Friday, October 22, 2010

Utilities grow weary of siloed payments solutions

Posted by Mark Brousseau

Rising payment processing costs may be catching up to utilities, if this week’s 13th Annual Utility Payment Conference hosted by Dominion at the Hilton Hotel in Richmond, VA, is any indication.

Historically, utility payments were among the easiest and cheapest to process, thanks in large part to the high number of full-pay transactions that included a remittance document with an OCR scan line. In fact, TAWPI’s 2009 Payments Benchmarking Survey showed that the average cost per paper-based remittance payment remained unchanged at $0.15 per item between 2005 and 2009. But the emergence of new payment channels, such as the Web and credit card, has disproportionately “taken out” so-called “clean” transactions, leaving utilities with more complex paper-based remittances. At the same time, utilities must cost-effectively manage this growing number of payment streams.

Not surprisingly, utilities in attendance at this week’s payments conference were keen on finding solutions that would consolidate both paper-based and electronic payment streams onto a single platform. Mario Villarreal, president and COO of US Dataworks, Inc. – an exhibitor at the event – can’t remember a time when utilities have shown as much interest in enterprise payments solutions.

This follows a trend I observed this summer at the Federation of Tax Administrators conference.

“The utility market is clearly thirsting for enterprise payments solutions that provide them with greater visibility, efficiency and consistency in their revenue management,” Villarreal explained.

For utilities, centralized processing is one of the key advantages of an enterprise payments approach. Villarreal says centralized payments processing is especially appealing to utilities that are expanding their geographic footprint; one utility he spoke with at the conference operates in 33 states. With an enterprise approach, utilities gain better visibility into their payments, regardless of their footprint.

Utilities see similar benefits to centralizing the archival of their payments images and data, he adds.

But vendors may be slow in getting the message, Villarreal added. “Most of the exhibitors at the conference are still taking a fragmented approach to automated utility payment processing.” The vast majority of the 38 exhibitors at the Payment Utility Conference strictly offer siloed solutions for payments applications such as remittance, cashiering, remote deposit capture or ACH processing.

In Villarreal’s eyes, that won’t solve the challenge utilities face in their payments operations.

“Until you consolidate systems and apply standard processes and controls across payment channels, you will always be saddled with inefficient and costly payments operations,” Villarreal concluded.

What do you think?

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