NORTHBROOK, Ill.-It’s no secret that people don’t like paying bills, so the mobile communications industry is taking part in a nationwide trend that aims to help retain customers by using electronic funds transfer.
Some cellular and paging operators are testing programs that let customers pay their cellular bills automatically, according to Bill Davidson, director of national sales and marketing of ATA Information Systems.
ATA, based in Northbrook, Ill., along with a few other smaller transaction processing companies nationwide, are setting up programs that let wireless customers pay bills electronically by various ways-directly from a bank account or using credit cards.
ATA’s Davidson said electronic funds transfer, or EFT, helps wireless operators retain customers. “It eliminates the buying decision from the customer,” said Davidson, adding the paperwork involved to stop EFT also creates a deterrent.
At the moment, transaction processing companies are working directly with Federal Reserve agencies, credit-card companies and cellular and paging operators, who supply names of those customers who want EFT service.
While a cellular or paging bill can vary from month to month, most customers have an idea how much it will be, according to Davidson.
Plans are in the works that would give companies such as ATA direct access to billing companies. Future options could allow customers to pay their bills using the telephone; therefore, they still would have some control over when bills are paid.
Some cellular operators, including Bedminster, N.J.-based Bell Atlantic Mobile, are investigating a variety of ways to let customers pay for service. “One option includes a method that provides payment up front,” said BAM spokesman Steve Fleischer.
“That could include a plan for customers to buy a card that plugs into a phone worth so much airtime,” said Herschel Shosteck, president of market consulting firm Herschel Shosteck Associates Ltd., of Silver Spring, Md.
Even with an EFT payment plan, the carrier still sends out an invoice to let customers know how many calls were made and the duration of the calls. Customers usually get about 10 days notice before the electronic deduction is actually made.
While customer retention is the main reason to adopt EFT, according to ATA, other factors such as fewer collections of unpaid bills and cash flow predictability for carriers are listed as benefits from the service as well.
“This is a growing trend nationwide, and it is commonly used in the health and fitness industries today,” said Davidson.
Each transaction would cost about 25 cents, according to ATA, depending on the size of the carrier and the number of people using EFT. “That’s less than the cost of a postage stamp,” Davidson added.
Demographics indicate that people are working longer hours, and not only do surveys indicate people dislike paying bills, they also have less time to do it, according to ATA.
About 45 percent of all households in the United States use some form of electronic payment. Davidson said that about 1 to 3 percent of cellular customers are using EFT. “I wouldn’t be surprised to see (personal communications services) do it right off the bat,” said Davidson.
“We have long been a proponent of this type of billing,” said Shosteck. He noted that as customers become more expensive to acquire through system purchases, it becomes more important to keep them on the system. As revenue per subscriber declines, it becomes vital for operators to reduce costs to maintain profitability, he added.
PCS operators will be able to use EFT from the start. “That is one of the few tactical advantages they can bring to the table,” said Shosteck. Existing cellular carriers have been slow to adopt electronic transfers because rapid growth has forced them to put priority on other things such as management information systems and fraud control.
“Electronic transfers are common in other parts of the world. As the industry stabilizes here, I think it will become more common,” Shosteck said.
