CONFIDENTIAL
The EBPP Market Uncovered
Sizing the U.S. Billing & Payment Market
CONFIDENTIAL
Agenda
Who is Transactis
Why Commission this Research
Billing & Payment Landscape Paper and Electronic
So . . . “How Big is the Market?” How Many Billers of Each Size by Industry
How Many Bills
Why Blueflame
Research Results
What Does the Data Mean to All of Us in Payments
Q & A
Sources
CONFIDENTIAL
Payments Growth
Who is Transactis?
America’s Fastest
Growing Companies
America’s Fastest Growing
Technology Companies
Secure and Compliant
Award-Winning Thought Leaders
Key Technology Vendors who
Support Digitalization and “Big Change”
High-Growth Businesses
Defining the Future of FinTech
We excel at serving the largest banks and BPO’s in the country.
Transactis is more than just a software provider. We are a full service
business partner and we never compete with our resellers.
White Label Software-as-Service
Cost Effective Transactis Pricing
Robust B2C and B2B Functionality
Promote YOUR relationship with YOUR customer
Augment Existing Products & Services
58%
YOY
Growth
69%
YOY
Growth
47%
YOY
Growth
North America’s Most Promising
Private Technology Companies
CONFIDENTIAL
Legacy Billing: Paper & Mail
Deposit
4
Accounting System
Bill Run
Statement Rendering
Statement Mailing
Delivery
Statement Write a Check
Billing Department
Reconciliation
MailingPayment
CONFIDENTIAL
Changes @ the U.S. Postal Service
5
Participants in a survey about how the move to 5-day delivery will affect
business billing and payment practices revealed the following results:
• Greater investment in paperless eBill delivery59%
• Will increase the number of consumers who pay online50%
• More customer service calls about late payments41%
• Delay timing and consistency of bill payments50%
• Late-payment situations and increased use of emergency, expedited payment options
CONFIDENTIAL
Bill Payers Have Many Paperless Options
6
Biller Direct
• Pay and Receive Bills at Biller Websites
• Multiple Access Points
• Single Bill and Payment
Consolidated
• Pay and Receive Bills Directly at Bank & Credit Union Sites
• Single Access Point
• Featured with Online Banking Services
• Pay and Receive Bills via Email
• Banks or Merchants
• Access via Email
• Multiple Site Sourcing
Bill Aggregation
Portals
• Online Websites to Pay Many Bills
• Single Access Point
• Multiple Site Sourcing
Number of Bill Payment Methods
Consumers Use Monthly
One17%
Two23%
Three23%
Four18%
Five9%
Six or more10%
CONFIDENTIAL
Healthcare16%
Insurance13%
Government12%
Utilities12%
Property Management10%
Financial Services10%
Manufacturing & Distribution
7%
Retail & Wholesale6%
Other6%
Education4%
Professional Services4%
Transactis Broad Market Coverage: Billers
• Rental Properties
• Condo / Co-op
• Homeowner’s Associations
• Parking Garages
• Timeshares
• Benefits Administrators
• Hospitals
• Medical Practices
• Health Plans
• Banks/Credit Unions
• Retail Credit Card
• Consumer Loans
• Retirement Plans
• Brokerages
• Insurance
• Collections
• Hospitality & Leisure
• Food & Beverage
• Media & Telecom
• Transportation
• Electric
• Water
• Gas
• Sewer & Sanitation
• Communications
130% YOY Growth
150% YOY Growth
75% YOY Growth
44% YOY Growth
67% YOY Growth
50% YOY Growth
63% YOY Growth
• Medical
• Property & Casualty
• Life
• Farmer’s & Crop
• Auto
• Fire
43% YOY Growth
• City & County
Government (tax,
permits, licenses,
citations, union)
• State Child Support
44% YOY Growth
140% YOY Growth
CONFIDENTIAL
Transactis Broad Market Coverage: Biller Size
< 500 Customers21%
500 - 2,500 Customers
14%
2,500 - 5,000 Customers
41%
5,000 - 25,000 Customers
15%
25,000+ Customers
9%
CONFIDENTIAL
So…How Big is this Market?
9
Large CorporateMiddle MarketSmall Business
Delivering EBPP & EIPP solutions to businesses with 50 bills a month to the Fortune 50
• Education:
• Pre & K-12
• Public/Private
• Private Clubs
• Medical Practices
• Parking Garages
• Start Up
Companies
• US Towns &
Counties
• Banks / Loans
• Hospitals
• Property
Managers
• Universities
• Utilities
• Insurance
• Large US Cities &
States
• Global Retailers
• Major
Manufacturers
CONFIDENTIAL
About Blueflame Consulting, LLC
Blueflame Consulting is a 12 year-old research and advisory
firm specializing in strategic research for financial services
organizations, utilities, billers and payment processors.
Notable biller and billing related studies include:
10
NACHA
• 1000 Billers Speak survey about ACH vs. Cards
• Stakeholder Survey for 2013-2015 Strategic Plan
• eBilling Benchmarking Study
• Bill Payment Exceptions Survey
Fiserv • Mobile Bill Pay and Presentment Benchmarking Biller Surveys 2012-2015
Federal
Reserve
• 2013 Networks Processors and Issuers Study
• 2001, 2004 and 2007 Electronic Payments Study
• Unbanked and Underbanked Qualitative Research
TAWPI /IFO • 2005 and 2009 Remittance Processing Benchmarking Surveys
FDIC • Survey of Banks’ Efforts to Serve the Unbanked and Underbanked (2009)
Other • Ed has directed 260+ market research studies over the past 30 years
CONFIDENTIAL
Bill Payment is estimated to be second largest category of
payments after POS ~20 billion per year
Google search returned 168 million web-pages for “billing”
11
Billing Marketplace is HUGE
CONFIDENTIAL
Key Data Sources for Market Research
Census Bureau
IRS tax filing statistics by industry
Includes organizations that filed taxes in 2011 & 2012
InfoUSA
Business data listings by category and size
Industry Trade Association
Key biller verticals
Estimated e-billing penetration
Meta-analysis of aggregate data from billers
12
CONFIDENTIAL
Addressable Market: IRS Tax and Census Bureau Data
0.0
5.0
10.0
15.0
20.0
25.0
30.0
AllBusinesses
PotentialBillers
5.84.1
3.4
2.6
17.4
9.6
0.4
0.3Government
Tax Exempt
Sole Proprietor
Partnerships
Corporations
13
Source: IRS Tax Return Data
Addressable Market (Millions)
Removes POS
Oriented Sectors
-
1.0
2.0
3.0
4.0
5.0
Orgs. w/Employees
Orgs. w/Revenues>$500K
3.9
1.2
0.1
0.6
Corporations Other Orgs
Removes ‘Micro’
businesses without
employees
Potential Billers
(Millions)
Between 1.8 and 4.0 million potential billers
CONFIDENTIAL
IRS Data used in Estimates
Corporations
C-Corps
S-Corps
Partnerships
General
Limited
LLCs
Non-Farm Sole
Proprietorships with Income,
includes Single-Owner LLCs
Non-Profit Organizations and Foundations and
Exempt Organizations
Government
14
0
250
500
750
1,000
1,250
Thousands
969
195
59
Corporations filing Taxes with Receipts over
$0.5 Million, by size
Over $250MM
$5M to $250M
$0.5MM to $5MM
3.9 MM w/Employees
1.21 MM w/Rev 500K+
143 K w/ Employees
611 K w/ Rev 500K+
Applied 2007 size distributions with some 2011 and 2012 tax filing data
This IRS Report series has not been released publicly since 2008.
CONFIDENTIAL
Study Results: Market Sizing - Billers
Approximately 4.2 million billers in the U.S….
15
Total Number
of Billers
Target Market
(- Micro)Mega Large Medium Small Micro
(- Micro) ($100MM+) ($10MM - $100MM($500K to $10MM) (Up to
Utilities 33,965 27,752 10 219 2,311 25,212 6,213
Telecom 471 471 6 30 190 245 0
Financial Services 57,276 53,086 10 1,859 4,358 46,859 4,190
Insurance 193,434 105,329 10 452 2,410 102,457 88,105
Healthcare 889,262 792,594 3,205 17,700 771,689 96,668
Property Management 209,962 170,910 463 3,684 166,763 39,052
Professional Svc/Other 1,134,853 474,302 1,225 15,461 457,616 660,551
Manufacturing and Transportation 455,467 338,246 3,142 37,893 297,211 117,221
Wholesale 367,453 367,232 10,107 148,471 208,654 221
Food Beverage and Hospitality 617,686 210,053 203 4,394 205,456 407,633
Heavy Construction 119,675 106,538 403 8,992 97,143 13,137
Government 77,187 38,961 657 21,944 16,360 38,226
Education 61,903 61,903 231 769 60,903 0
TOTAL 4,218,594 2,747,377 36 22,196 268,577 2,456,568 1,471,217
Number of Billers
CONFIDENTIAL
Total Number
of Billers
Target Market
(- Micro)Mega Large Medium Small Micro
($100MM+) ($10MM - $100MM($500K to $10MM) (Up to
Utilities 2,724,895,044 2,723,478,480 526,545,240 1,256,184,000 378,319,944 562,429,296 1,416,564
Telecom 2,111,397,900 2,111,397,900 1,872,000,000 234,000,000 4,560,000 837,900 0
Financial Services 8,840,360,208 8,839,002,648 1,740,000,000 6,051,045,000 823,034,448 224,923,200 1,357,560
Insurance 2,054,268,900 2,034,885,800 540,000,000 534,264,000 202,440,000 758,181,800 19,383,100
Healthcare 2,781,747,920 2,777,881,200 0 320,500,000 296,652,000 2,160,729,200 3,866,720
Property Management 1,493,192,772 1,484,757,540 0 9,723,000 44,208,000 1,430,826,540 8,435,232
Professional Svc/Other 2,406,299,250 2,175,106,400 0 74,970,000 773,050,000 1,327,086,400 231,192,850
Manufacturing and Transportation 282,546,744 263,791,384 0 25,136,000 136,414,800 102,240,584 18,755,360
Retail and Wholesale 687,163,936 687,128,576 0 80,856,000 534,495,600 71,776,976 35,360
Food Beverage and Hospitality 230,010,816 132,178,896 0 2,436,000 23,727,600 106,015,296 97,831,920
Heavy Construction 8,846,802 8,767,980 0 241,800 2,697,600 5,828,580 78,822
Government 1,897,826,744 1,896,144,800 0 349,524,000 1,474,636,800 71,984,000 1,681,944
Education 56,018,670 56,018,670 0 11,688,600 2,307,000 42,023,070 0
TOTAL 25,574,575,706 25,190,540,274 4,678,545,240 8,950,568,400 4,696,543,792 6,864,882,842 384,035,432
Number of Bills &
Statements Generated
16
…sending over 25B consumer bills annually.
Study Results: Market Sizing - Bills
CONFIDENTIAL
Key Vertical Markets/Segments
17
Financial Services34%
Healthcare11%
Utilities11%
Professional Svc/Other
9%
Telecom8%
Insurance8%
Govt & Educ.8%
Property Management
6%Other
5%
Bills & Statements
CONFIDENTIAL
USPS FY’12 Household Diary Study:
20B Consumer Paper Bills & Statements
18
= 19,666 Total
= 6,719 Service
= 633 Merchants
= 11,310 Financial
CONFIDENTIAL 19
US Consumer Bills & Statements
0% 20% 40% 60% 80% 100%
Bills
Billers
$100MM+ $10MM - $100MM $500K-$10MM <$500K
Bill Volume Concentrated at Large Billers
CONFIDENTIAL
eBilling is Growing Steadily – now 25%
USPS Household Diary Studies document a steady decrease in mailed
Bills and Statements and a shift to paperless internet delivery.
20
Source: USPS Household Diary Studies 2005-2012, Blueflame Trending
Annual Household Bills & Statements (Billions)
0
5
10
15
20
25
30
2005 2006 2007 2008 2009 2010 2011 2012 2013 2014e 2015e
25.0 26.0 25.9 25.2 24.421.9 20.5 19.6 18.5 17.5 16.5
1.21.6 1.8 2.5 3.3
3.64.0 4.4 4.8 5.2 5.6
Mail Internet
25%
CONFIDENTIAL
Study Results: Consistent with USPS HDS
21
0
1
2
3
4
5
6
7
8
9
10
(bil
lio
ns)
Total Bills
Net Paperless
USPS HDS FY 122
The reasonableness of the estimated number of Billers was tested by:
1. Multiplying the number of billers by the number of bills generated for each
vertical and revenue size available from the meta analysis (Dark Green)
2. Accounting for paperless adoption by vertical (Light Green)
3. Compared with the USPS Household Diary Study Total. (Red)
CONFIDENTIAL
Validity: Statistical Relationships
Biller data has a 92% correlation between the number of customers
and bills generated; 84% correlation with revenue size.
22
Correlations
1 .186** .991** .801** .872** .447** .880**
.000 .000 .000 .000 .000 .000
1000 962 1000 969 863 743 939
.186** 1 .259** .556** .629** .496** .664**
.000 .000 .000 .000 .000 .000
962 968 968 937 828 745 907
.991** .259** 1 .842** .917** .469** .923**
.000 .000 .000 .000 .000 .000
1000 968 1018 985 870 749 957
.801** .556** .842** 1 .907** .461** .913**
.000 .000 .000 .000 .000 .000
969 937 985 991 848 728 931
.872** .629** .917** .907** 1 .600** .999**
.000 .000 .000 .000 .000 .000
863 828 870 848 873 694 870
.447** .496** .469** .461** .600** 1 .639**
.000 .000 .000 .000 .000 .000
743 745 749 728 694 751 751
.880** .664** .923** .913** .999** .639** 1
.000 .000 .000 .000 .000 .000
939 907 957 931 870 751 960
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
Pearson Correlation
Sig. (2-tailed)
N
Consumer or Residential
Business or
Non-Residential (if
applicable)
Total Customers
Rev Midpoint
Consumer or Residential
Business or
Non-Residential
Total
Consumer or
Residential
Business or
Non-
Residential (if
applicable)
Total
Customers Rev Midpoint
Consumer or
Residential
Business or
Non-
Residential Total
Correlation is significant at the 0.01 level (2-tailed).**.
CONFIDENTIAL
Smaller Billers receive the majority of their payments as paper,
while Billers with Annual Revenue over $500MM receive the
majority of their payments electronically.
48%
32%
15%
21%
22%
28%
10%
12%
13%
5%
6%
14%
6%
4%
10%
2%
2%
10%
6%
18%
3%
0% 10% 20% 30% 40% 50% 60% 70% 80% 90% 100%
Up to $10MM
$10 to $500MM
Over $500MM
Paper checks, MOs & Cash Mail Recurring ACH
WEB Bank Bill Pay Service IVR
Live Agent Debit/Pinless Credit Card/Other
23
Source: NACHA 1000 Billers Speak research by Blueflame Consulting
Mix of Payments Received by Billers
CONFIDENTIAL
Across verticals, electronic payments are chasing paper.
24
61%
45%
43%
45%
46%
34%
37%
28%
38%
38%
36%
23%
16%
8%
12%
23%
22%
18%
18%
29%
24%
30%
20%
19%
19%
30%
33%
38%
2%
8%
10%
10%
8%
5%
20%
10%
11%
6%
11%
14%
17%
16%
10%
2%
9%
4%
6%
11%
7%
6%
4%
4%
12%
12%
9%
0%
2%
3%
5%
2%
6%
15%
5%
6%
3%
0%
0%
10%
13%
0%
7%
2%
1%
3%
2%
1%
2%
2%
11%
3%
1%
2%
9%
14%
3%
17%
8%
14%
12%
14%
11%
28%
13%
2%
18%
0% 20% 40% 60% 80% 100%
Home/Consumer Services
Other
Non-profit
Health Care
Finamcial Svcs
Membership Organization
Insurance
Telecom
Retail
Property Mgmt
Education
Utility
Government
Subscriptions and Publications
Paper checks, MOs & Cash Mail Recurring ACHWEB Bank Bill Pay Service IVRLive Agent Debit/Pinless Credit Cards and Other
Paper Electronic
Source: NACHA 1000 Billers Speak research by Blueflame Consulting
Mix of Payments Received by Billers
CONFIDENTIAL
Electronic Billing & Payment
25
Accounting
SystemBill File Data Export
eBill
PresentmentConsumer logs in
eBill PaymentConsumer pays ACH or
Credit/Debit;
ReconciliationA/R file into accounting
system
Bill Data UploadeBills are created
Email DeliveryE-Statement
Notification
1
CONFIDENTIAL
Consumers Visit Biller Websites to Pay Bills
82%
45%
22%18% 17%
7% 6%
0%
10%
20%
30%
40%
50%
60%
70%
80%
90%
100%
Pay a Bill AccessMonthly
Invoice or ViewBilling/Payment
History
Shop forProducts and
Services
Use OnlineSelf-Service
Options
ContactCustomerService
TakeAdvantageof
MarketingOffers
Learn MoreAbout theService
For which of the following reasons did you visit a biller’s site from whom you receive and pay a monthly bill?
26
Source: Annual Billing Household Survey, Fiserv, 2014
CONFIDENTIAL
74%
62%
53%48%
45%
36%
24% 22%17% 16% 16%
11%
Online(Biller or Bank
Site)
Online atBiller Site
Check Auto-Debit(ACH)
Debit orCredit Card
Online atBank Site
Both Biller &Bank Sites
In PersonRetailerLocation
CallingBiller
MobilePhone
CheckCashing,
Convenienceor Grocery
Store
Onlinethrough Non-Banking Site
Bill Payers Choosing Biller Direct
Source: Fiserv
27
74% Pay bills Online Compared to 2011…
59% Online at biller sites
38% Online at Bank Sites
59% Check
Americans are paying their bills in more ways than ever before. By providing
integrated billing and payment solutions across multiple channels, billers can reduce
costs, enhance operational efficiency and improve customer relationships.
CONFIDENTIAL
Bank Bill Pay Declining
Online and mobile payments on biller sites
increased from 62% in 2010 to 69% in 2013
Bank site payments declined from 38% to 30%
No “quick fix” for bank bill pay
28
Source: Aite Group, How Americans Pay Their Bills: Sizing and Forecasting Bill Pay Channels and Methods, 2013-2016.
Fiction: People don’t want to “hunt all over
the Internet” to find their bills.
Fact: People get an email from the biller,
click on the email, pay their bill. Done.
Gen Y and X online bill payments are
heavily skewed toward biller direct. It’s
the “over 60” group that pays their bills
at bank sites. Which of these segments
are the payers of the future?
CONFIDENTIAL
$25B Marketplace
29
Integrated Receivables
Competitive Advantage
Customer Retention
Increased Exposure
Reduce Collection Time
Improve Cash Flow
Reduce Billing Expenses
Reduce Customer Service Expense
Improve Customer Satisfaction
Go Green
Security & Privacy
Quick & Convenient
View & Pay Bills Online
Robust Payment Methods
Email Notifications
Eliminate Checks, Stamps &
Clutter
Solution
Providers
Business
(Biller)Customer
(Payer)
$6B Market $19B MarketPass-Through
Benefits
CONFIDENTIAL
Questions and Contacts
Joe Proto, Transactis
CEO
212.392.4731
Ed Bachelder, Blueflame Consulting, LLC
Director of Research
781.662.8584
30
CONFIDENTIAL
Appendix - Lists and Sources
Census Bureau
IRS – Business tax filing by Employment size and
Receipts
InfoUSA, Business and Industry Lists
EIA Utility Lists
Insurance Industry Associations
FDIC, NCUA
USPS Household Diary Study
Blueflame Consulting biller studies
NACHA studies
31
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