The benefits of e-billing

The MasterCard Utility Industry Program enhances the benefits of payment card acceptance within the utility segment. Featuring a reduced fee structure offered in conjunction with specialized service industry support services, the program further extends the benefits and value of accepting MasterCard cards. Payment card acceptance for customer bill payment is mutually beneficial for the utility industry and its customers, increasing customer satisfaction by expanding bill payment options while allowing utilities to reduce bottom line costs.

NGP&E. Why hasn’t it been possible to pay utility bills using a MasterCard credit or debit card until now?

SC. Utility companies make the decision as to what payment programs or methods they want to make available to their customers. Across all industries we’re seeing growing consumer preference for electronic payment. This has allowed utilities to capitalize on electronic bill presentment (e-bill) as an efficient way to reduce costs associated with rendering paper bills and promote recurring or auto payment programs.

MasterCard has worked to establish a program that meets the unique needs of this industry and helps utility service providers leverage payment card acceptance to drive efficiencies and reduce costs by increasing customer self-care and satisfaction.

NGP&E. What are some of the benefits of MasterCard acceptance for utility companies and utility customers?

SC. For utility companies, electronic payment programs hold tremendous untapped potential to enhance customer service, streamline operations and attract new customers.

From the customer service perspective, card acceptance can deliver a host of benefits to utilities such as increased satisfaction and enhanced customer relationships and retention. Research conducted in 2004 by Edgar, Dunn & Company shows that as many as three out of four calls into utilities contact centers deal with account, billing and/or payment issues. By expanding bill payment options and accepting payment cards, utilities can increase customer satisfaction and reduce the volume of customer service calls and costs associated with handling them. Further, card acceptance enables utilities to meet the growing demand for customer self-service. By leveraging electronic bill payment, anytime access to the Internet, and e-statements, utilities can service more customers, improve satisfaction and reduce customer attrition.

From the revenue perspective, card acceptance also directly contributes to the bottom line of utility service providers, by reducing costs associated with rendering paper bills. Statistics from a 2001 Celent Communications study show paper-based billing can cost service providers between $0.70 and $2.00 per statement to process versus $.03 per bill for an electronic payment. Utility service providers can also lower costs associated with processing queries via a call center, which cost an average of $6.62 per call according to the Celent Communications study. With a card acceptance program, utilities are guaranteed receipt of payment in full and on time, resulting in improved cash flow and faster revenue recognition. Utilities can also reduce exposure to bad checks, collections, write-offs and disconnect expenses.

From the consumer’s perspective, recurring payment programs offer many benefits. They give consumers the added convenience and security of knowing their bills will be paid on time while foregoing the added costs and time associated with writing and mailing paper check. Consumers can also take advantage of their payment cards’ rewards programs, earning points, miles or cashback when they pay their utility bills.

NGP&E. How can a company go about accepting MasterCard payments? Are there any pitfalls that should be avoided during the deployment process?

SC. Utility companies wishing to implement payment card acceptance or recurring payments should contact their commercial bank for more information and to see if they offer merchant processing. Companies can also obtain a list of acquirers that offer merchant processing through the referral program that can be found at www.mastercardmerchant.com.

To capitalize on the electronic payment opportunity, utility providers must deliver clear, concise, and consistent messages on their websites, in direct mail and telephone solicitations that reinforce the fact that they accept credit and debit cards for bill payments. This also requires a commitment to customer education, marketing and communication programs regarding the electronic payment options available to customers, including online payments and recurring payments.

NGP&E. What kind of feedback have you had, so far, from users and deployers? And what are your hopes for the program in the future?

SC. Utilities that have already implemented payment card acceptance have benefited from the reduced costs, reduced manual processing, streamlined payment processes and increased customer satisfaction and loyalty. These companies have also become more receptive to new payment options to further increase their efficiencies.

Utility charges are the second most common type of recurring bills, according to a 2005 MasterCard consumer research study. The study also found that while over three-quarters of Americans pay a recurring utility bill, only 37 percent were aware of the option to pay by credit card recurring payment and 45 percent knew they could pay their utility bills with debit card recurring payment. While some utility service providers are taking advantage of the benefits of payment card acceptance, the opportunity to convert utility customers to electronic bill payment remains substantial. MasterCard remains committed to continuing to develop payment processes and programs that drive added value for utility providers and their customers.