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 to learn how a business review could assist you with the process.

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© 2013 Gary Sanders

Checkout fees – what does it mean for your utility?

Statistics for my blog indicate that the article about convenience fees continues to be the most popular. Apparently, lots of people are searching the internet to learn more about charging convenience fees.

Checkout fees now allowed

If you’ve read my newsletter or the blog post mentioned above, you know that whether or not you can charge a convenience fee is based on how you received the payment.

All that has changed. You may have seen in the news that, effective January 27, 2013, retailers can now charge “checkout fees” for Visa and MasterCard transactions. This is the result of the Interchange Settlement as a result of a class action lawsuit brought by retailers against banks and Visa and MasterCard.

I’m not an attorney, but my research leads me to believe that, in this context, a retailer is any entity that accepts credit cards, including municipalities and utility districts.

Rules for charging checkout fees

If you opt to start charging a checkout fee, you must follow some rules. These include notifying your customers of the checkout fee at your entrance, at the point of sale and on the customer’s receipt. I’ve read some advice that recommends issuing separate receipts for the purchase and the checkout fee.

Checkout fees can only be charged for credit card transactions, not debit card or prepaid cards. The checkout fee also cannot exceed what you are charged to process the credit card transaction, up to a maximum of 4%.

Ten states are ineligible

If your utility is in one of the following 10 states where check-out fees are already illegal, the Interchange Agreement didn’t accomplish anything for you. These 10 states are:

  • California
  • Colorado
  • Connecticut
  • Florida
  • Kansas
  • Maine
  • Massachusetts
  • New York
  • Oklahoma
  • Texas

However, if you are located in one of the remaining 40 states, I believe you can now charge a checkout fee for credit card transactions, regardless of how the payment is received.

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© 2013 Gary Sanders

2012 Utility Fee Survey Results – Part III

Editor’s Note: The 2015 Utility Fee Survey is now complete and you can see the results of that survey here:

2015 Utility Fee Survey Results – Part I

2015 Utility Fee Survey Results – Part II

2015 Utility Fee Survey Results – Part III

This is the last of three consecutive Utility Information Pipelines reporting the results of the Utility Fee Survey. Eighty-eight utilities, from 15 states, ranging in size from 200 to 168,500 active accounts participated in the survey.

The first issue summarized the demographics of the survey respondents as well as water and sewer tap and impact fees. Last week’s issue dealt with delinquent fees and policies. Today’s issue explores the remaining fees.

Clicking on any of the graphs will open a larger image in a new window.

Returned check fees

Of the 88 participating utilities, 86 charge a returned check fee. Returned check fees range from $15.00 to $50.00, as this graph illustrates:

Application fees

In Utility Information Pipeline #10, I wrote about application for service best practices. One of my recommendations was to charge a non-refundable application fee, in addition to any security deposit, to all new accounts. I’m pleased to report that 46 of the 88 utilities (representing 52.3%) responding to the survey charge such an application or administrative fee. These application fees range from $5.00 to $100.00 as shown below:

Meter reread fees

Sixteen of the eighty-eight utilities (or 18.2%) charge a meter reread fee if the customer requests their meter be reread. In many cases, this fee is waived if it turns out the customer was correct and the utility misread the meter. Of the utilities that charge a meter reread fee, the fee ranges from $8.00 to $50.00 as this graph shows:

Meter tampering fees

Fifty-three of the eighty-eight utilities (or 60.2%) charge a meter tampering fee. Six utilities charge the actual cost of repairs or cost plus an administrative fee. The remaining 47 utilities charge a flat fee ranging from $15.00 to $1000.00 as shown below:

Convenience fees

One of my earliest issues last year explained why I believe utilities should accept credit cards. I’m pleased to see that, of the 88 utilities responding to the survey, 55 of them (or 62.5%) accept credit cards. Of the 55 that do accept credit cards, 22 of these charge a convenience fee on at least one form of credit card payments as shown below:

As you can see, six utilities assess a convenience fee for over the counter payments. If you read Utility Information Pipeline #22, you know that, unless you are in a state with specific legislation allowing you to do so, Visa and MasterCard do not allow convenience fees for over the counter payments, so these six utilities are potentially in violation of their agreements with Visa and MasterCard.

The convenience fees charged by these utilities are too diverse in how they are assessed to be graphed, so they are presented here in a table.

Other fees

In addition to the fees that have been described in the three results issues, the survey asked what other fees utilities charge. Below I’ve listed a few of the more creative fees that were reported:

Letter of credit fee

Customers who have moved away often request a letter of credit reflecting their payment history while they were customers. One utility charges a $5.00 fee to provide a letter of credit. Your staff must take time to prepare the letter of credit and send it to the requesting utility, so why not charge a fee for providing this service?

Payment extension fee

Many utilities offer payment extensions to customers who may not be able to pay their bill by the due date. One utility assesses a $5.00 fee per payment extension. Having to pay an additional fee to extend the payment date may well be all it takes to convince your customer to go ahead and pay the bill now. If not, it provides an additional source of revenue when they do pay.

Return trip fee

When turning a meter on, most utilities will not leave the water on if the meter indicates water is running inside the house and no one is home. This requires the utility to make a return trip when the customer is home to turn the meter on again. Several utilities charge a return trip fee to cover the time and expenses involved in returning to the customer’s home.

Same day connection fee

A number of utilities routinely provide next day service for activating new accounts. A few utilities charge an additional fee for same day service and one even charges more for same day service late in the afternoon than they do for earlier in the day.

A special offer

I’m offering a special offer to readers of my blog. If you let me know that you read this here, I will conduct a personalized fee consultation for a 20% discount. That’s $800 rather than the usual $1,000 price for this service.

I will review your utility’s current fee schedule and conduct an in-depth phone assessment to learn more about your fees. You will receive a presentation quality document illustrating how your fees compare with other utilities. Also included will be my recommendations for revising any existing fees and suggestions of new fees you should consider charging. An on-site presentation of the report can also be arranged for an additional fee, plus travel expenses.

If you are interested in this special offer, please contact me by calling 919-232-2320 or e-mailing me at Remember to let me know that you read this on my blog when you contact me.

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© 2012 Gary Sanders

Can we charge a convenience fee for credit card payments…?

If you’ve read past issues of this newsletter, it should be obvious by now that I firmly believe utilities should accept credit cards. If you missed them, please see Issue #4 or Issue #7 for past discussions about accepting credit cards.

So, now that you’ve been convinced to accept credit cards, you may be wondering if you can recoup any of the costs of offering credit cards by charging a convenience fee. The answer is “It depends…”. This issue will help shed some light on the confusion surrounding convenience fees…

If you’ve been reading these newsletters for a while, you’ve probably realized that I have some pretty strong opinions about a number of business practices. The topic of convenience fees is one that I have completely changed my mind about. I used to be of the opinion that utilities shouldn’t charge convenience fees because customers aren’t accustomed to paying a convenience fee to pay by credit card anywhere else they do business.

Having seen how well received Logics’ WebPay and PhonePay have been for several of our customers that do charge a convenience fee has changed my mind. Our largest customer has seen payments by WebPay and PhonePay increase to nearly 10% of their customers and a $3.50 convenience fee has not deterred any of them!

When can’t you charge a convenience fee?

When looking at convenience fees, the first thing to consider is how the credit card payment is being received – what Visa and MasterCard call the “payment channel”. Visa and MasterCard define the “traditional payment channel” as credit card payments received over the counter or through the mail. Without specific legislation in your state giving you the authority to charge a convenience fee, Visa and MasterCard will not allow you to charge a convenience fee for payments accepted via the traditional payment channel.

When can you charge a convenience fee?

Eliminating payments made over the counter and through the mail leaves the following types of payments eligible to be assessed a convenience fee:

  • Phone, with a person answering the phone
  • Interactive Voice Response (IVR), automated phone payments
  • online bill pay
  • Kiosk

How much can you charge for the convenience fee?

The purpose of a convenience fee is to recover the cost of providing alternate ways for your customers to pay by credit card, not to recover the merchant fees associated with credit card payments. Now that I’ve said that for the record, I do realize that many utilities use the convenience fee to recover the cost of merchant fees.

Do the same rules apply to all credit cards?

Of course not, because that would make things easy!

Visa has more stringent requirements than either MasterCard, Discover or American Express. Among other requirements, Visa stipulates that the convenience fee must be a flat amount. The website has an excellent discussion of convenience fees.

Can we charge a convenience fee as a percentage or does it have to be a flat amount?

As noted in the previous section, Visa will only allow a convenience fee that is a flat amount. So if you want a consistent policy for all credit card payments, it seems only logical to assess the convenience fee as a flat amount.

What happens if we charge a convenience fee for all credit card payments?

So, what happens if you’re currently charging a convenience for all credit card payments, including over the counter payments? I am aware of one utility that assessed a convenience fee for in person credit card transactions. One of their customers reported them to Visa. The utility received a very stern letter from Visa advising them to stop assessing the convenience fee immediately or face revocation of their ability to accept Visa payments. Needless to say, they stopped assessing the convenience fee for over the counter payments immediately.

If you have any questions about credit card payments or charging convenience fees, please give me a call at 919-232-2320 or e-mail me at

Editor’s note: As a result of the Interchange Settlement, checkout fees are now allowed for some utilities effective January 27, 2013. Click here to read my blog post about checkout fees.

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© 2011 Gary Sanders