Visa USA launches effort to expand card acceptance at utilities

SAN FRANSISCO, Nov. 10, 2004 — Visa USA announced that it will launch a multi-pronged campaign to expand card acceptance at residential utilities companies. To develop this next frontier in bill payments, Visa will offer a reduced incentive fee structure, address consumer convenience fee barriers, demonstrate how utility operation expenses can be curbed through acceptance, and provide specialized support services.

“Visa’s efforts to grow acceptance will reduce operating expenses for utilities, bolster financial institutions’ card volume, and provide consumers with another convenient place to use a payment card,” says Diana Knox, senior vice president, Visa USA. “The utilities segment represents a $177 billion opportunity for electronic payments. Growing bill payments on payment cards is a tremendous business opportunity for everyone in the payment channel, and we expect that our efforts to open the utilities space will drive acceptance and card usage.”

A key component of the Visa effort is the creation of a new fee structure that provides greater incentives for utilities to accept payment cards, while encouraging a reduction in the number of utility merchants that charge convenience fees on Visa card transactions. Effective April 2, 2005, a new, lower interchange reimbursement fee program for consumer card transactions will be adopted for the Acquirers of utility merchants that do not charge convenience fees to consumers paying bills with Visa payment cards.

“Every industry is unique and the utilities segment has some particularly complex challenges,” says Knox, citing that the industry is highly fragmented geographically and utilities may be regulated, often imposing convenience fees on cardholders wanting to use payment cards. “We’ve worked to develop solutions that will add value and, through card acceptance, help the segment improve customer service, reduce expenses, and streamline operations.”

With Visa, utilities are guaranteed payment and can reduce expenses. Visa research with billers that accept cards indicates that:

* Payments with cards post 72 percent faster than payments made with checks

* Delinquency rates on accounts paid with cards are over 20 percent less than accounts paid by check

* 5 percent fewer payments require exception processing

* Up to 25 percent fewer customer service calls are reported per customer

Additional services that Visa will provide to utility companies include:

* Visa Account Updater (VAU), a service that automates the process of updating a Visa cardholder’s account information when a card expires, is lost, or stolen. VAU can help utilities increase customer satisfaction and reduce card declines

* A return on investment estimator that easily helps merchants evaluate the benefits of card acceptance

* Technology assistance to help utilities accept cards

* Marketing materials and programs to help merchants promote bill payment services to consumers

The utilities segment, which grows at approximately 4 percent annually, is already beginning to see the benefits of card acceptance. This is underscored by the increasing Visa sales volume on bill payments, particularly in the utilities segment. In the four quarters ending September 30, 2004, bill payment transactions on Visa debit and credit cards totaled $66 billion, a 24 percent increase over the previous four quarters. Visa’s volume in the utilities segment increased 42 percent during the same period.

Today, Visa represents approximately 2 percent of all utility bill payments. However, Visa expects that number to grow as more and more utility service providers come to understand the value, convenience, security, and customer satisfaction that Visa card payments bring to their business.

About Visa [ ]

Visa is the world’s leading payment brand and largest payment system, enabling banks to provide their consumer and business customers with a wide variety of payment alternatives. Nearly 21,000 financial institutions worldwide rely on Visa’s processing system, VisaNet, to facilitate $2.5 trillion in annual transaction volume with virtually 100 percent reliability.

Cardholders in more than 150 countries carry more than 1 billion Visa-branded cards, accepted at millions of locations worldwide. Within the United States, nearly 14,000 financial institutions issue 450 million Visa cards, accounting for more than $1.1 trillion in annual transaction volume. Visa offers a trusted, reliable and convenient way to access and mobilize financial resources – anytime, anywhere, any way.

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