In the EBPP market, payment processing is one of the most complex parts of the sale. For most IT shops, the solution is to use a third-party payment service provider to handle the dirty work.
A number of different types of electronic payment service providers are in business, including biller-focused, commerce-focused, and payer-focused providers. The biller-focused providers should continue to dominate the market for e-billing, with the commerce-focused providers playing a more limited role. Many of the payer-focused providers are beginning to add merchant- and biller-focused offerings to their arsenals, but it remains to be seen if a significant percentage of the market will use such services for mission-critical B2B payments.
Finally, with so many players in the market, consolidation is likely. Considerable consolidation already exists in the biller-focused market (led by CheckFree), and it is expected to continue in the other markets as well. Ultimately, electronic payment system services will become a commodity offering. The vendors that remain will be differentiated by the value-added services they offer. In addition, as standards emerge and gain acceptance, increased commoditization should reduce switching costs.