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Verizon Adds $2 Charge For Paying Your Bill Online
An anonymous reader writes with this excerpt from geek.com (based on a report at Droid Life) that makes me consider quitting or at least suspending the very expensive service 3G data service I get from Verizon: "With 2012 about to start, it seems Verizon has decided paying your bill online or over the phone is
now worthy of an extra charge. So, from January 15, anyone choosing to pay their monthly bill using either method will incur a $2 charge. Verizon is classing the charge as a 'convenience fee' which translates into them deciding allowing you to pay either online or over the phone is a convenience. They also explain in the FAQ above that the fee allows them, 'to continue to support these bill payment options.' Really, Verizon? When did offering online payments or accepting phone calls from customers get so much more expensive?"
This is completely reverse to what companies in my country have started doing. For a long time companies have started pushing people to use internet billing, and if you still want paper bill then that costs extra (because it really does, with printing and mailing). Sending invoice or auto-billing via internet saves them a lot, so I'm not sure I understand why Verizon would want to do thi.. oh right, more $$$.
Arent online payments actuallt cheaper for them?
They need a small team of highly paid people instead of thousands of people across the country to collect cheques from drop boxes and cash at stores.
If they have 1 person per store to collect cash, wouldnt they have to increase the no. by a lot to make up for the extra load created by this fee?
Anonymous, sic'em!
Wait, isn't Verizon a phone company? And would you likely be making the call on their own lines? Would it be free if you called using an AT&T phone? Sprint? T-Mobile? Is this what they would prefer?
of course it is cheaper for them, that has nothing to do with the fee. Paying online or over the phone is quicker, easier, and cheaper for the consumer, therefore more convenient. If Verizon can leverage that convenience as a premium service, then they will bill for it. There are plenty of colleges and utilities that do this same thing. Pisses me off, but at least with Verizon there is some chance of moving to another company ( in some locations) as opposed to my water bill, which I pretty much just have to suck it up.
These are the things that made AT&T swallowing T-mobile such a bad deal. More competition actually removes this kind of crap. Fewer companies makes collusion easier, and these fees will pop up everywhere.
The fee is waived if you pay by electronic check or auto pay. This only effects last minute payments.
The fee is waived for autopay.
The economy sucks, they want all their accounts on autopay so the phone bill gets taken out before other bills if the customer's money can't pay them all.
Beware of autopay. Once you bill is autopaid you have a lot less leverage in billing disputes.
Cash and cheques don't incur the same fees as online processing, which usually entail VISA/MC/AMEX/etc taking their 2% or more of the transaction in fees. In addition, they are Non Qualified transactions. This is because the card is not present, thus there is a higher likelihood that there could be a charge back, so the processing company charges an additional fee.
I think Verizon is idiotic for adding this surcharge that is so obviously a cash grab, but I would like to dispel the idea that the online transactions are inherently cheaper. They have staff at retail outlets for sales already, so the fixed costs for the rentals are already taken into account.
Don't they charge $5 for that?
It says in the full article that they won't charge $2 if you use an electronic check or autopay. These are probably handled entirely by bank computers. This means that they get your money perfectly on time, Hope you don't notice when your bills go up, and they don't need to pay to keep so many servers going.
The company is charging extra if customers use a service thats cheaper for the company
Doesnt this have a massive chance of backfiring by a large proportion of people actually walking into and clogging up stores to pay their bills in person?
Or are phone bills so high in US that $2 is an insignificant percentage?
My water supplier also charges an extra $2.50 "convenience fee" for paying online. This comes to about 10% of the total bill most months. It's a pain in the ass because the only other form of payment they accept is checks and I don't own a checkbook (I prefer to use credit cards for everything possible... yay cashback).
If a dispute occurs they have your money and you have little recourse. With a credit card payments you can do a chargeback if they take too much. Using your bank's online bill pay gives you positive control, which means you decide how much to pay as opposed to Verizon deciding how much to take.
Never EVER give a creditor access to your bank account. This includes Paypal.
I have mine tied directly to my checking account and payments are done as ACH at no cost to me. Verizon also pushed me toward One Bill and then paperless billing to save the environment, and now they want to charge me $2.00 a month to do their job: I'm sorry, when I enter all the data and submit my bill every month *I AM DOING THE WORK FOR YOU!* It should not cost them a dime for me to submit my bill, directly to their systems, online.
Is it cheaper for them to accept a payment via mail or at the store?
You'll never know. Last time I got a cellphone I demanded the Verizon employee tell me what my bill would be for a normal month. Not the "45 voice + 30 data" but what the number I would actually be billed after taxes, fees, interest, gratuity, and graft. They couldn't tell me. They said there was no way to get that number until the bill was calculated because of the taxes. ATT could tell me within a nickel without any hesitation.
Verizon has been struggling for a long time. If they don't get their activation fees, random fees, roaming charges, and payment fees - they would go broke. It's only fair that we consumers would help a struggling giant in this era where everyone is ditching their cell phones for landlines and carrier pigeons. We pay $35 to have the privilege of becoming their customer, $200 if we want to stop being a customer early - it's only fair we pay $24/year to stay their customer.
NO! Assumptions are what America thrives on! Now I will go back to only reading articles to the point where something makes me angry.
This has nothing to do with how much it costs verizon. Businesses do not charge you based on what their costs are. They charge you based on what you are willing to pay.
Quit arguing over whether or not the charge is justified. It doesn't HAVE to be justified. Either you're willing to pay it or you're not. Somewhere some verizon bean counters ran all the hard math that factors in their actual costs, in terms of providing the service, loss of business, handling angry phonecalls,bad press, etc, and figured this was a net-win, and so they did it. That's all there is to it. You're totally missing the point if you're trying to figure out why verizon is "justified" in making a change to their charges. If you're willing to pay for it, they're justified in charging for it. Nothing else matters in the business world.
I work for the Department of Redundancy Department.
It probably does have a chance of backfiring, but I am sure they know how locked in their customers are, and how unwilling others may be to move. The risk is likely outweighed by the profit, and the bad PR will be replaced shortly by another cell company being even more assholish.
The fee does not apply to either ACH or AutoPay transactions. This leaves credit card payment as the only mechanism which does incur the fee. Verizon can't come out and say that the fee is because you're using a credit card, because the terms between credit card processors (e.g. MasterCard, VISA) and merchants (in this case, Verizon) specifically forbid altering the price if a credit card is used. When you pay a merchant with a credit card, the merchant only gets 97-99% of the price you pay with the card. 1-3% goes to the credit card company. Verizon can accept payment in any of three ways, but one of them costs Verizon more than the other two ways, and they consequently charge a fee. It's not exactly in-line with their costs, but considering what a monthly phone bill for a smart phone costs, it's not grossly far off, either.
"Give away the stone, let the oceans take and transmutate this cold and faded anchor." - Maynard James Keenan
Okay let's dissect this before Slashdot goes apeshit. Per the screenshot on the link:
"A $2 payment convenience fee applies to bill payments made by phone (IVR and rep-assisted) and online (My Verizon and My Verizon Mobile). The fee is waived for bill payments made by electronic check (also referred to as "ACH") and for all bill payments made on accounts that are enrolled in AutoPay with any payment method (credit/Debit/ACH or electronic check)."
Now before I go further, note that some payment options cost more for Verizon than others. Mostly it's due to credit card interchange fees, and not personnel and infrastructure as most people think. Credit card processors love to slam everyone, small and big companies alike, and verizon is trying to maintain margins. Yes they are also trying to discourage people from using certain services by "incentivizing" them to use ones that cost less. I'm not stating to defend this, merely trying to explain how things work.
Now then:
1) payments over the phone are considered "less secure" by credit card companies because there's a human involved. Despite all the huge "this site got haxx0red and lost 100k credit card numbers" stories, most credit card fraud is an inside job where humans get card numbers. They have humans handling multiple things in customer service and I'm sure they have made things efficient enough at this point that someone taking a payment over the phone is not going to hurt their bottom line. What does hurt their bottom line is that "less secure" transaction cost more money to Verizon, thus a $2 fee. It's verizon passing on costs.
2) Doing payments by ACH is basically wiring the money. This passes the cost from Verizon to the customer, because wiring money might cost money with the bank. It might not, but it depends on each bank. Verizon has no real extra cost here.
3) The sentence is convoluted but it seems there is a difference between making a one time payment via verizon's site, and being enrolled in autopay, which autocharges every month. This part I am not as familiar with, but it would seem locking your card number costs less than typing it in once. From Visa's standpoint this is counter intuitive because if a user pays once and presents you with a card and you throw away the number after the transaction is done, it's "more secure" than storing the card and paying it at any time. It's more likely to get stolen if it's stored. I can theorize here that they must be using two payment systems and the autopay system is cheaper all around in interchange fees simply due to volume.
Now I'm not defending this fee by any means, but I am explaining the thought process here. They are trying to incentivize people to use lower cost services due to interchange fees, regardless if it costs them a human being to do so. To me, it's not in a company's best interest to start charging their customers fees like this and they should eat costs as a part of doing business. There are probably better ways to incentivize people.
"All great wisdom is contained in .signature files"
I autopay with my VISA. If I need to dispute, and VZW wants to argue, I call my bank, and they handle it. Done it before.
Just another ignorant American.
Did I miss Ticketmaster buying out Verizon or something? Or maybe companies just don't hire competent marketing/planning folks anymore...
It is illegal in some U.S. States to charge more for a product or service if the buyer is using a credit card. Also, it is a violation of the merchant agreement with Visa, MasterCard, and American Express. This policy at Verizon is essentially a surcharge for payment via credit card. If one uses cash (cheque by mail, or ACH bank transfer), then there is no fee.
If one pays with credit card, then there is a "convenience fee" (surcharge). I suppose that their legal department could argue that they provide the Auto-Pay option for credit-card users to avoid the surcharge, but it remains debatable.
It certainly is not customer friendly. A more friendly way to cover their credit-card fees is to make the higher rate the standard price, and provide a discount for cash payments (cheques and ACH).
Here in France direct transfer is actually safer in that respect than CC, because chargebacks are even easier to obtain (IIRC a mere phone call as opposed to written complaint, and a longer grace period). This is mostly because creditor-issued transfers have stringent specs, it's open only to established businesses (utilities mainly), and if they don't respect the charter (i.e. delay in chargebacks, abnormally large amounts ...) their authorization can be pulled in a matter of days.
New York State General Business Law Section 518: Credit card surcharge prohibited.
No seller in any sales transaction may impose a surcharge on a holder who elects to use a credit card in lieu of payment by cash, check, or similar means.
Any seller who violates the provisions of this section shall be guilty of a misdemeanor punishable by a fine not to exceed five hundred dollars or a term of imprisonment up to one year, or both.
I want peace on earth and goodwill toward man.
We are the United States Government! We don't do that sort of thing.
The credit card companies don't want merchants to add a surcharge for credit card payment. Calling it a "convenience fee" and then "waiving" it for ACH payment is a way for merchants to circumvent these contractual restrictions, much as some gas stations give a discount on gas purchased with a gift card (and gift cards must be paid for with cash or EBT card).
Ever try to pay a parking ticket or some other municipal fee online? They will charge you a "convenience fee". My guess is because they have to pay the credit card companies something.
My guess is that will eventually change when an older generation dies off or gets online. An efficiency expert will notice that they are employing staff to handle paper based payments........for very few payments. At that point they will encourage people to pay electronically. Probably by charging a fee for paper based payments.......the way my car insurance company does.
I know it seems like it should be cheaper for Verizon to accept electronic payments, but I once worked for the company that ran their web application servers. Verizon has outsourced that job. The convenience fee likely goes to the outsourced company.
My water bill incurs a $2.95 "convenience fee" as well, and that goes to Western Union. They run the website and transfer the money. For that, they get the $2.95 per customer per payment.
The company is happy because they don't have to process the payments, run the app servers, or pay for the service. The provider is happy because they get all this money for $0 marginal cost. The customers get the shaft and don't complain loudly enough.
What is the incentive to go paperless it saves them money no postage, no printing the bill, no stationary needed and less employees needed. This is like a convenience fee they are double dipping on the service they are already making money on. Even if you payed with a credit card on line they are still saving money. They are saving money and making more.
http://www.thetechnologygeek.org
Then, just after the bill's due date, go online again and disable the recurrent payment.
Repeat next month. This will get the message across loud and clear.
Exactly right and incredibly wrong at the same time: the merchant raises everyone's price. And typically the card companies contractually don't allow the merchant to differentiate price based on payment method. If that across-the-board raise (say, 0.25%) is less than the cash-back bonus (say 1%), then congratulations, the card holder is making all the other suckers who paid in cash pay for his bonus. (Though he is only getting some fraction of the advertized %.) So in the end the rewards transfer wealth from other customers who's reward is zero (or even just below the average) to those with better rewards programs.
"You saved 1968." - Ms. Valerie Pringle to the crew of Apollo 8