Expanding Payment Options

Consumer preference for payment card usage and electronic bill payment is growing across all industries. Utility service providers are recognizing that expanding payment options can enhance customer satisfaction, improve the bottom line, and provide a competitive advantage in an increasingly ‘plastic-driven’ marketplace. To facilitate this shift toward card payment programs, payment card brands are offering incentives specifically targeted to the utilities sector.

NGPE. What are the factors driving payment card acceptance in the utilities industry?

SC. Consumers are using payment cards increasingly to make their everyday purchases. Online card usage is growing as well. According to Jupiter Research, the number of US households viewing and paying bills online reached 45 million in 2006, and is expected to rise.

Customers now expect the same flexibility in card acceptance and electronic payment options from their service providers, including utility companies. The convenience and security of payment card transactions, as well as the ability to earn airline miles, gifts and other rewards through programs linked to card usage, are among consumers’ reasons for embracing card payments. For utility companies, card acceptance and e-bill presentment and payment offer a powerful tool to keep up with changing consumer preferences, as well as garner customer loyalty, streamline operations, and improve cash flow.

ST. There is a large push from customers for utilities to accept payment cards and provide greater access to billing and payment via self-serve channels. Utilities are constantly looking for ways to improve customer service and satisfaction while driving operating efficiencies, and payment card acceptance fits into this model. To meet the needs of modern day cardholders, utility providers are also expanding their payment practices to include e-billing, as well as recurrent or automatic payments. Innovative payment card brands also currently offer targeted programs with special merchant interchange rates, reduced fee structures and specialized service industry support services as an added incentive.

NGPE. What are the specific benefits of payment card acceptance to utility companies and consumers?

SC. For utility companies, card acceptance programs hold tremendous potential to enhance customer satisfaction, streamline billing operations and attract new customers. Card payments and e-billing offer consumers greater self-service capabilities and enhanced payment options- factors important for customer loyalty and retention. Tailored reduced-fee incentives offered by payment card brands make it increasingly beneficial for utility companies to accept payment cards.

Card acceptance also encourages timely receipt of payment for improved cash flow as well as reduced volume of customer service calls and associated costs. E-billing contributes directly to the bottom line of utility providers by reducing costs associated with paper bill processing. Utility providers are able to reduce costs associated with exposure to bad checks, collections, and disconnect expenses. Recurring or automatic payments are tailor-made options for utilities – which produce the second most common type of recurring bills – and provide guaranteed, timely payments for a stable revenue stream.

ST. Card payments and e-billing options allow utility companies to increase customer satisfaction by expanding payment options, while allowing utilities to reduce bottom line costs. With a streamlined billing and payment scheme, and reduced customer service costs, companies can focus on process and product innovation to remain competitive. Card acceptance can be a valuable differentiator, especially in a marketplace that is evolving from cash and checks toward payment cards.

NGPE. What does the future hold for card acceptance and e-billing?

SC. The incentives for moving toward payment card acceptance and e-billing are strong, with the greatest pressure coming from consumers. The shift toward payment cards is already underway. According to Chartwell, card acceptance in the utilities sector increased from 41 percent in 1999 to 81 percent in 2006. This trend will likely continue as utility providers, and the service industry at large, continue to adapt and expand their payment practices to reflect the changing desires of US consumers.