Digital Payments

Digital Billing’s New Usage-Based Look

Let’s a take a moment to celebrate the paper boys and girls who — showing early commitment to initiative, hard work and entrepreneurship — handled a task that now vexes so many consumers and B2B operations in the digital world. They managed subscription billing for multiple accounts in particular neighborhoods, as James Messer, CEO and founder of online billing platform Gotransverse, pointed out in a recent PYMNTS interview with Karen Webster.

Messer himself, while certainly not a modern-day deliverer of newspapers, is a pro on subscription billing, having worked in the telecommunications and utility sides of that payment activity via previous companies. Now, with Gotransverse, he intends to bring that expertise to other areas, including B2B and B2C transactions — and do so in ways that marry the increasing consumer demands for seamless payments with the advantages that data (some of it real time) can bring to recurring billing.

In the PYMNTS interview, Messer took Webster on a deep dive into a growing area of early 21st century billing practices — one that increasingly relies on mobile technology, data analysis and other areas to provide cost-saving options for companies at risk of leaking too much revenue from inefficient billing practices. “Billions of dollars are going over these [billing] networks,” he said, setting up the stakes involved. “And if you are starting a company, you want it as digital as possible,” another point in favor of bettering billing via digital technology.

Now, with the adoption of smartphones and other mobile devices, along with the spread of low-cost cloud computing, the time is right, in his view, for billing that better reflects actual consumer or business use of a product or service, rather than providing relative estimates on pricing.

Auto Insurance Use Case

Automotive insurance is an obvious example of this new billing landscape — obvious, but still familiar and lucrative enough to offer a good example. Policies written for vehicles are — save for a few, mostly experimental cases — based on relatively general premiums, instead being tailored to individuals and the specific ways in which they use the cars, trucks and motorcycles covered.

However, data collection and analytics — the increasingly connected nature of autos — promise to change that, and do so sooner rather than later. Actuaries certainly have access to treasure chests’ worth of driver data, but the new digital technology and mobile connectivity will make it possible to charge more or less, depending on how often drivers actually drive, and how they do so. (Do they often speed, for instance?)

Data, though, is only part of getting to that point. Digital platforms must integrate with payment systems that enable such individualized, specific and recurring billing.

“Managing the whole accounts receivable and analytics around it is where things get tough,” Messer told Webster. Not only that, but scaling those new billing regimes presents significant “complications. Scale means billions of events — some in real time, some in near real time, some in batches and [some just] in time. It means selling on an international basis,” he said. Additionally, the challenges for B2B billing systems — where supply chains, payment methods, invoicing and factors have, over the years, formed a complicated world of transactions — are “more complex than B2C.”

Silicon Valley Failures

In Messer’s telling, such challenges often bedevil the venture capitalists and technology experts who dominate Silicon Valley. That’s because “you need domain expertise and situational awareness” when it comes to these newer, more digital forms of billing. “You have to have been there and done that, and billing is often treated as an afterthought in Silicon Valley.”

That shouldn’t be the case, he said, given that even the best companies (with a tight grasp of billing) experience “revenue leakage” of 1 percent to 2 percent, with the worst ones as high as 10 percent. “Our role as a billing vendor is to tighten up that revenue leakage cycle, and have an audit trail,” Messer said.

Thanks to digital technology, as well as data collection and analysis (tasks being enhanced in multiple industries by machine learning and artificial intelligence), companies can find more value in their own billing offerings. That can include upcharges, cross-selling and better management of subscriber churn, among other tasks. For insurance, that might lead to the development of new business models.

Moving to better forms of billing can include making the most of tiers and rates — from revenue and customer support angles — via such factors as location and time. That means bringing products, services and innovations to market faster and cheaper, thanks to better billing capabilities. The deployment of 5G mobile network technology also promises to make billing more valuable for companies.

“All those operations will have the same network performance for the most part,” Messer said, who then noted a pet-tracking application via the Internet of Things (IoT) as an example of how 5G and cutting-edge billing might combine.

Billing Use Cases

Instacart is one company doing billing via the Gotransverse platform. “We are powering all their revenue, everything they do,” he said without going into more detail.

He also gave another example of a B2B client using the platform to, essentially, keep a utility company honest about how much energy it is billing for that client. “The utility company found out and really became interested in our technology,” Messer said. Gotransverse clients use “the same set of code,” he added, and the billing platform has, so far, integrated with 15 major payment providers, with that effort typically taking about six weeks.

The coming months and years could bring more such integrations and keep-‘em-honest efforts, as well as more appreciation for such digital billing methods, and more experience in how to get the most value from them. The world has come a long way from the days of those hard-working paper boys and girls, many of whom could count on holiday tips from customers as the sole cherry-on-top, so to speak, to their subscription billing programs. Digital technology — the connectivity, integrations and data — promises to bring more efficiency and rewards to all types of B2B and B2C billing.

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