BNY Mellon Client Roundtable: Impact of Real-Time Payments in the Utilities Sector

BNY Mellon Treasury Services recently hosted a client roundtable focused on billing and payment modernization in the utilities sector (power and water utilities). Attendees represented American Water, Con Edison, and National Grid.

Carl Slabicki, Director, Immediate Payments, BNY Mellon Treasury Services led a vigorous and highly engaged discussion of Real-Time Payments (RTP). RTP can help solve payment inefficiencies in ways that greatly benefit utilities. BNY Mellon was the first bank to originate an RTP payment, and is now the first bank to enable Request for Payment (RFP) messaging.

RTP Request for Payment messages allow for the immediate electronic delivery of invoice details, desired payment due date, and other pertinent transactional details. The receiver of this message may approve or reject the request before payment transfers. Once the recipient approves the request, payment is immediate, final, and irrevocable. This capability promises to greatly streamline billing and payments for utilities and their business or consumer customers, primarily used for high-volume, low-value payments.

The general consensus among client attendees was that the utilities industry initiated significant investment within their payment and billing platforms during recent years. Additional investment, though continuous, must be selective. Legacy systems, budget constraints, available technology, and vendor capabilities have limited their ability for immediate change. The three main utility company pain points that emerged included: the ability to process urgent receivables (when a last minute payment is made but not applied till the next day and a client's utility is shut-off), uncashed refunds (sending out hundreds of paper checks that never get cashed), and reconciliation of business-to-business receivables across disparate billing systems.

Top of mind among client attendees was how banking partners such as BNY Mellon can provide cost-effective 'added value' during this transitional period. For example, utilities may not have allocated IT budget to build a whole new accounts receivable format. BNY Mellon will do data translation and mapping based on existing channels and data formats so that clients do not have to do it on their own. Until utilities complete a retooling of their customer billing platforms and ERP systems, they'll be looking for cost effective interim payment solutions.

Additionally, client attendees agreed that a low percentage of their clients provide cell phone number and email addresses for billing, creating a barrier to tokenized payments adoption. With tokenized payments, users can send and receive money within minutes using such data rather than bank account numbers or other more sensitive data. The ability for the utilities sector to leverage a tokenized payments platform could help accelerate the ability to process urgent receivables, and would drastically reduce the amount of paper refund checks printed and mailed.

For utilities, RTP and tokenized payments may be the payment experience of the future, but they will not replace current methods (i.e., ACH) anytime soon. While utility CEOs are very interested in customer experience from a holistic perspective, they are still working through the details of how customer transaction processing translates to customer experience. They want to make sure they have a business case. In the meantime, there need to be interim steps, both transitional solutions and ongoing industry championship.

BNY Mellon Treasury Services offers its clients solutions in global payments, trade services, cash management, and foreign exchange. It operates in 36 countries, helping clients optimize cash flow, manage liquidity, and make payments more efficiently in more than 120 currencies. Its services help organizations conduct payment operations, ensure adequate liquidity, and manage risk.

For further detail on BNY Mellon Treasury Services, please visit our website. To speak with a utilities industry expert, contact Chris Fox (christopher.fox@bnymellon.com).