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GartnerG2: Postal Rate Hike Will Drive E-Billing

By Elaine X. Grant E-Commerce Times ECT News Network
Apr 12, 2002 10:42 AM PT

This week, the U.S. Postal Service made it official: The cost of a first-class stamp will increase from 34 U.S. cents to 37 cents on June 30th.

GartnerG2: Postal Rate Hike Will Drive E-Billing

The rate hike undoubtedly will make e-mail an even more prevalent method of communication, but according to GartnerG2 analyst Kenneth Kerr, it also will boost the popularity of online billing.

As a result of the increase, which will drive up the cost of sending paper bills and statements by mail, the move to electronic bills and statements will accelerate, Kerr said.

Savings Opportunity

Fear of anthrax-contaminated mail and a slowing economy have combined to cause a 5 percent decline in mail volume this year. However, growing use of electronic alternatives also has been a contributing factor.

"Years of disappointing consumer adoption rates have been replaced by significant growth in online billing and payment," Kerr said.

According to research by GartnerG2, 32 million customers already view at least one bill online, but billers continue to send paper statements, missing out on an opportunity to save money.

"At a time when costs are being closely watched, all companies should see mail rate increases as one more reason to reexamine the speed with which they are proceeding with their electronic bill and statement delivery efforts," Kerr said.

Dangling a Carrot

But dislodging consumers from the deeply ingrained practice of paying bills through the mail will require some work on the part of the companies doing the billing.

According to Forrester Research analyst Ron Shevlin, just 7 percent of consumers paid bills online in 2001, mostly because online bill payment offers no advantage over the traditional method.

The postal increase is unlikely to change consumers' opinion, and will have "little effect at best" on the number of people choosing to pay bills online, Shevlin told the E-Commerce Times.

"Cost is not much of a factor in a consumer's decision to pay bills online or not," Shevlin said, adding that only about 30 percent of those who pay bills online do so because it is cheaper.

Incentives Are the Answer

According to Kerr, incentives are the answer.

"Offering incentives is the best way to get customers to view electronic bills and statements and agree to turn off the paper copy," Kerr said.

"Incentives can be structured to be both appealing to customers and easy to cost-justify from the billers' point of view."

Several companies already are trying to convince customers to go online. Some airlines offer bonus frequent-flier miles to customers who are willing to receive statements online rather than through the mail.

And many telecom companies offer reduced call rates to customers who agree to switch to electronic billing.

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