JULY 2008 UPDATE => for my latest posts on Bill Express, click here.
Bill Express (ASX code – BXP) has unleashed a firestorm of anger among newsagents, its retail network, by removing a long standing marketing subsidy making the relationship loss making for many. The subsidy was removed prior to Bill Express advising newsagents.
The Bill Express action risks newsagents turning off the service and the company being without its retail network. This would upset biller partners as well as telcos such as Telstra, Optus and Vodafone who rely on newsagents to sell recharge through the Bill Express / newsagent relationship.
Some newsagents are calling for a national boycott of Bill Express, some have already stopped accepting bill payment through Bill Express and some are researching possible legal avenues – several having met with lawyers already.
Removal of the marketing subsidy is a high risk strategy by Bill Express. They knew it yet they proceeded. They were told prior to the announcement how newsagents would react yet the proceeded. My assessment is that they chose the lesser of two evils, they chose to save their cash.
In 2003, Bill Express was a small start up in need of capital and a retail network. Newsagents provided both on the promise of shared profit. 3,500 signed up – committing to leases valued at $25,000 each, taking the financial risk and unlocking around $87.5 million in free capital for Bill Express. I was skeptical and arrived late at the Bill Express table. In hindsight, my skepticism was well placed as were the tough questions put by some in the industry.
But that’s history now, newsagents signed up, we delivered the retail network and capital to Bill Express. We signed contracts which are difficult to terminate. Thanks to the withdrawal of the marketing subsidy, we are burdened with around $3,000 a year more in bottom line costs. This is our reward for our extraordinary support. Bill Express, in the meantime, has added $875,000 a month to their bottom line by removing the marketing subsidy.
It is easy to see the winner in this. But it was always going to be so. Bill Express was clever to spin the impression that the subsidy would remain while always knowing that it would end.
It is instructive to break down the four-part Bill Express offer: The bill payment side is loss making; the in store advertising screen system XIP media is a failure; the BOPO debit card is, well, very slow at getting off the ground. Bill Express, as part of their spin to newsagents this week, uses an example showing I can make money if I sign up one new BOPO customer every day. I currently sign up, on average 1.5 a month. One a day is a huge stretch for something with slim margins and a high labour cost; the Dialtime phone recharge component is the only money making aspect for newsagents. However, what we make from this is diluted by the now chunky Bill Express fees.
The numbers put to newsagents by Bill Express this week to show how they can make money are not being believed. Indeed, they make matters worse for Bill Express as they show an organisation out of touch with its retail network.
Recovery from the loss of faith among newsagents looks insurmountable. I wonder at what point Bill Express will have to make an announcement to the ASX about this.
I am conflicted in the Bill Express matter. Seven months ago, I and my team at Tower Systems started work on eziPass, a software product which competes with Bill Express. We developed this product and exclusively integrated it with our newsagency point of sale software. We have also developed a stand alone version which will be available in a matter of weeks free to all newsagents. Up to a week ago, 220 newsagents had signed up with eziPass. Sign ups have increased considerably since the Bill Express announcement this week.
While eziPass competes with Bill Express, my work and that of Tower Systems is pro-bono for newsagents. Neither I nor Tower Systems nor any business assocoiated with me makes money from eziPass. I know that by not taking a cut I was able to maximise the return newsagents achieved from selling phone recharge, attraction tickets, tollway passes and the 300 products through eziPass. This is why many eziPass assessible products have a better margin for newsagents.
While eziPass benefits from the difficulties in which Bill Express finds itself, Bill Express alone is responsible for its problems. It is responsible for promises made on its behalf to newsagents, the failure of the in store advertising screens, the slow uptake of BOPO and the now high cost of its old bill payment technology. eziPass is the smarter alternative. No expensive baggage. No capital outlay. No monthly fee. No onerous contract. No special computer hardware. There are fewer middlemen sharing the pie. It is integrated with point of sale for all 1,450 Tower newsagents and available from April for non Tower newsagents. Free.
I am pleased to be able to offer newsagents an alternative to Bill Express – for many it offers an attractive parachute.
The wrath expressed by newsagents over the last 48 hours is unlike anything I have seen before. They are angry and upset – with justification I would note. I am surprised that Bill Express has remained silent. It’s as if they are resigned to taking a hit because of their decision and that they’d prefer to weather this than reinstate the subsidy. Cash is king I guess.
Beyond the public anger being vented, some newsagents have sought legal advice on action against Bill Express over the removal of the subsidy and misrepresentations surrounding the benefits claimed prior to them signing up for the service. The problem for newsagents is the Bill Express contract many signed. It requires notice six months prior to the end of the agreement that a newsagent does not wish to roll over otherwise it is automatically renewed. Of course, most newsagents have not given such notice and have automatically renewed contracts.
My view is that the Bill Express contract will need to be tested in an appropriate forum. Whether this is tribunal such as the Consumer, Trader & Tenancy Tribunal in NSW or as high as a Supreme Court or somewhere in between remains to be seen. In the meantime, newsagents can vote through their actions by putting as little business through Bill Express as possible.
I can’t understand that your implication is that nobody is having much turnover, but the company last year turned over 1 billion dollars didn’t it? The subsidy was always for a limited time. I have a feeling that has already been extended also? I appreciate the margins are slim, but with prepaid product like phone vouchers etc there is no upfront cost for the stock. A cost for the equipment, sure, but there has got to be someone selling product out there, otherwise where does the billion dolllar turnover happen? I appreciate your conflict of interest disclosure, but I would feel more comfortable if you were operating on lower margins rather than giving it for free. Sounds like the old ATM story, no fees to start with.
Clem, I’ve been working with newsagents for 26 years. When I say this eziPass is a pro bono project that’s what it is today anf in the future. The value of my word is well established. The ultimate commercial benefit for me is that newsagents see that Tower Systems has done something good and more will switch to us. Mark
Clem,
The Bill Express platform is purposly designed as so it is able to change an equiptment rental. The two other products on the marker (of which eziPass is one) don’t require extra equiptment.
While eziPass has chosen to take no profit from the sale of vouchers through their system, I believe the commonwealth bank takes a commission for such sales through their alternative service – thats where the profit comes from.
Many newsagents would disagree that the subsidy was for a limited time – this isn’t just one of two claiming this, we are most likely talking hundreds. But regardsless, i see the former subsidy as a farce to cover up the rediculous terminal rental fees.
Does any release that Tower Systems currently get all their products from Dialtime. If you have ever set up a tower system you need to call Dialtime to get your terminal IDs for you tower.
What Bill Express done is awful for newsagents. I am worse off and they dont care. Newsagents should stop using them. I am.
Anon, sure, newsagents can use Dialtime from within the Tower software. This has been available for over a year and before that Ezipin – the company Bill Express purchased. eziPass is a different offer, without middlemen. Mark
How do you get out of this contract? i asked them & they said i have to pay the remainder of 5 years contract which is 51 months @ $545/month. Where do we stand? Please help!
Chris you need to first up write to the contracts department and make a request. Ask for their response in writing. You could also write to the finance company with the same request. At the same time, get together all the material you have received from them – in case you need to take this further.
Anon,
If you knew anything you would know that Touch networks is the supplier of products for ezypin, not Dialtime.
ezipin was purchased a year orn two back by Bill Express / Dialtime. eziPass accesses its products through Touch. Mark
XPOS (Comm Bank) also accesses its products through Touch Networks.
So does the NAB and St George bank.
There is another alternative out there and it is e-pay.
They are the major supplier to the retailers like Woolies, BP, Nextra & Newslink.
Their approach to supporting retailers is around no/low costs solutions.
What does this mean to the Bopo prepaid Credit Card? I’m Confused
Some people report that BOPO cards can;t be used. I would certainly not put any more money on it.
Got my money just in time on Tuesday
Tired to top up bopo card today. and bill express no more 🙁 so no bopo. its useless
With Bill Express gone, Does that render the BOPO card useless? Will they offer an alternate loading method or are we just going to throw them out? Seems as though Bill Express has no respect for its partners and customers.
My question is how do we stop the payment side legally. As you all kinow dealing with Bill express and their team takes a lot of time. If the system is not working then we should not be paying. How do we stop the direct billing from our bank accounts.
Grant,
To stop BE from direct debiting your account, ask your bank to place a block on them. Your bank will be able to get the account details of who they need to bloack from the last direct debit made by BE.
I have received notification from Technology Business International and Mobius Financial Services that they intend to continue to cllect the terminal rental money on the 26th of the month. They then refer me to my obligationsthrough FAQ.
Irrespective of our arrangements with the failed Bill Express they want their money.
Is there a class action intended?
Has anyone been in contact with a solicitor for advice ?
We all should realise that by stopping the direct debiting and closing bank accounts will not stop these organisations from attempting to get what they see as their money.
We need a strategy to combat them!!
Grant there is a strategy and it has been well canvassed here and by the QNF and NANA. You can register your interest in the class action by emailing spierconsulting@netspeed.com.au.
Mark
is it true that bill express has gone bust if not how can I get records of payment made from bill express. I require this information because I am in dispute with a bill I have already paid and have had to pay it again.