As instant payments increasingly become core to the customer experience, the utility industry is shifting toward intelligent, data-driven near real-time payment technology. In many respects, payments act as the utility companies’ metaphorical storefront rather than a back-end function. Utilities can upgrade that ‘storefront’ by helping prioritizing and improve collections, help minimize customer debt and provide near seamless, omnichannel self-service payment options through open finance. Similarly, they can focus on account ownership verification to aid in security and fraud prevention, a crucial component of the customer experience in today’s connected ecosystem. A great payment experience is vital because nearly 90% of businesses see some form of customer abandonment during onboarding due to poor experiences.
Services offered via open finance can also help reduce costs and improve overall payment performance. For instance, paying digitally reduces the cost of processing paper checks and can increase visibility into at-risk customers, helping reduce the number of accounts become severely past due or face service disruption.
Mastercard’s open finance gets to the heart of solving these challenges. Open finance starts with a Mastercard API that retrieves bank details, such as account numbers and routing codes, providing a streamlined, customizable experience for the utility’s customers. Because Mastercard aggregates data from 95% of all U.S. bank accounts and more than four-fifths of all accounts, a broad range of consumers can access their accounts on the network. To help support secure connections, Mastercard verifies the account owner before connecting accounts.
To help avoid potential problems with customer payments, Mastercard offers various services. For example, Mastercard’s proprietary Payment Success Indicator score identifies potential problems making future payments so the utility can work with customers to find the right payment options ahead of time, ultimately avoiding shutoffs and reducing the need for collections. Mastercard’s open finance team helped one large digital bank test various PSI score implementations, resulting in a 30% cut in NSF rates and a 46% reduction in unauthorized returns.
“Our open finance approach brings all of Mastercard and our extensive data network to utilities to transform the old way of doing business into a modern process based on data-driven insights and the highest level of trust and security,” said Nicole Waibel, a vice president at Mastercard’s open finance product management team.
Armed with this near real-time data, utilities can undertake more efficient disbursements, helping to mitigate fraud potential and help facilitate easier account funding transactions, which is designed to be a formula to helpreduce costs and support improved financial outcomes. By analyzing open finance data, Mastercard’s team can provide recommendations onhow the utility might change its processes to further improve outcomes.
Mastercard’s approach can also help increase trust and reduce fraud. One example of of a large financial institution who used Mastercard’s Account Owner Verification checks to identify high-risk transactions for further due diligence or rejection, producing a 60% reduction in fraud and capturing $100,000 in savings within 90 days of implementation.
Utilities do the simple yet vital things that keep our everyday lives running, from keeping our water taps flowing to keeping the lights on. With modern digital tools and data, they can continue to focus on doing that important work, leaving them with one less thing to worry about.
To learn more, watch our Mastercard on-demand webinar on the future of utility payments.
