E-billing market consolidates as Epost buys Webdoxs

Canada’s two largest electronic bill presentment and payment providers will spend the next 18 months in a massive integration project following E-Post’s purchase of BCE Emergis’s

Webdoxs service for $14.5 million.

Epost said the deal would create a combined service with more than one million registered users delivering 200 distinct documents from 97 businesses. The two firms promised that bill payment services from both firms will be offered from Epost within six months. A second migration will potentially change the way e-billing services from Epost would be offered through billers, and is expected to take another year, executives said.

“”It’s very important we talk principally with our financial institution partners about how they feel our service should be incorporated with their Web sites to best serve their customers,”” Epost president Roger Couldrey said during a teleconference call. “”We haven’t had the chance to begin that yet.””

Marc Filion, a BCE Emergis executive vice-president and former president of Webdoxs, said Emergis will support the integration of the two firms’ IT platforms through a professional service agreement it has with Epost in an effort to ensure a seamless transition.

While Epost is owned by Canada Post Corp., the Webdoxs service was launched by E-Route, which was formed in November of 2000 as a joint venture with CIBC, National Bank of Canada, Scotiabank, TD Financial Group, Laurentian Bank and Mouvement des caisses Desjardins. It was purchased by BCE Emergis for $26.4 million in April 2002 to expand membership to other banks and sign up new billers. In May, however, BCE said it would sell off its stake in Emergis, which plans to focus more on loans and claims processing in the business-to-business sector.

Forrester Research suggested in 2002 that Epost and E-Route form a cooperative billing hub, indicating a combination was necessary to grow the e-bill presentment and payment (EBPP) market. At the time, E-Route senior management rejected the idea, but Couldrey admitted the market was calling for a single provider.

“”With two distinct services, it was difficult for either to grow the market,”” he said. “”The industry was prevented from achieving the critical mass of content or consumers for EBPP to truly flourish. We listened to that feedback from all of our stakeholders.””

Ron McKerlie, vice-president of e-business at Epost customer Rogers Communications, cheered the acquisition.

“”We were sure there would have to be a consolidation at some point,”” he said. “”It gets rid of a lot of uncertainly that might have existed in the marketplace, particularly among billers.””

Rogers has been offering bills for cable and wireless services with Epost for about a year and a half. McKerlie said he was particularly interested in gaining access to Webdox’s relationships with banks, given there are an estimated 10 million Canadians performing bank transactions over the Web.

Consolidation in the e-billing sector is a worldwide trend. According to James Van Dyke, founder of Javelin Strategy & Research in Pleasonton, Calif., there are only one quarter of the companies in the EBPP space now than there were seven or eight years ago.

“”Regardless of where you are, it’s very much a scale market,”” he said. “”It’s very costly for any one organization to go out and get the biller relationship.””

There are also quality control factors, Van Dyke pointed out, when billers move processing centres from location to another. A centralized third party like Epost would remain relatively stable in terms of service delivery.

While the Webdoxs service has claimed about 70 per cent of the Quebec billing market and has enjoyed the relationships with major banks, Epost has marketed itself on the strength of Canada Post’s reputation and the legal protection it can offer traffic under the Canada Post Act. Couldrey said the combined service will deliver 70 per cent of all bills in Toronto, including phone, cable, credit cards, hydro or water. Epost earlier this year also signed up billers outside Ontario, including the City of Nanaimo, B.C. and Montreal’s Videotron.

Once the integration is complete, Epost wants to expand its service to incorporate other types of documents that would be value-added but not relayed to payment, said vice-president of marketing and sales Michael Garrity. These could include financial statements, insurance documents or payroll information.

The integration of the two services will also involve Epost’s portal partners, such as Sympatico/MSN and Yahoo!, as well as Intuit’s Quickax software.

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