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St. Louis Area Utilites Partner to Promote Direct Payment

Partnership Marketing Activities Resume

St. Louis area utility and service companies have joined the Federal Reserve Bank to help encourage consumers to use direct payment for their utility bills.

A joint sign-up brochure will be available for eight utility and service companies in Missouri and Illinois, including AmerenUE, Charter Communications, Illinois-American Water Company, Illinois Power, Laclede Gas, Metropolitan St. Louis Sewer District, St. Louis City Water and St. Louis County Water Company.

Several financial institutions in the St. Louis area and some of the participating utility companies are piloting the sign-up form this month.

If the consumer response is good, a new form will go out each year as new utility and service companies join the partnership.

The sign-up form allows consumers to authorize companies to electronically withdraw funds from their checking or share draft accounts to pay bills. Consumers can sign up for direct payment with several utility companies on one form at one time.

How Does Direct Payment Benefit My Institution?

Direct payment not only benefits consumers and utility companies, but it also benefits your organization.

As a receiving depository financial institution (RDFI), direct payment saves you money.

According to one study, processing costs for financial institutions average 5 cents per item for receiving ACH payments, compared with an average of 11 cents to process a check.

A 6 cent savings on each of the thousands of payments that you process for your customers every month can add up considerably.

In addition to cost savings, direct payment improves your service. ACH payment processing is faster and less labor-intensive than check processing, so returns are more timely.

Direct payment also improves your customer relationships because users tend to maintain higher account balances and have longer retention rates with their financial institution than nonusers.

How Do I Get a Form?

Designed as a statement stuffer measuring 3 by 6.5 inches, the form will be available free in limited quantities while supplies last. To place an order, contact Laura Vermillion at the Federal Reserve Bank of St. Louis at (314) 444-8946.

We hope to expand this campaign to other cities in the District. If you have utility or service companies as customers, encourage them to partner with other local businesses and to organize a joint sign-up promotion.

Call your Fed account executive if you are interested in starting this type of direct payment campaign in your area.

We continually look for ways to enhance the efficiency of the payments system. Electronic transactions such as direct payment are more efficient than checks and cash, and increased consumer use can both improve your customer service and increase your profits.

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