Six and half years ago I started blogging with my first post entitled "Does the world really need another blog?" Today's post is about a new Pay Anyone service that Billtrust launched last week that I think will be a game changer for us. What exactly is a Pay Anyone service? Well pull up a chair and I'll explain more about the fascinating world of bill payments (this is the point in the story where my kids start fake snoring and exit the room).
These days, most people pay their bills online. I didn't say all, but most. There are two primary ways that this happens. The first is called the Biller Direct model which simply means you go directly to your biller's website to pay your bill. Think AT&T, American Express, Con Edison, etc. The second method is called the Consolidator model. In this model, you go to a bank's web site where you can pay ALL of your bills. Most people like the Consolidator Model better because it's more convenient than logging into multiple different Biller Direct sites.
When these consolidator sites started popping up in the 90's, it quickly became apparent that most consumers didn't want to pay some of their bills via the web and some via paper check, they wanted to do them all the same way. Unfortunately, there was no way then, and there is no way now, to pay everyone via an electronic payment. In order to make a payment electronically, you need the electronic address of the recipient, which is typically a bank routing and account number. There is no universal database that lists all these electronic addresses of every landscaper, phone company, dry cleaner, water utility, etc.
So someone, probably CheckFree, had the brilliant idea to fake it. They made it look to the consumer that all payments were being made electronically but on the back end, paper checks would be issued to those recipients that couldn't be paid electronically. Back in the 90's, roughly 25% of the payments were electronic and 75% were via paper check. Now that is reversed with 75% of payments electronic. This approach has worked well and there have been several businesses that have followed that model. Most recently Check did this in the Mobile world. They were so successful they were acquired by Intuit.
OK, lecture over. Now the news.
These Pay Anyone services have worked well with consumers but what about businesses? This is where Billtrust comes in. A couple of years ago we launched a consolidator site called Invoice Central that allows businesses to view and pay bills from other businesses. We launched with around 20 different billers and have steadily grown to over 100 billers and tens of thousands of small businesses. The problem we predicted, much like what played out on the consumer side, is that once you convince a business to pay some of their bills at your site, they then want to pay all of their bills. So last week we launched Pay Anyone as part of Invoice Central to a small subset of our customers.
That is sort of interesting. But does the world really need another Pay Anyone service?
We think so because ours is different. Significantly different. Like why didn't I think of this sooner kind of different?
Our Pay Anyone service gives small businesses the ability to extend the vendors they can pay in one secure site. Best of all, it is free to the small businesses as it is funded by the vendors (the ones issuing the bills to be paid). Why would vendors fund this? Simple, electronic payments AND electronic remittance are fundamental to streamlining their business.
If you think paying everyone electronically is hard, try figuring out how to deliver clean electronic remittance to everybody. Electronic remittances are instructions that tell a business how to post a payment - here's my payment for $12,513 that pays these 14 outstanding invoices with these various amounts. This remittance information must be delivered to businesses in format that is easily digestible in their accounts receivable system or it is a big problem. What we in the business call "payment exceptions". The dirty secret in B2B payments is that electronic payments are actually more costly to handle than paper payments because they rarely come with good electronic remittance data and are therefore exceptions.
And that's the big news. But wait, that's not all.
We're doing the old CheckFree trick of sending paper checks to those businesses that we don't have electronic addresses for, but our marketing team had a cool idea. Why not also print a nice big marketing message on the check stubs that says something like "Tired of receiving all these paper checks, contact Invoice Central and get paid faster electronically".
So to answer the question posed earlier. Yes - we think the world needs another Pay Anyone service. But not like the rest. One geared to the needs of the B2B industry that is free for small businesses, and delivers to large businesses payments that can be post cleanly to their accounts receivable system.
That, my friends, should be a winner.