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Multi-Sourcing Payment OptionsA Case Study
Bill Dow
Senior Project Manager
Arizona Public ServiceOctober 17, 2007
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Agenda
A little about APS...
Current payment programs
Costs and Benefits
Q & A
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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
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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
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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
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Payment Sources2006
E lectronic47.7%
Offices5.4%
Mail41.7%
Pay Stations5.1%
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Payment Sources 2007
Electronic47.9%
Mail39.2%
Pay Stations2.6%
Offices10.4%
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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
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$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
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Average estimated cost of customer service, by contact channel:
?
How does this compare to Industry Standard?
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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
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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
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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• ??
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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
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The Players• Visa• Master Card• NCO• PayPal• BillMatrix• ??
Credit Card Payments:
Where Discussion is beginning to heat upWhere Discussion is beginning to heat up
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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
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Kiosks and Kiosk Networks
The Players• TIONetworks• EPOS• ChoicePay• IPP• ??
Where Discussion is beginning to heat upWhere Discussion is beginning to heat up
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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– ??
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Q & A