Have you considered a third party convenience fee?

When it comes to accepting credit card payments, there are two options regarding the fees associated with processing credit card payments. One is to absorb the fees as a cost of doing business and the other is to charge a convenience fee for credit card payments.

In the first case, your utility simply absorbs the cost and your customer only pays the full amount of the bill. In the second case, your customer pays a convenience fee, over and above the amount of the bill, and your utility pays the credit card fees from the convenience fee collected.

Some credit cards, such as reward cards and business cards, incur larger fees than others. Many utilities don’t want to incur the cost of credit card fees and they feel uncertain about charging a convenience fee, not knowing if the convenience fee will cover all the costs associated with accepting credit cards.

Third party convenience fees

A third option is third party convenience fees. If a third party provides your online bill pay or IVR service, such as Logics does with Logics WebPay and Logics PhonePay, the third party processor can charge the fee and your utility still receives the entire about amount of your customer’s bill. In this case, it is up to the third party to pay the associated fees from the amount they charge.

Additionally, convenience fees are not allowed by law in some states. If your utility is located in one of these states and you want to avoid the costs associated with taking credit card payments, third party convenience fees are the solution for you.

In office payments

Obviously, third party convenience fees can’t work for in-office payments because no third party is involved.

But, is there a way to charge a convenience fee for in-office payments?

One solution employed by some utilities is to install a payment kiosk in the lobby and direct customers who wish to pay by credit card to the kiosk. This need not be an expensive kiosk – it can be as simple as a retired desktop computer or a tablet device mounted in a frame so it can’t be stolen. The kiosk is configured to access only your online bill pay site and customers use this to pay by credit card in your office.

A side benefit of your customers using a kiosk in your office is they become familiar with your online bill pay site and may make future credit card payments from home.

Are you considering taking credit cards?

If your utility is considering accepting credit cards and you need assistance determining how best to go about it, please give me a call at 919-232-2320, or email me at gsanders@logicssolutions.com for more information about how a business review could help.

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© 2017 Gary Sanders

When is your real due date…?

When is your due date?

What date do your customers think is your due date?

If the answer to these two questions isn’t the same, you have a problem.

Conflicting due dates

In a sales presentation with a prospect last week, I asked, “when is your due date?” The two billing clerks contradicted each other – one stating their due date is the tenth of the month, the other insisting it is the first of the month.

The reason the second billing clerk insisted it is the first is because this is the due date printed on the bills. However, they don’t consider the bills to be late until the tenth, which explains the first clerk’s answer.

I can assure you, if you publish one due date but don’t charge a late fee until a later date, your customers will quickly catch on and, in their minds, they consider the “due date” to be the later date. Sure, your very best customers will pay their bills by the published due date, but as far as all the rest are concerned, the due date is the very last day they can pay without being penalized.

Grace periods

What purpose is served by offering a grace period between the due date and delinquent date? Absolutely none. Once your customers realize you won’t charge a late fee until the second date, you might as well publish the delinquent date as your due date.

If you offer a grace period, abolishing it is one of the easiest ways to reduce your days of exposure.

Postmarks

This same prospect, in addition to offering a grace period of 10 days, doesn’t charge penalty until two days after the delinquent date. They do this to allow payments postmarked by the tenth to be processed without being charged a late fee.

Verifying postmarks, or delaying charging late fees to accommodate them, is an antiquated process that few utilities take the time to do. Unless you are governed by state law or local ordinance that requires you to check postmarks, there is no reason to do so.

Mailing a check is no longer the only way to pay a utility bill. With options such as bank drafts,  online bill pay and IVR phone payments, your customers have no excuse for not paying by the due date.

Is your office still following outdated procedures?

Is your office still following practices that have outlived their usefulness? Could your office benefit from operating more efficiently? If the answer to either question is “yes”, or if you’re not sure, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could benefit your utility.

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© 2014 Gary Sanders

How can I reduce walk-in payments in my office?

Recently, a customer inquired about ways to reduce walk-in payment traffic in their office. Unfortunately, there are no easy answers to this question because several key factors are out of your control.

Factors impacting walk-in traffic

In my experience, the biggest factor affecting walk-in traffic is the demographics of your customer base. Utilities that serve older or more low income populations tend to have more walk-in traffic than those serving younger or more affluent communities.

Another factor that seems to impact walk-in payments is the location of your office. Offices that are in the central business district of most small or mid-sized cities and towns are likely to have more walk-in traffic than if they were located farther out of town.

But there are a few things you can do that might entice your customers not to visit your office to pay each month.

Bank drafts

Simply put, bank drafts, or ACH payments, are the easiest way to collect payments. You collect your customer’s banking information, create an ACH file, send it to the bank and your billing system creates payment transactions for each bank draft customer. If it’s not that simple with your billing system, it’s time for new software.

Do you aggressively market your bank draft program to your customers? Some utilities ask every new customer if they would like to sign up to pay by bank draft. Have you purchased a life insurance policy lately? That’s exactly how they do it.

Periodic bill inserts is another way to publicize and market your bank draft program. Be sure to include a bank draft enrollment form with your bill insert.

Online bill pay

An integrated online bill pay system not only provides your customers with a convenient way to pay, it also can answer many questions that would otherwise require a call to your office, reducing both walk-in traffic and phone calls. Does it get any better than that?

An effective online bill pay system should provide answers to the questions most frequently asked of your customer service staff:

  • How much is my bill?
  • When is it due?
  • Did you receive my last payment?
  • Can I pay online or over the phone?
  • How does my usage compare to previous billing periods?

IVR payments

Another way to limit walk-in payments is an IVR (interactive voice response) system. Interactive voice response systems provide a way for your customers to pay by phone even when your office is closed.

After all, what have you accomplished if you offer phone credit card payments as a way to reduce walk-in payments and it takes a customer service representative longer to process a payment over the phone than it did face to face?

Convenience fees

Any discussion of credit card payments always leads to questions about convenience fees. Should you or should you not charge a convenience fee?

In my opinion, if you are implementing online bill pay or IVR payments as an alternative to walk-in payments, then you shouldn’t charge a convenience fee. If you truly want to see a decrease in foot traffic in your office, you should do all you can to encourage your customers to pay through other means, including removing any impediment such as adding a convenience fee.

Are you ready to try something different?

If you are interested in reducing walk-in payments, or solving any other customer service issues, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com to learn how a business review could assist you with the process.

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© 2013 Gary Sanders

Automating phone credit card payments

Now that you’re accepting credit cards (you are accepting credit cards, aren’t you…? If not, please read my Issue #4 here) have your customers caught on? If they have, my bet is that you’re now taking more credit card payments over the phone than you are in person. Am I right…?

Is there a problem with taking credit card payments by phone, you may ask? No, not necessarily, but as the volume of phone credit card payments increases, they can become a burden to your customer service staff. Consider the sequence of events of a typical telephone credit card payment transaction…

  • Customer calls to find out how much he owes. More than likely, he doesn’t have his account number
  • CSR looks up the account in the computer, tells the customer how much he owes and when the bill is due
  • Customer asks if he can pay by credit card over the phone
  • CSR answers “Yes, of course”
  • Customer locates his credit card and reads out his card number and expiration date
  • CSR scribbles credit card number and expiration date on a piece of paper
  • CSR takes the piece of paper to the credit card machine at the front counter and keys in the customer’s credit card number, expiration date and payment amount
  • CSR waits for approval and writes the approval number on the piece of paper
  • CSR returns to her desk and reads the approval number to the customer
  • Customer hangs up
  • CSR must now enter the payment into the system and shred the piece of paper with the customer’s credit card information to avoid a read flag issue

In the end, how much time did this entire process take…? Three minutes? Five minutes? Longer? It’s easy to see that as word spreads among your customers that they can pay by credit card over the phone, these few minutes per payment could evolve into a few hours (or more, depending on the size of your utility) on your busiest days.

Is there a better way?

Of course there is – or why else would I be writing about this topic?

Interactive Voice Response (IVR) telephone systems allow the entire phone credit card payment process to be automated, resulting in improved efficiency for your office and more flexibility and security for your customers.

With an IVR phone payment system, your customers are no longer limited to paying during normal business hours – they can call at any time of the day or night to pay. Your customers can also feel safer about paying by credit card since they no longer have to risk giving their card number to another person over the phone. With an IVR phone payment system, they enter the credit card information directly on the phone keypad or speak the numbers.

Staff time drops from several minutes per payment to several minutes per day to import and balance the payment batch for the day.  With Logics’ PhonePay IVR payment system, phone payments are entered directly into a payment batch, further eliminating the need to import a file each day.  All that is required is to reconcile and update the previous day’s batch each morning.

I have compiled a Return on Investment (ROI) analysis that I’ve used for Logics customers to determine if investing in an IVR phone payment system makes sense.  If you are wondering if an IVR phone payment system would be cost effective for your organization, I can prepare the same ROI analysis for you. All you need to do is supply a few variables by clicking here.  I will then e-mail you the completed ROI analysis.

If you have any questions about IVR phone payment systems in general or Logics PhonePay in particular, please give me a call at 919-232-2320 or e-mail me at gsanders@logicssolutions.com.

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© 2011 Gary Sanders