Utility companies customer service has declined steadily. All of them had a drive up payment window for most of my early life. They gradually began eliminating them in the late 80’s.
Then we had a miserable period where bill paying centers were common. They were usually in dingy buildings and there was always a long line. These were the places that charged people to cash their paychecks. They charged a fee to process utility bill payments. I tried hard to avoid these places and their fees by mailing in payments early.
The 00’s brought payment by phone. Bill matrix is the most common. Eliminates the long lines but we still pay a fee. Currently it’s $2.95.
I continue to mail in my payment and avoid the fees as much as possible.
How did we get from handing a real person, that occasionally smiled, the payment to a fee based electronic system?
I love how these jerks call it a “convenience fee”.
IT’S CONVENIENT FOR THEM. They don’t get inundated with millions of letters with checks to process.
But we pay the fee.
That seems pretty twisted to me.
I will point out AT&T and DirecTV don’t charge for electronic payments. I call them every month and pay be CC.
We pay by check too if it saves us a convenience fee. You’re absolutely right that the convenience is totally for them – it costs them a significant amount to handle all that paper.
I have noticed though that we can pay most of them electronically through our bank (which has never charged us for bill pay) without them charging us any fee. What we can’t do on a fee-free basis is charge the bill to a credit card. Some let us do that, but not our electric, gas or water providers.
Yes, I know they pay a fee to charge to a credit card. In return though they get early payment of the bill and a guarantee that the bill will be paid. Some companies recognize that’s worth a couple percent to them.
They’re outsourcing the processing to someone else. That company charges them a fee. Since they’re a business they pass the fee to the customer. As you’ve noticed, you can still mail in a check.
Whether or not their pricing structure went up, down or stayed the same (when it could have gone up) after getting rid of all the places where you could hand your payment to an actual person, I don’t know.
If you want to see huge fees, my local gov’t uses govpaynow . com. A water bill might have a service fee of five or six dollars. A property tax bill can run you well over a hundred dollars.
I’m all for a business being able/allowed to do what they want, but that really seems over the top.
My guess is that electronic bill payment is still a little new, and the fees were tacked on when it was first offered. Over time, this may diminish as it becomes more common. Much like ATM fees; my local bank doesn’t charge anything for ATM use, but they used to.
Are you using credit and/or debit to pay your bills? I find I can avoid fees by having the payment taken from my checking account using EBT, or electronic bank transfer.
I’ve heard you can pay some utility bills free over the web.
Which makes even less sense.
Payment by phone should be using the same database. It’s just a different interface to create a payment transaction.
I avoid automatic bill payments. I want to be aware of what I’m paying. It would be too easy to forget about bills that pay themselves.
And if they have to handle checks, whether they do it themselves or outsource it, it costs them money too. And probably more money. So why would there be a fee for electronic payments?
Over here (at least IME), no utility company charges more for electronic payment (just paid my electricity bill, in fact). And I don’t remember them ever doing so, as long as I used electronic payments.
Reminds me on the other hand of a credit company that offered me at some point to pay for the “convenience” of not receiving anymore paper statements. I’m pretty sure my bank pulled the same trick when they began to introduce online banking.
Well, the situation won’t change until the OP and sufficient people of like mind ring up and complain to the CEOs of such companies non-stop.
Every day on the hour until they anticipate your calling.
For utilities and government agencies some of the issue is that they can’t simply raise prices. Those are regulated by law or regulation. e.g. by law a driver’s license renewal must be $30, no more and no less. That’s both the amount of money the consumer must pay *and *the amount the agency must collect and supply to their budget. Utility charges are similarly regulated.
So these add-on fees are the only way the agency can collect the money via 3rd party intermediary(ies) and still comply with the law. Meanwhile they still have to provide *some *way for you to pay exactly the statutory $30; they just don’t have to make it convenient.
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From watching my parents pay bills in the early 1960s to today I have never paid a utility bill by going someplace or standing in a line or using a service. the check goes in an envelope that goes in the US mail. I cannot conceive of a mindset that would find paying these bills at a bank or service center more convenient. Yet somehow these systems existed and still exist in some parts of the country.
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I don’t know. My guess, if I had to make one, would be that before, taking checks or charges (that they did themselves) was just part of the cost of doing business. Now, they have an actual price since they’re billed for it differently. On the one hand, it sucks when you see that fee right there, OTOH, it’s nice to know that if you don’t use that service, you’re not paying for everyone else to use it. For example, when you go into a store, like it or not, you are paying for everyone else to swipe their credit card. That costs a lot of money and while some stores play the cash discount/credit card fee game, the vast majority just build that into overall costs and everyone pays for it.
Also, another quick example, I’ve seen several business start outsourcing deliveries instead of doing it themselves. There’s many reasons for it but one that always comes up is that now they know exactly what it costs to deliver something. It might even cost them more, but they have an actual number in black and white that they can work with.
As for who does and doesn’t charge, I’m sure it’s just hit and miss. My utility company, I think, only takes ECH charges. TWC doesn’t charge for any type of online payment.
Honda doesn’t charge, but only drafts from your bank account.
Jeep (Chrysler Capital) will take money from anywhere, but charges a $2.75 Western Union Convenience Fee.
Also, earlier when I mentioned that paying a tax bill online with a credit card can run you over a hundred dollars. I was just looking at the math. It looks like they’ll charge you $120 on a $4000 bill, while that’s still a lot of money, it’s about 3%, not a huge amount over what they’re probably paying in fees to begin with.
I’ve been paying utility bills online since I bought my house in 2005 and I have not once paid a fee for the privilege. The payments come directly out of my bank account, just as if I stood in line somewhere and handed them cash or a check.
I probably logged in the first time in 2005 and saw a notice that said “fee if you use your credit card” and said to myself “I won’t stand for it!” and filled out my checking info instead.
Which brings us around to the second point: shaping consumer behavior.
If they can convince you to permit them to vacuum money out of your checking account then they never receive a payment late. Nor for the wrong amount or with an illegible account number.
That won’t help with people who have no money to pay the bill. But it probably removes 90% of their routine consumer buffoonery. Plus all the costs of them handling paper.
For sure as between 1) them hitting my credit card, 2) me sending them an e-payment, or 3) them sucking money out of my checking account the priorities are clear.
For the consumer #1 is best and #3 is worst. For the agency / utility #3 is best and #1 is worst.
When they’re the ones setting up the fee schedule it’s pretty easy for them to incentivize the behavior that’s best for them.
I realize that banking practices are different up here than in the US, but I don’t pay any service charges for paying my bills online. For those that are set up for it I have them automatically charge my Visa credit card (that way they contribute to my cashback bonus at the end of the year). Those that I can’t do an automatic charge to my Visa as well as my Visa bill itself I pay online through my bank. In all cases I don’t get charged a service charge.
A significant percent of the population doesn’t have banking accounts. While for some it’s become of income tax avoidance (living in the underground economy) for others it’s actually cheaper to not have one. This happens when one doesn’t keep track of their spending or relies on the float–and end up with frequent overdrawn account fees.
In the short term, is it necessarily cheaper for the company to take electronic payments that are “pushed” by the customer? The marginal cost of dumping another envelope into the machine that opens it and sucks out and scans the check can’t be that high, and if you aren’t going to give them the benefits of letting them “pull” the money automatically, maybe they’d prefer that you use the system they’ve already paid for as long as the machines still work.
A number of my local utilities charge a convenience fee. Of the three or four who do, all offer two options: charge a visa/mastercard or direct debit from my checking account. Invariably, they utilities charge a convenience fee for charging a card and do not for debiting my checking account.
This thread puzzles me for that reason. Unless it’s people who don’t or somehow can’t get a bank account, I don’t understand why anyone would pay a fee for electronically paying a utility bill. Even if there are banks which charge for this (never heard of it in US) there are plenty which don’t. We reduced the minuscule expense, and less minuscule hassle of writing and paying for checks and stamps, by paying electronically, no fee, through the bank. I’ve also never heard of a util charging at their end for an electronic payment from a checking account.
It’s not necessarily worth a provider’s while to take a 2% (or so) hit by accepting a credit card at no charge. It’s certainly not worth it just in terms of the time value of money to get paid a little faster where banks still pay 1% or less on deposits. Merchants accept CC’s at no differential on the idea that customers will go elsewhere or reduce impulse purchases if not, not really applicable to a utility. My health insurance accepts CC at no charge…which I take advantage of but I’m not really sure why they do. My util co’s don’t and I’m not surprised they don’t, so I pay electronically out of checking account.
That said it’s not ‘free’ overall to tie up money in a checking account a 0% when you can get 1%+ in best online savings account. There are deals for interest checking accounts but they generally force you to make lots of debit card purchases, losing the CC cash back on those. And one of my online 1%+ saving accounts allows limited electronic bill pay so in theory I could ditch the checking account, pay for everything with CC and pay the CC bill from the savings account. But that’s also jumping through hoops. Bottom line I just don’t understand why anyone would ever pay a ‘convenience fee’ to pay a bill if they have a checking account. Unless they are paying with CC a bill which is due and they don’t actually have the money, but that’s its own problem.
My util co’s don’t and I’m not surprised they don’t, so I pay electronically out of checking account.