Credit Card Recurring Monthly Billing Capture
-- Financial Impact and Customer Retention Analysis
On average, less than 20% of Service Provider customers in the Broadband, Internet, Utility, Telco, and Cable industries pay their monthly bills via automatic Credit Card payments. Historically, this has not been a service that Service Provider's heavily marketed to its consumers due to the perceived high cost of this payment type compared to other traditional methods, such as payment by check.
Service Providers that work with Patria better understand the type of customer (including long term value and overall profitability) that pays via a Credit Card on a recurring spend basis versus other forms of traditional payment.
Critical/Key Findings:
The following are some key observations from the profile comparing customers that pay with a Credit Card to customers that pay their monthly billing via checks.
- Credit Card paying customers have higher average monthly billing amounts.
- Conversely, customers paying via check fall into the category of a ‘less service user’, often at half the revenue rates of Credit Card payers. This is primarily due to the higher incidence of advanced products in the recurring payment group.
- Credit Card paying customers that are cable customers are much higher users of Internet services than other subscribers.
- A higher percentage of Credit Card payers have advanced video products.
- Credit Card payers tend to be younger, with the age group 26 to 35 indexing higher than average.
- Household income for Credit Card payers is significantly higher than households paying via other methods.
- Customers that use Credit Cards as a form of payment have a larger proportion of households with advanced educations than customers that pay via other methods, with both College and Graduate School indexing higher than average.
- Credit Card customers are more capable and apt to use more services and can afford to pay for these services by using these forms of payments.
Retention Rate Findings:
- Credit Card payers are less likely to attrite than customers that make their payment via other methods.
- After controlling for all other significant factors, there remains a statistically significant difference in higher retention rates for Card paying customers.
- The revenue increase far outweighs increased costs associated with processing credit card payments.
Bottom Line:
There is statistically a significant difference in profitability, product usage, retention and cross sell effectiveness when Service Provider customers pay their monthly bill via a Credit Card recurring payment method.
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