that certain subscribers are not paying although they have, indeed, been billed.

But Meralco makes use of its website to present its subscribers’ bills online. The power company also has partnerships with certain banks for bill payment through phone banking. It is also negotiating with banks the implementation of its so-called Automatic Debit Arrangement (ADA), which EastWest Bank’s Suarez says can be the start of electronic billing and settlement at Meralco.

Cuevas says they have plans to launch next year a more concrete electronic bill presentment and settlement infrastructure using the Internet. Part of this plan is the soon-to-be launched prepaid card loaded with different values for specific kilowatt hours.

Prepaid card

Retailing power using a prepaid card is akin to the concept used for cellular phones. Cuevas says the new concept not only promotes efficient energy consumption, it also does away with paper bills and will let Meralco get paid before even providing the service. Cuevas adds they will eventually tap the banks’ online facilities as their prepaid card’s distribution channel.

Meanwhile, Suarez says Filipinos will soon get accustomed to receiving their bills via Short Messaging Service (SMS) and e-mail. When this happens, Suarez says the consumers are just a step away from also using SMS or e-mail to instruct their banks to settle their bills for them.

"In business you cannot do things without the bank because at the end of the day, the final transaction is always the settlement. So without the banks, how can you get settled? Settlement is the final thing that we want to happen," says Suarez.

Meanwhile, Suarez suggests that utility companies put up an aggregated or independent electronic statement system and make available there all the outstanding bills for the banks to access and inform their depositors. He believes such an infrastructure can create an level-playing field among small and large banks so they’ll compete not in terms of their physical size but by the efficiency of their online infrastructure.