GartnerG2: Postal Rate Hike Will Drive E-Billing

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

The rate hike undoubtedly will make e-mail an evenmore prevalent method of communication, but according toGartnerG2 analyst Kenneth Kerr, it also will boost the popularity of online billing.

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

Savings Opportunity

Fear of anthrax-contaminated mail and a slowingeconomy 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 havebeen replaced by significant growth in online billingand 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 tosave money.

“At a time when costs are being closely watched, allcompanies should see mail rate increases as one morereason to reexamine the speed with which they areproceeding with their electronic bill and statementdelivery efforts,” Kerr said.

Dangling a Carrot

But dislodging consumers from the deeply ingrainedpractice of paying bills through the mail will requiresome 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 advantageover 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, Shevlintold 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 customersto view electronic bills and statements and agree toturn off the paper copy,” Kerr said.

“Incentives can be structured to be both appealing to customers andeasy to cost-justify from the billers’ point of view.”

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

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

1 Comment

  • Online and saving money? You Bet! I recently called the Peppermill Motel in Reno for reservations. I was looking at their website when the Rep. answered. I asked about a Friday and Saturday rate. The least expensive was $119 and $139, respectively. I said, "well on your website the rates are $49 &59". He told me that if I ordered online, the rates are much lower. It pays to check online for a lot of things. I will continue to use online banking for bills, because I refuse to pay the postage.

Leave a Comment

Please sign in to post or reply to a comment. New users create a free account.

Related Stories

E-Commerce Times Channels