Wireless carriers are trying to push more consumers into using their bank accounts or debit cards when enrolling in auto payment programs, instead of credit cards, because the costs of the processing credit card transactions are so much higher than the other forms of payment, according to a published report.
T-Mobile, for example, is requiring customers to update their payment information to use debit cards or bank accounts if they wish to continue receiving a $15 discount for enrolling in its AutoPay program. AT&T, meanwhile, is lowering the discount for customers using credit cards for their AutoPay accounts, to $5 per month from $10. Both carriers are following the lead of Verizon, who announced a year ago that customers needed to link a bank account or debit card to their account in order to be eligible to receive a $10 monthly discount when enrolling in its AutoPay program.
The carriers are looking for ways to improve their bottom lines, analysts said in the report. Having consumers use their bank accounts or debit cards can save carriers money by not paying interchange fees to the credit card networks. A debit card interchange fee is $0.21 plus $0.01 for fraud costs and five basis points, while a credit card interchange fee can be as high as 1.8% of the amount being charged. On a transaction of $100, that means carriers could be paying as much as $1.50 more to process a credit card transaction than a debit card transaction.
Ultimately, taking a payment via whatever means a consumer has is preferable to not taking a payment at all, but it’s interesting to note just how close companies are scrutinizing every aspect of their transactions in order to save whatever money possible.
