Fee-Free Credit and Debit Cards: Case Study

This series of articles has explored fee-free credit and debit card offerings by utilities.  Accepting credit and debit card payments by utilities is common, but with convenience fees.  Customer dissatisfaction with paying convenience fees is growing, in a world where most other providers offer fee-free credit and debit card acceptance.

Increasingly, utilities are addressing this customer dissatisfier by proposing fee-free credit and debit card acceptance to their respective regulatory bodies.  And there is growing success in that arena.

One utility that has demonstrated success with gaining approval for fee-free is NiSource. I was fortunate to be able to interview NiSource’s Chuck Shafer, senior vice president of customer service and new business. NiSource, one of the largest natural gas utility companies in the United States, serves more than 3.4 million customers in seven states under the Columbia Gas and NIPSCO brands. NiSource also serves approximately 500,000 electric customers through its vertically integrated electric subsidiary in Indiana, NIPSCO.

The interview with Chuck provided valuable insights on the process of securing fee-free offerings and the experience and learnings from this initiative. The final articles in this series share the insights from NiSource, which now offers fee-free credit and debit card offerings in three states, and are pursuing this service offering across their entire service territory.

What was the motivation for offering fee-free credit and debit card payment?

Our customers. As we listened to the voice of our customers, we heard overall satisfaction with our service.  But we also heard great dissatisfaction with the payment experience.  This spoiled the final piece in the customer experience lifecycle.  Most customers simply do not expect to pay fees to pay people, and when they are forced to their satisfaction takes a big hit. They don’t understand or care why we charge fees.  How they pay for other goods and services sets their expectations, and charging fees violates their sense of fairness.

Consequently, we decided at NiSource to initiate regulatory proceedings to secure regulatory approval for fee-free in their service territory.  

“In 2016, we filed separate residential fee-free payment proceedings in Maryland and Pennsylvania.  We first gained approval in Maryland, and fee-free credit card payments took effect in October 2016.  Shortly after, Pennsylvania secured approval and implemented its residential fee-free credit card payments in December, 2016. Subsequently, we secured approval in Virginia to roll out the same fee-free service in July, 2017.”

Now that you have implemented fee-free, what has the response been from customers?

Positive, as you would expect.  At NiSource, we deliberately implemented with a soft launch without a lot of advertising or proactive messaging to customers. We also did not enable recurring payments out of the gate.  This approach allowed us to understand customer adoption patterns and to understand all the implications.


“As expected, we have seen an increase in customers choosing this channel.  In Pennsylvania, we have seen a 25 percent increase in credit card usage.  This increase is significant, but is much less than the adoption we expected.  Correspondingly, with the adoption of fee-free service, we have seen increases in customer satisfaction in JD Power in ease of paying bills and the variety of methods to pay a bill.

“We believe there is a lot of opportunity for increased customer adoption. But we want to ensure we are positioned to support this service offering. Our plans are to enable recurring payment within the next year. We believe customer adoption will increase with a recurring payment option.”

What was the response from regulators to your proposal to offer fee-free credit and debit card acceptance?

Our regulators in the states where we have advanced this offering understood this was a customer-driven request, but did thorough due-diligence around the costs, the business case, the mechanics of the service and the overall impact on all customers.  Some of the key points we reinforced to regulators is that the convenience fee was one of the biggest complaints from customers.  Our customer demographics are changing with more millennials and generations behind the millennials, many of which don’t even use checks.  And providing fee-free opens us up to other modern payment channels like Apple Pay, Pal Pal and Google Wallet.  We have not built those services yet, but now can provide that in the future.”

 NiSource is to be applauded for listening and acting on the voice of their customers with the fee-free credit and debit card offering. NiSource has developed a strong business case and rational for consideration by regulators. Also notable is the deliberate approach to implementation that has enabled NiSource to successfully offer this fee-free option to customers, while also learning about customer adoption behaviors.  In the final article in this series, I continue with the interview with Chuck Shafer, as he shares lessons learned to date from the implementation.

About the author: Penni McLean-Conner is chief customer officer at Eversource Energy, the largest energy delivery company in New England. She serves on several boards, including the American Council for an Energy Efficient Economy.


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