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Multi-Sourcing Payment OptionsA Case Study
Bill Dow
Senior Project Manager
Arizona Public ServiceOctober 17, 2007
Agenda
A little about APS...
Current payment programs
Costs and Benefits
Q & A
A little about APS…..
• Investor owned utility held by PinnacleWest Capital Corporation
• Covers majority of Arizona and shares the Phoenix valley with SRP
• Customer Base is 1,000,000+
• Arizona is a semi-deregulated market
Technology Objectives– Provide Multiple Payment Options– Improve Customer Satisfaction– Manage Costs
Deployed Options & Technologies– Web– Automated IVR phone system– Integrated C-Store kiosk network– Electronic Data Inter-exchange – EDI– Automated File Transfer Protocol– Office Cashier System– Authorized Walk-in Payment Stations– NCO Credit Card Processing
Payment Sources
Electronic– Web site aps.com– IVR automated phone system– Integrated C-Store kiosk network– Electronic Data Inter-exchange – EDI– Automated File Transfer Protocol w/ACH Record– NCO Credit Card Processing– SurePay & AutoPay– CheckFree
Walk-in– 30 Local Offices – Authorized Payment Stations
Central Payment Processing - Mail & Lockbox
Payment Sources2006
E lectronic47.7%
Offices5.4%
Mail41.7%
Pay Stations5.1%
Payment Sources 2007
Electronic47.9%
Mail39.2%
Pay Stations2.6%
Offices10.4%
How does this compare to Industry Standard?
Payments by Channel:APS Industry2
Mail or CPP 39.2% 67.9%
Offices 10.4% 12.6%
Automatic Bank Debit 12.2% 8.6%
Web Payments1 17.5% 6.9%
On-line 3rd Party 10.1% 6.6%
Walk-up Pay Stations 2.6% 6.4%
IVR or Telephone 5.1% 3.9%
EDI 0.7%1 Includes AutoPay, aps.com, and kiosk payment2 Chartwell’s Guide to Bill Presentment and Payment 2007
$0.00
$0.50
$1.00
$1.50
$2.00
$2.50
$3.00
Mail orCPP
Offices Surepay WebPayments
NCO CheckFreenon e-Bill
CheckFreee-Bill
Walk-ins IVR orTelephone
EDI
2006 Costs per Payment Channel
Average estimated cost of customer service, by contact channel:
?
How does this compare to Industry Standard?
Benefits to APS by ChannelElectronic
– Ease of use– Low cost– Availability
Credit Card Processing– Customer Convenience– Lower cost to APS
Walk-in– Customer Convenience
Central Payment Processing – Mail– Customer Convenience– Bulk Processing
Customer SatisfactionElectronic - Highest level of satisfaction
– Convenience and access (24X7 in most cases)
Credit Card - Lowest level of satisfaction
– Cost of Service– Limited Card Options
Walk-in - Medium
– Wait times– Locations– Get Receipts
Central Payment Processing – Medium
– Slow or late delivery – Check or Money Order writing– Pay all bills at one time
Where Discussion is beginning to heat upWhere Discussion is beginning to heat up
Walk-in Pay Stations and Pre-Billers The Players
Walk-in:• CheckFreePay • IPP• MoneyGram• Western Union• ACE• Pay-O-Matic• E-Money• Global Express• Fidelity Express Prebillers:• Incomm• Pre-Solutions• ??
Walk-in Pay Stations and Pre-Billers
The issues…• The Prepaid and Postpaid walk-in bill payment market
is very fragmented with the largest player controlling less than 13% of the market
• Five types of competitors in the walk-in bill payment space:– Bill payment companies– Money transfer companies– Wireless phone top-up providers (Prepaid)– Money order companies– Check cashers
• Prepaid bill payment market is outpacing Postpaid
Where Discussion is beginning to heat upWhere Discussion is beginning to heat up
The Players• Visa• Master Card• NCO• PayPal• BillMatrix• ??
Credit Card Payments:
Where Discussion is beginning to heat upWhere Discussion is beginning to heat up
Credit Card Payments
The issues…– Transaction fees – Impact to other primary payment channels – Charge-back activity– Back-office support needs to manage and interface with
vendors– Impact to call center – Promoting this payment option to customers– Regulatory involvement (are costs recoverable; is it viewed as
subsidization)– Payment due dates --- i.e. shorten the number of days to
improve days sales outstanding (DSO)– In-house versus third-party biller– ??
Where Discussion is beginning to heat upWhere Discussion is beginning to heat up
Kiosks and Kiosk Networks
The Players• TIONetworks• EPOS• ChoicePay• IPP• ??
Where Discussion is beginning to heat upWhere Discussion is beginning to heat up
Kiosks and Kiosk Networks
The issues…– Payment Methods (Cash, Check, Credit/Debit
Card)– Costs
• Customer paid vs. Company incurred• Per payment method vs. single fee
– Other payment options available– Real-time, batch, or combination– Charge back processes & costs– Regulatory involvement– ??
Q & A
