Online Payment Fees Anger Utility Customers

By Segal, Dave | Honolulu Star - Advertiser, January 16, 2012 | Go to article overview

Online Payment Fees Anger Utility Customers


Segal, Dave, Honolulu Star - Advertiser


Clint Abe, a consumer goods sales representative, lives paycheck to paycheck.

With finances tight, the Kailua resident is upset that Hawaiian Telcom would charge him a monthly fee of $1.95 - the equivalent of $23.40 a year - for each one-time online payment he makes for his land-line and Internet services.

"Why should I as a consumer, using the Hawaiian Telcom system, be charged for the privilege of paying my bill online?" asked Abe, who wanted to make an electronic check payment. "They can't show me that if I put a check in the mail, it costs them less to process that payment as an online bill pay."

Abe, who said he recently complained unsuccessfully to a Hawaiian Telcom customer service representative, isn't alone among consumers nationwide who feel they're being nickeled and dimed by so-called "convenience fees."

About three weeks ago Verizon Wireless customers protested a plan by the telecommunications provider to charge $2 for every payment subscribers make over the phone or online with their credit or debit cards. More than 95,000 names were collected in an online petition against the fees, and Verizon Wireless, the nation's largest cellphone company, dropped the fee the following day.

Last year Bank of America dropped a plan to charge customers $5 a month for using their debit cards following a similar customer backlash.

In Hawaii the picture is mixed with HawTel, Hawaiian Electric Co., Kauai Island Utility Cooperative and Hawaii American Water, which provides sewer service to Hawaii Kai, charging customers a fee for one-time online credit card and electronic bank payments.

Oceanic Time Warner and the Hono­lulu Board of Water Supply, on the other hand, charge no such fee.

"I don't think it's a good idea," Oceanic President Bob Barlow said. "I'm assuming companies are trying to cover every cost possible, but customers don't need another charge."

Is it fair to charge customers who opt to make one-time online payments and not charge those who mail in a check, pay in person or use automatic bank account deductions?

Many companies say there is no issue with charging for such payments since there are several methods, such as mail, office payments and automatic deductions, that involve no cost to the customer.

"This is a standard practice in the electric utility industry nationwide," said HECO spokesman Peter Rosegg. "As a regulated utility, we must control our operating costs and do our best to ensure fairness to all of our customers. Waiving credit card fees would result in higher operating costs, which would ultimately end up being paid through electric rates by all customers, regardless of whether they use credit cards to pay their bills or not."

In many cases companies have outsourced one-time online payment processing to third-party vendors who charge convenience fees. Those fees usually are kept by the vendors or split with credit card companies, and are not retained by the businesses who contracted with them.

Atlanta-based Chartwell Inc., an information provider that helps utilities improve customer satisfaction, found in an August 2011 study that 84 percent of the 41 utilities surveyed use vendors for card payment acceptance, and more than half charge for those payments. Furthermore, it said more utilities are moving from fee-free to convenience fees.

Third-party vendor fees ranged from $1.50 to $5.95 per transaction, with the amount going higher if a customer's bill exceeded a certain dollar figure, such as $300, the study found.

"Utilities will look to third parties to accept payments because the utilities cannot work the card acceptance fees into their rates, nor are they willing to eat the costs," Chartwell said.

Utilities pay about 24 cents, on average, for a paperless transaction by electronic means, according to a separate Chartwell study. If the payment is with a credit card, the company - MasterCard, Visa, etc. - will charge as much as $1 per transaction. …

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