Q: What is the total EBPP market size and what kind of consumer adoption rate does Paytrust have so far?

Singh: Paytrust has seen very strong growth and, though we are at a relatively early stage in our business, we are pleased with our excellent progress to date.

Every household and small business in the United States has to deal with bills and no one likes it. J.P. Morgan Chase has estimated that the EBPP market will grow from $80 million in 1997 to over $2.3 billion in 2001.

However, today, according to Jupiter Communications, 5.3 million households in the United States already pay bills online. That number is expected to rise dramatically –- to 25.8 million by 2005, with another 40 million also receiving bills electronically. That is a compounded annual growth rate of almost 100%.

So why are billers still printing out pieces of paper, putting them in the mail, and carrying them to your house, so you can collect them on your kitchen table before you pay the bills?

Paytrust believes that consumers will not abandon their traditional methods until they are presented with an option that is truly better than their mailbox -– a service that gives them the ability to receive, review, pay and organize 100% of their bills online. A service that can deliver all of a consumer’s bills online offers a tremendous differentiator when compared to the “bill pay-only” services that many banks have offered to date.

Financial service institutions recognize the value of this “killer app” and have clearly been eager to partner with Paytrust to implement a complete bill management service on their own Web sites. We expect to see an ongoing strong adoption rate as our business partners continue to market their new private-label Bill Centers that are “powered by Paytrust.”

Q: How much do you plan to spend on marketing in 2001?

Singh: Paytrust is not pursuing any direct to consumer marketing campaigns in 2001. Paytrust is focused on delivering our service through our partners, rather than
direct to consumers.

Our partners have already established one-to-one communication with their existing customer base and are looking for more services to sell into that base. Our partners are implementing a variety of creative, highly integrated marketing campaigns that leverage their existing customer communication vehicles, including email, banner ads, statement inserts, direct mail, and event marketing.

Citibank, for example, is targeting their 3 million Account Online customers through email, banner ads, and direct mail. American Express has leveraged email and direct mail campaigns as they have been classically testing a variety of offers. OnMoney.com, another partner, has promoted an “I Hate My Bills” Sweepstakes with the chance to win $25,000 via newspaper inserts, polybags, and flyers that were handed out at the Bloomberg Summer Concert Series in New York, as well as at a booth presence they had in Newark Airport.

Q: How are you dealing with competition from other bill service providers?

Singh: CheckFree can be seen as a competitor of sorts, but there really is no direct comparison because CheckFree and Paytrust offer very different products. CheckFree is a “bill pay-only” service with only one or two bills available electronically for a consumer to view online. In contrast Paytrust is a complete bill management service, where you can receive, review, pay and organize 100% of your bills online today. Paytrust is also the largest independent distributor of electronic bills today. These are two very different products and platforms.

In the “complete bill management” category our closest competitor was a company called PayMyBills.com. Paytrust finalized a merger with PayMyBills.com this past October. Because this is a very compelling category, we expect to see other products being introduced into this space and more competition in the future. CyberBills has an entry in the market, but rich, substantive differences exist when comparing the actual service, infrastructure, management team, etc. Most recently, Intuit has put forth an initiative in this space, however, it is strictly based on a partnership with CheckFree and it is hard to gauge the impact of this offering at this time.

Q: Will the U.S. Postal Service’s EBillPay succeed because of its brand backing and/or deep pockets of its government parent?

Singh: The U.S. Postal Service offers partial delivery, or “bill pay-only” with a very small handful of electronic bills available online. It is essentially a rebadge of the CheckFree service. We feel it is far more likely that consumers will look to their financial services provider than the Post Office for their bill management solution, and that is why Paytrust has partnered with major financial services institutions.

Q: Isn't bill paying really just a small fraction of the larger peer-to-peer market? Where does Citibank’s c2it or X.com’s PayPal fit in?

Singh: The P2P market is “person to person” and is a small fraction of the larger bill payment market. From our Paytrust data we see that only about 10% of payments made with our service go to individuals or “micro” organizations such as lawn care providers or babysitting services.

Our service works together with a bank’s existing offering. Recently, Paytrust introduced the Citibank Bill Center on the c2it site. A consumer can use c2it to email payments to individuals, but now they can also use the private-labeled Paytrust service to pay all their bills on c2it. This extends the functionality of the site significantly. Before, consumers certainly could not simply email their payments to utilities like the phone company -– but now, with Paytrust, they can actually make payments to anyone through their enhanced complete bill management service.

Contact Singh at anil.singh@paytrust.com.