Verizon’s New Year’s vow: Cut back on credit cards

Like every operator looking to cut billing costs and buff its green credential, Verizon Wireless (s vz)(s vod) has spent much of the last few years encouraging its customers to move to paperless billing. But now with millions of customers checking and paying their bills online, Verizon is springing a “convenience” fee trap on its unsuspecting wireless customers on Jan. 15. On Wednesday, Droid Life reported Verizon will begin levying a $2 charge on all credit, debit and ATM card transactions processed through its website or via customer care reps over the phone. Verizon confirmed the report Thursday morning.
Credit card transactions cost Verizon money, as the banks charge a fee for every transaction they process. But $2 not only seems excessive; it runs counter to the policy that Verizon and all service providers – whether wireless, wireline, cable or utility – have implemented in recent years: cutting the enormous cost of issuing and sending paper bills and processing hand-written checks. Furthermore, the policy won’t impose the charge on all credit/debit transactions. If you sign up for auto payment, which automatically charges each month your bill to your card or deducts it directly from your bank account, you will avoid the fee.
Verizon’s goal here isn’t so much covering its credit card processing fees as it is driving customers to its more preferred payment methods. Not only is auto-pay the most direct path between Verizon and your money; it allows it to manage the timing of its payments and worry less about customers skipping their monthly bill to clear funds for groceries or a down payment on a Camaro. (s gm)  If all customers switched to auto-pay, Verizon wouldn’t collect late fees. But if a customer is regularly paying late, there’s a good chance Verizon won’t get its money at all without suspending service, so it’s better to avoid that hassle by collecting that money up front.
Verizon could find itself in customer-relations bind, both from a consumer and environmental standpoint. Verizon doesn’t charge a fee if you pay by paper check. So if the policy goes into effect, many customers may switch back to mailed bills, if only for the convenient return envelopes that come with them. Verizon also accepts electronic checks, but a lot more people have credit/debit cards than online banking services. You can also avoid the fee by paying in person at one of Verizon’s stores or kiosks.
Additional fees are never popular among consumers (Bank of America’s (s BAC) now-retracted $5 debit card fee comes to mind), but being forced to cough up $2 for the privilege of paying your carrier is really going to make people mad. And the customers Verizon is going to make angry are probably the ones it can’t afford to peeve. Postpaid smartphone subscribers are probably the biggest users of Verizon’s website payment options, and Verizon is already on rocky ground with those customers this month. This week, Verizon had its third LTE data outage for the month, calling into question its claim of running the nation’s “most reliable network.” Verizon also soon plans to launch its own NFC mobile payments service through Isis. If Verizon charges customers fees to pay their bills with credit cards, are they going to turn their credit card info over to Verizon to enable mobile payments?
Photo courtesy  of Flickr user slgckgc