ebillme small business webinar

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Small Business Webinar

October 23, 2007


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Copyright 2007 MODASolutions Corp. All Rights Reserved.

How Small Businesses prefer to Checkout

Agenda:

How Small Businesses Buy Online and Pay OnlineKaren Webster, President, Market Platform Dynamics

eBillme Online payment option for Small BusinessLesley Purtell, eBillme

Questions Online chat in Go to Webinar


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2007 Market Platform Dynamics

Cracking the Catalyst CodeB2B Online Purchasing and Payment Trends: How Small Businesses Buy and Pay Online

October 23, 2007

Karen Webster [email protected]


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Key Insights

Small business online purchasing and payment behavior mirrors consumer behavior.

The accounting department plays an important role in the purchasing andapproval process of small businesses.

Credit is important feature but there is an increasing interest in using debit-like options online .

Transaction security is a chief concern and small businesses prefer not to

disclose payment card information when transacting online. Built-in controls and end-to-end monitoring of payment and shipping are

highly valued.

The market is big enough for new entrants and products.


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Objectives and Research Questions

In 2007, MPD conducted a survey of U.S. small businesses (under < $10M in annual revenue)to better understand the online buying, payment, and purchasing behavior of small business.

Research Area Key QuestionsOnline spend preferences

What do SBs buy online?

How often do SBs buy online?

How much do SBs spend online?

Online payment preferences

What payment instruments are used to make online purchases?

What is the relationship of type of purchase to type of paymentinstrument used?

Online purchasing processes

Who buys and who authorizes online purchases and paymentdecisions?

How does the profile of the decision maker impact the payment optionselected?

What are the most critical features of an online payment solution?



Methodology

Internet-based survey of 721 respondents

Survey was organized into three sections1. General respondent andcompany information

Collected SB demographic information such as annualrevenue, industry segment, geographic location, and years inoperation

2. Company payment andprocurement process

Collected information on what SBs buy online, how often, howmuch they spend, and how they pay.

3. An alternativepurchasing process

Tested attributes of a hypothetical solution for appeal.



7

The Sample At A Glance

AnnualRevenue

$100 to $499K,16.6%

$1 to $4.9M,32.5% $500 to $999K,

17.2%

Less than$100K, 14.6%

$10M or more,8.8%

$5 to $9.9M,10.2%

Number of Employees

1 to 4, 18.0%

100 or more,

18.0%

21.0%25 to 49, 8.0%

50 to 99, 11.0%

proprietorship,

9.0%

5 to 9, 16.0%

RespondentRole

Executive or

senior m gmt,

19.9%

Purchasing o r

procurement,

3.8%

Administration,

22.9%

Other: , 2.6%President, CEO,

or owner, 36.5%

Accounting or

fin ance, 14.3%

Years inOperation

7 to 9 years,

11.4%

1 to 3 years,

6.4%

4 to 6 years,

11.4%

Less than one

year, 1.4%

10 years o r

more, 69.3%

Business and respondent details (n = 721)



Survey Says Company Payment and Procurement

Process


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SBs Are Very Active Online

70%64% 59%

0%10%20%30%

40%50%60%70%80%

Percent That MakeOnline Purchases Percent That UseOnline Banking Percent That UseOnline Banking toPay Bills

The smallest SBs (earning less than $100,000) had the lowest penetration rate of online banking with the penetration rate growing as the SB increases in size.

n=721


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Why They Dont Shop Online

SBs

of all sizes expressed concern about the security of online transactions.

Revenue Segment Primary Reasons Why

They Dont Shop Online

AR less than $100K Not secure, no credit card

$100K =< AR < $1M Not secure, not offered by suppliers

$1M =< AR < $5M Not secure, not offered by suppliers

$5M =< AR < $10M Not secure, no credit card


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What They Buy

84.9%

63.9%

43.2% 44.0%

18.3%

51.2%

0%10%

20%

30%40%

50%

60%

70%

80%

90%

Office supp lies (e.g., toner,paper, staples)

Office techno log y (e.g.,compu ters, pr inters,software)

Printing or shippingservices

Publications (e.g., boo ks,news articles, researchreports)

Raw materials

Travel and entertainmentexpenses

(n=502)*

*Data limited to responses from SBs that make purchases online.

For the largest purchase category, office supplies, nearly half of SBs (45.9%)

make monthly purchases, followed by 26% that make weekly purchases.


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How They Pay

0.5%

1.7%

2.6%

4.0%

10.6%

11.1%

21.0%

45.5%

0% 10% 20% 30% 40% 50%

Cash by mail

EFT (e.g. transfer from checking account)

Personal debit card

Corporate debit card

Personal credit card

Check by mail

Supplier credit

Corporate credit card

(n=423)*

*Data limited to responses of SBs that purchase office supplies online

The smaller the SB (in terms of annual revenue), the less likely it used corporate credit cards to make online purchases (or any payment device tied to credit, such as supplier credit),

suggesting that credit availability is an issue for small SBs.

Q. What payment methoddoes the company typically

use to purchase office supplies?


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Who Calls The Shots

As the SB grows in size, the approval of purchases shifts to senior management or, even more predominantly, to individuals within the accounting department.

M indicates where over 25%makethe purchase A indicates where over 25%approvethe purchase

CEO Sr. Mgmt Account-ing Procure-ment Admin-istration

$0 < R < $100K M, A

$100K < R < $500K M, A M

$500K < R < $1M A A M

$1M < R < $5M A M, A M

$5M < R < $10M M, A M, A


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Cracking the Catalyst CodeSurvey Says . . .

An Alternative Payment Process


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Attributes Of A Hypothetical, Alternative Purchasing And Payment Solution

1. Online purchases can be made without owning a credit card

2. Online purchases are made without a line of credit extended3. Online purchases are made without disclosing payment card

information

4. Online purchases are approved before payment is released tothe merchant

5. Online purchase approval and payment can be tracked online6. Online purchase history can be set up to download into the

companys accounting software


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Most And Least Appealing Attributes

29.3%

13.5%

34.3%31.0%

35.5%

19.3%15.9%

21.5%

5.4%9.0%

4.8%

13.3%

0%

10%

20%

30%

40%

Online

purchasescan be madewithout

owning acredit card

Online

purchasesare madewithout a line

of c reditextended

Online

purchasesare madewithout

disclosingpayment card

information

Online

purchasesare approv edbefore

payment isreleased

Online

purchaseapproval andpayment can

be trackedonline

Online

purchasescan be set upto download

into thecompanysaccounting

software

% That Found It Appealing % That Found It Unappealing

(n=502)*

* Responses limited to responses of SBs that make purchases online.


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Cracking the Catalyst CodeConclusions And Recommendations


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Revenue SegmentLess than $100K

n = 123 $100K =< R < $1M

n = 219 $1M =< R < $5M

n = 232 $5M =< R < $10M

n = 147

Ave. # of Employees 1 to 4 1 to 10 10 to 24 100 or more

Ave. # of Years inOperation

10 or more 10 or more 10 or more 10 or more

Representative Industries Very concentrated: mostlyprofessional services, someretail

Concentrated: mostlyprofessional services, someretail, construction

Less concentrated: professionalservices, construction,manufacturing, retail

Least concentrated: professionalservices, construction, high-tech,manufacturing, retail

Bank Online? No Yes Yes Yes

Buy Online? Yes 60% Yes 78% Yes 70% Yes 65%

If They Dont, Primary

Reasons Why?

Not secure, no credit card Not secure, not offered by

suppliers

Not secure, not offered by

suppliers

Not secure, no credit card

Who Makes Purchases CEO CEO, Admin Admin Admin, Accounting

Who Approves Purchases CEO CEO Sr. Mgmt, Accounting Accounting

What They Buy Online Office supplies Office supplies, officetechnology

Office supplies, officetechnology, T&E purchases

Office supplies, officetechnology, T&E purchases,

publications

How Often They BuyOnline

Quarterly, followed by Monthly Monthly, followed by Quarterly Monthly, followed by Weekly Weekly, followed by Monthly

How Much They SpendOnline/Transaction

Between $10 and $99 Between $100 and $500 Between $100 and $500 $100 to $500 and $500 to$1,000

How Much They SpendOnline/Year

Low( < $10K/year)

Low( < $15K/year)

Mid-Range(>$15K & $25K/year)

Essential Attributes of aPayment Solution Does not require a credit card Does not require disclosingpayment card information

Does not require a credit card Does not require disclosingpayment card information Offers additional controls likepurchase approval and tracking

Does not require a credit card Does not require disclosingpersonal information Offers additional controls likepurchase approval and tracking

Does not require a credit card Does not require disclosingpayment card information Offers additional controls likepurchase approval and tracking

What We Learned: Survey Results Snapshot


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2007 Market Platform Dynamics19

Implications Of The Findings

The line between SBs personal and business payment methodsblur.

Alternative SB payment solutions must appeal not only to theCEO, but to accounting too.

SBs, wary of online security, are more likely to prefer an onlineoption where payment card information does not have to bedisclosed.

SBs want a process with fewer moving parts integration withaccounting and online banking has a high appeal.

There seems to be plenty of interest on the part of SBs toconsider alternative online payment methods.


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Cracking the Catalyst CodeThank You.

Karen Webster [email protected]


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Cash Payment Options forSmall Business

Welcome


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eBillme Overview

Customers shop online, by phone, or by catalogPay with cash through online bill payPay from banks, credit unions, or bill pay portals (~13,000FI)

84 Million Online Banking Customers Are


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84 Million Online Banking Customers AreReady. To Shop at Your Site


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Leverage Online Banking

Large and active customer andbusiness base of 84 M source: eMarketer

Larger than American ExpressCard holders, Discover Cardholders or active PayPal users

64% of Small Businesses bankonline

Trusted, established

infrastructure 80% of online shoppers trustonline banking source: Forrester Research

source: eMarketer

North America in Millions

Online Bill Pay Online Banking

120

100

80

60

40

20

02002 2006 2009


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Small Business Service

Small business and SOHOs bank online, shop online, and repeatmore than the average consumer.

eBillme for SB and SOHOs. Cash payment option for Online and Call Center purchases No Credit: SB with no or limited credit can purchase without the use of

personal credit cards

Control over purchases: Managers now have control over thepurchasing processes with easy integration to accounting software IT Shops Manager Approves Controller Pays Books Updated


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eBillme Business Users


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eBillme User Experience


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eBillme at Checkout

Fast - Secure Checkout No need to enter personal financial numbers

No applications No pre-sign up required No authorizations No declines


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Business Submits Order

Business submits the order confirming that they selected eBillme andintend to pay eBillme for their order using online banking


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Order Confirmation

Order is complete

Payment instructions appear on merchants order confirmation page

eBill arrives simultaneously by email, forward eBill to accounting

Pay eBill at ANY US bank, credit union, or bill pay portal that offersonline bill payment


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Bill B P i S i


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Copyright 2007 MODASolutions Corp. All Rights Reserved.Copyright 2007 MODASolutions Corp. All Rights Reserved.

eBillme Buyer Protection Service

Merchant BenefitsMerchant Benefits

New Premium ServicesNew Premium Services NO chargeNO charge

Increase Sales and Repeat OrdersIncrease Sales and Repeat Orders

Enhance Customer SatisfactionEnhance Customer Satisfaction

Reach New CustomersReach New Customers

Covert Price Sensitive and HesitantCovert Price Sensitive and HesitantShoppersShoppers

Price Protection : Get the bestpossible price

Return Guarantee : Provides amoney-back guarantee

In Transit Protection : Protectsfrom loss, theft, or damages that

may occur during shipping Payment Protection : Safeguards

against unauthorized transactions

A comprehensive package ofconsumer protection services.

Offers peace of mind with every

purchase.

R d i M h O i l C


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Reducing Merchant Operational Costs

No chargebacksNo NSFsNo fraud liability

No extra fees No up front fee No monthly fee No charge for refunds No charge for reporting No charge for exception handling

Reduce talk time in the call center

Reduce checks and manual processingReduce processing costs: eBillme fees rangefrom 1 2% per transaction

Costs

Bill D li R lt


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eBillme Delivers Results

Very popular

with a large number of consumers who consider online shopping a risky endeavor.

Don Cohen, Managing Partner, Tool King

The 40% increase in AOV is staggering, and the cost savingshave been significant .

Mark Crary, Dir. Of Marketing, pcRUSH.com

Our average order values have skyrocketed

compared to our other payment options.

John Congdon, CIO, bowlingball.com

60% Transaction Cost Savings

20% AOV Increase

13% ROR

We implemented eBillme as a customer retention solution and have seen a 6.2%

adoption rate . Dean Bellone, Founder, CompSource40 Hour Implementation

E er one Wins ith eBillme


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Everyone Wins with eBillme

Small BusinessesSecureConvenient and familiarNo costsAlternative to credit cardsAccounting integration and controlNo prior signup requiredBuyer Protection

MerchantsIncreased salesDecreased costsOptimized customer satisfactionGuaranteed fundsZero liabilityLeverage Online Banking userbase

eBillme at your Checkout


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eBillme at your Checkout

Cash Payment Options for

Small Business

Questions and Follow up


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Questions and Follow up

Karen WebsterMarket Platform [email protected]

Lesley PurtelleBillme/ [email protected]


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