20-763 electronic payment systems spring 2004copyright © 2004 michael i. shamos electronic payment...

20-763 ELECTRONIC PAYMENT SYSTEMS

SPRING 2004

COPYRIGHT © 2004 MICHAEL I. SHAMOS

Electronic Payment Systems20-763

Lecture 14 Electronic Invoice

Presentment and Payment


SPRING 2004


Outline

• Electronic invoice presentment and payment (EIPP)• Presentment: displaying notification of debt with details• Also Electronic Bill P&P (EBPP)• Electronic Statement Delivery (ESD)• B2C v. B2B• Service providers• Bill consolidators• System Architecture• Future of ePayments


SPRING 2004


What is EIPP?

• Statements or bills rendered on Web (1)• Multiple bills consolidated

at one site (2)• Customers visit the site

to view bills (3)• Customers review bills,

schedule payments (4)• Remittance information

returned to biller (5)• Payments routed from

customer's bank to biller’s account (6)

SOURCE: VALERIE KRAMER, PNCBANK


SPRING 2004


Electronic Billing

• U.S. consumers pay 18.2 billion bills per year– Occupies 2.4 billion man-hours

• U.S. businesses pay 26 billion bills per year– Generating bills costs USD 20-35 billion per year– Postage costs USD 17 billion

• Mellon demo (password: “solutions”), Whitney• Moore demo, PayNet demo, CheckFree demo,

PayTrust, Santa Clara 999999999, 1234• Other providers:

– Logica, Netscape, TransPoint

• Hong Kong: Jetco

http://www.mooreconnects.com/demos/telcom/NatTelcomStart.htm

http://www.paynet.co.il/ebpp/login.asp

http://www.checkfree.com/

http://demo.paytrust.com/NASApp/Pt2/DemoLogin


SPRING 2004


Savings on $100 Billed Electronically

• Reduced float (USD per bill)

• Reduced non-payments • Reduced processing errors • Eliminated paper processing • Saved postage • More efficient customer service• Total potential savings

0.150.250.100.900.400.101.90

SOURCE: MCKINSEY

AMOUNTSAVED


SPRING 2004


EIPP Participants

DATA PARSINGBILL FORMATTING

BILLER HOSTING

PERSONAL FINANCE SYSTEM,AGGREGATOR,BANK

PAYMENT AND REMITTANCEPROCESSING SOURCE: EBILLING.ORG

DATA FLOW

MONEY FLOW

BILLINFO

PAYMENTORDERS

http://www.ebilling.org/how/participants/default.htm

Electronic Invoice Presentment Participants

Electronic Invoice Presentment Participants

Customer ServiceProviders

Billers

Biller ServiceProviders

Customers

Consolidator

B B B B B B B B B B

C C C C C C C

Distribution Options

BILLERDIRECT

CSPHOSTING

BSPHOSTING

SOURCE: APACS


SPRING 2004



EIPPEIPP SWIFTBILL DEMO

http://www.hssworld.com/products/ecommerce/swiftbill/demo/start.htm


SPRING 2004


Biller Direct Model

• Biller hosts its own site to present bills• Works through a financial institution to reach the

settlement system to process payments• Requires payors to visit the biller’s site• Various vendors provide software to assist in internal

development


SPRING 2004


Biller Service Providers (BSPs)

• Acts as agent for billers• Technically enables electronic invoice presentment• Warehouses invoice data• Payment and remittance processing• Players:

– some banks– PayNet, Metavante– CheckFree– Paytrust

http://www.checkfree.com/

http://www.paytrust.com/htmlu/learnmore.htm


SPRING 2004


Consolidator Model

• Bills from multiple billers are presented on a consolidated site

• Site can be hosted by a financial institution or third party

• Benefit to payer is one-stop bill payment• Key to success is critical mass of billers


SPRING 2004


Bill Consolidation

Customer Aggregator Customer’sBank

Biller

Biller

2. CONSOLIDATOR ADVISES CUSTOMER OF BILLS

1. BILLERS SEND BILLS TO CONSOLIDATOR

3. CUSTOMER VIEWS BILLS, AUTHORIZES PAYMENT

4. CONSOLIDATOR DIRECTS BANK TO PAY

5. BANK PAYS BILLERS


SPRING 2004


Thick versus Thin Consolidators

Biller #1BillingAppl.


BillData

BillData

Conso-lidator’s

WebPage

SummaryData


Biller #1’sWebPage

Conso-lidator’s

WebPage

URL linkfor detail

Thick -data consolidated

Thin - links to Biller’s site



SPRING 2004


EIPP Issues

• Retain familiar bill format• Information extraction• Bill presentation• Personalization

– understanding customer bill review and payment habits

• Settlement mechanism


SPRING 2004


The e-Billing Process Connect to biller legacy systems Extract bill data Convert to Web output formats Integrate with third party systems and databases

Provide access to bills on biller’s Web site

Provide access to bills on consolidator Web sites

Facilitate credit card and direct debit payments

Process payments and post to customer and biller accounts

Bill Extraction& Conversion

Internet BillPresentation

Internet BillPayment

Internet Customer Care

Provide customer account management

Facilitate 1:1 marketing and e-commerce programs

Integrate bill analysis tools and applications

SOURCE: LOGNET

http://www.lognet-systems.com/product/ebilling.html


SPRING 2004


Invoice Generation

Account Management

Render

Co

nvert

MIME•HTML•OFX•Excel

XSLStylesheets

Secure Submit

SMTPS/MIME

XML

Legacy

Modern

UserInput

X.509Certificates

DemographicInfo

DeliveryInfo

TrackingInfo

SOURCE: STEVE KILLE


SPRING 2004


Invoice Delivery Architecture

STATEMENT

000.00000.00=====000.00

StatementGeneration

Distribution& Tracking

Archive

Account Management

Action/PaymentManager

Raw Statements

SecureEmail

DeliveredStatement

Administration

URLs(web links)

Actions SOURCE: STEVE KILLE

AOP,Payment

InvoiceNo.Payment

No.

Ship &Invoice

PONo.Invoice

No.

PurchOrder

PONo.

Integrating Payments with Upstream Processes

PurchasingDept.

AccountsPayable

ReceivingDept.

SalesDept.

AccountsReceivable

Shipping& Invoicing

Dept.

Buyer Seller

SOURCE: COMMERCENET

Bill Miner Architecture

SOURCE: LOGNET


SPRING 2004


BillMiner Architecture

BillMiner System

Internet

ConsolidatorSystem

PaymentSystem

AccountsReceivable

System

End -User

Data StreamBiller

Application

LegacySystem

ConversionModule

SemanticAnalyzer

CustomerQuery

System

PresentationEngine

ManagementSystem*

Auditing &Licensing

UserEnrollment

System

BillDatabase

Advanced Features Module

SOURCE: LOGNET

http://www.lognet-systems.com/product/ebilling.html


SPRING 2004


Customer Interface

• Designing electronic bills– Typically varies from paper– Input from marketing– Requires internet expertise – May require regulatory approval– Possible legal issues– Advertising

• Enrollment process…on-line is best!• Requires a fully structured and integrated customer

service model


ILLUMINATED STATEMENT

SOURCE: ENCIRQ

http://www.encirq.com/


SPRING 2004


EIPP Projections

0

10

20

30

40

50

Billions

1999 2005

EBPP PresentmentsEBPP Payments


SPRING 2004


SOURCE: KILLEN & ASSOCIATES


SPRING 2004


EIPP Status

• Only 3 countries with widespread offering– US, Canada, Australia

• Others – small scale or coming– Scandinavia, NZ, UK, Hong Kong, Switzerland

• All are finding EIPP is complex– Scale- and/or partner- dependent


SPRING 2004


EIPP Major Ideas

• EIPP is data-rich– Interactive bill detail, challenge, resolution

• EIPP is complex– Interaction with legacy accounting systems, data interchange

• EIPP requires service providers– Biller service provider– Customer service provider

• Are bills necessary?


SPRING 2004


Future of Electronic Payments


SPRING 2004


Money Supply Chain and Value Chain

• Where does it come from?• More electronic flow• Role of banks?

– Can money be transferred without banks?

• Financial intermediaries• Banks, insurance companies, stores, stockbrokers• Agents (sports figures have them because they’re rich)

– all vying to park your money

• Increasingly, payment will be viewed as part of the supply chain. (Just one more piece of data.)


SPRING 2004


Role of Cash

• Will never vanish– Portability– Offline use– Authorized by government

• Increasingly useless– Risk of theft– Not sufficiently liquid! (Must deposit in bank. How?)

• Role of stored value cards


SPRING 2004


eCash

• Where does the technology stand?• Security• Anonymity, pseudonymity, privacy

– Rivest: anonymity may be a value-added feature

• Double spending– Chaum’s protocol– Does not work completely offline

• Not for large transactions– Possibility of detection not a deterrent

• Outside the banking and Federal reserve system• Decline in importance of offline transactions


SPRING 2004


Ubiquitous Computing

• Limitations on processor speed/size• Solution: more processors• Computers in walls, desks, cars• Seamless movement of money• Will money exist in several forms?

– Accounts, e-scrip, cash, e-cash?

• PDAs


SPRING 2004


Checking

• Holdover from paper processing system

• Future view : check is just a type of payment order for moving notational money

• More research needed on clearing and settlement systems

• Instantaneous clearance & settlement. Why not?


SPRING 2004


Micropayments

• Transaction cost vs. transaction value• Rivest prediction: method of choice for purchase of

information over the Internet• Aggregation• Digital rights management• Hierarchical approach

– Aggregate amounts < .01 cent until they reach 1 cent

– Aggregate pennies until they reach dollars, etc.• Alternative economic models

– Subscriptions, taxes


SPRING 2004


Microcredit

• Small loans in underdeveloped nations (e.g. < $50)

• Commercial banks unable to serve the needs of low-income households and microenterprise

• Cost of granting credit, servicing loan. Low return.

• Apply micropayment principles to microcredit

– Hierarchical aggregation


SPRING 2004


International Aspects

• Currency conversion

• Controlled currencies

• Banking laws

• Alternative monetary systems

• Credit cards, checking: minor importance

• Availability of credit: major importance


SPRING 2004


Major Ideas

• Integration of payment with business processes– Straight-through processing

• World trend toward globalization of currencies– Euro, HKD/USD, Eastern Caribbean dollar

• Instantaneous settlement– Increases volatility– Reduces risk– Effect on currency control?

• Future of currency


SPRING 2004


QA&

BillCast Architecture

SOURCE: AVOLENT

OFX = OPEN FINANCIALEXCHANGE(XML STANDARD)

http://www.billcast.com/productsTechnology/billCastArch.html


SPRING 2004


BillCast Internal Structure

SOURCE: AVOLENT

VRU = VOICERESPONSE UNIT

http://www.billcast.com/productsTechnology/billCastArch.html

BillCast Payment Model

SOURCE: AVOLENT

BillCast Bill Distribution

SOURCE: AVOLENT

IFX = INTERACTIVE FINANCIAL EXCHANGE

OFX = OPEN FINANCIAL EXCHANGE

BillCast Thin Consolidator Model

SOURCE: AVOLENT

http://www.billcast.com/productsTechnology/distributionModule.html

20-763 electronic payment systems spring 2004copyright © 2004 michael i. shamos electronic payment...

Documents

payment slide

shamos electronic billing

bank payment

payment eipp presentment

shamos source

pncbank slide

apacs slide

jetcojetco slide