Bill and Invoice Presentment and Settlement (BIPS) Access and Distribution Models

There are two basic models for BIPS: the biller-direct model (whether hosted internally or outsourced) and the consolidator model. In the biller-direct approach, the customer goes directly to the biller’s site to access and pay bills. In the consolidator model, a third party aggregates billing data from many billers, providing customers with one site to visit to pay multiple bills. Both the biller-direct approach and the consolidator approach have advantages and disadvantages, but both models will continue to coexist.

Biller-Direct Model

In the biller-direct model, the biller makes the billing data available to customers over the Web or through e-mail. Customers can go directly to the biller’s site to access and pay their bills, with no other parties involved. The biller-direct model provides a one-to-one direct link between the biller and the customer.

Billers may host their own biller-direct sites, or enlist the services of a biller service provider (BSP). BSPs can include application service providers (ASPs) or service bureaus (such as Bell & Howell, EDS, Pitney Bowes, or DST Output), or any other entity that can handle any or all aspects of BIPS. Billers can also use such BSPs to syndicate billing data to consolidators or to consumer service providers (CSPs) such as Web portals, thus handling the technical intricacies for the biller, while extending the biller’s reach to multiple customer distribution points.

Distribution or Syndication Model

As an alternative to having customers visit a dedicated biller-direct site (whether hosted by a biller or outside service provider), billers can choose to work with third-party intermediaries that provide alternative end-points from which customers can access, view, and pay their bills. The most established distribution model available today is the consolidator model, in which a third party acts as the aggregator for multiple billers. The consolidator provides a single site that allows customers to access multiple bills from their different billers. The leading consolidator in the market today is CheckFree; newer players gaining traction include BillingZone.

Under a consolidator model, customers log on to the consolidator’s site and can view and pay all of their bills in one place. The consolidator provides an important convenience to customers, and provides a vehicle to attract more users to pay their bills online. Greater customer exposure leads to increased customer adoption, which can reduce the total cost of billing. For this service, consolidators typically collect a transaction fee or “click charge” from billers for every transaction conducted.

One limitation of the consolidator model has been the inability of consolidators to attract enough billers to give customers a single site from which they can access all of their bills. Thus, many billers are turning to other distribution points in an effort to give their customers the flexibility to access their bills through the distribution point of their choice.

Thus, many billers are now turning to consumer service providers (CSPs) in their strategies to syndicate their billing data to multiple end points and increase customer adoption. Portals such as AOL and Yahoo! act as consumers’ gateway to the Web, attract large volumes of user traffic, and are ideally positioned to connect users and their bills. Banks and financial institutions can also act as CSPs for their customers.

Another emerging approach for bill distribution is to work with intermediaries that serve as distribution pipes or “switches” for online billing. For example, services from organizations such as MasterCard RPPS and the Spectrum alliance (a joint venture of Wells Fargo, First Union, and JP Morgan Chase), provide billers with a trusted intermediary that handles the intricacies of bill distribution to various customer end points, and also handles the return payment processing.

Such services act as “behind the scenes” intermediaries that provide billers with a way to greatly extend their reach without having to manage processes or relationships with multiple distribution points