Verizon thinks it’s a good idea to charge customers $2 for paying their bills online using a credit/debit card. Sure, Visa and MasterCard/whoever takes a small percentage off the top of those transactions, but a $2 “convenience” fee is not the answer. I’ll just start paying my bill with a folded up check through good old snail mail. I’m sure they’ll be glad to save the extra few pennies on the processing of that check. I’ll also stop paying early and make sure the payment arrives only a few days before the due date instead of shortly after I receive the bill.

It just amazes me that Verizon thinks that customers don’t notice the extent Verizon goes to to extract every extra penny from customers. Here’s what I’ve seen (to name a few):

  1. New “convenience fee”
  2. Contract billing is actually prepaid. You charge me up front (month in advance) for the service I’m about to receive and then adjust it the next month if I go over my allowances. Good ol’ time value of money calculations at work, eh? I hope you get a better return that I would get.
  3. Charges for automated processes just to become your customer. (Activation of extra phone lines purchased through a 3rd party.)
  4. You don’t give any discount if I “bring my own phone”. You’d charge me the same monthly rate as you would if you subsidized my phone. The best economic decision? Let you subsidize my phone and lock me in for 2 years.
  5. You’re blocking Google Wallet on the Galaxy Nexus because you’re planning on rolling out your own cell phone payment system. You’ve seen the model the credit and debit card companies have and want a slice of it. You’re just a little slower than Google, though, so you choose to block it so potential customers don’t get tied in to their service first. Nice one.
  6. And, of course, any rant about a wireless carrier is incomplete without mentioning that they charge more for text messages than it costs NASA to receive data from space.

The fact that they call it a “convenience fee” is very revealing. It really is more convenient for me to pay with a debit card each month than having them take the money out of my bank account each month. I’ve been a customer for a little over two years and I’ve had a few too many incorrect bills to let them automatically take money out of my account. eCheck? No–that takes forever to post. If Verizon wants customers to use the methods that are cheaper for them, they need to make it worthwhile for customers to do so. A $2 fee on the more expensive methods will do that, but everyone knows what that means: more customers choose the cheaper option and Verizon saves money. Those that don’t pay $2 more. Net effect: customers pay more overall and Verizon takes in even more beyond that (less $$ going to the credit/debit card processors). That’s why if feels unfair to customers–they’re not getting any of the benefit of the cheaper payment methods while Verizon gets it all.

If Verizon did what a lot of gas stations did and gave discounts to those who paid with cheaper methods, people would be happy with the change. Why don’t they do this? Because they won’t get as much money that way. That’s why so many people these days feel corporations are greedy–everything’s calculated for their profit margin, not a symbiotic relationship where customers pay for a valued service and the company does its best to both earn a profit and please customers. In a free market, companies like Verizon would be replaced by those that actually do that. Unfortunately, our ability to utilize the radio spectrum efficiently is limited by our current technology, limiting the number of wireless service providers. We live with a world where we choose our cell phone provider from whichever member of the oligopoly has the best phone when we’re signing up. They all charge essentially the same price. When one prices goes up, they all do. When one member’s service is limited (think data caps), the rest soon follow.

Well, guess what Verizon (and AT&T, etc)? Someone’s going to “move your cheese”. Perhaps Google will come along and light up some of its fiber and roll out some WiMax using “white space” spectrum in some major cities and provide free calling using any Android device via Google Voice (connecting using Google Talk whenever possible to avoid the traditional telephone network). Perhaps more WiFi service providers like Republic Wireless will come along and take larger and larger chunks of your customer base. I don’t know exactly what it is, but your dominance will not last forever. Enjoy it while you can, but the next generation of purchases are a lot more informed, powerful, and less happy to pay large premiums for access to the net.