Dennise Williams, Staff Reporter
GOLDSON
INSISTING THAT the fees paid by utility companies for collecting bills on their behalf were insufficient to cover the cost of operating the business, GraceKennedy has again defended the decision by its Bill Express subsidiary to impose a $35 user fee on consumers who use the service.
And according to Brian Goldson the head of Grace's Information Service Division, in which Bill Express falls, despite the howl by consumer advocates since the company and its larger competitor, Audrey Marks' Paymaster, introduced the fees two months ago, relatively few clients have bolted. Importantly, too, Bill Express, which last year posted a loss on operation of $41 million, is doing better than before, Goldson said.
"We have lost some of our Bills Express clients," Goldson told stockholders at GraceKennedy's annual general meeting on Monday. "Yet, there is a solid group who believe our numerous locations provide value. And while the $35 user fee has had an impact, I am still doing better, believe it or not."
He did not give details.
Significantly, online payments, as was pointed out by Goldson, does not attract the fee. Last year Bill Express completed $122 million worth of online transactions, a 230 per cent increase over 2004.
Audrey Marks could not be reached for comment.
Bill Express and Paymaster, with hundreds of outlets - Bill Express has 241 - across Jamaica, often in supermarkets and other stores, help to make it more convenient for clients of mostly the water, electricity and fixed-line telephone utilities to pay their bills. The utilities, as they have outsourced collections, have closed offices and cut staff, thus saving costs.
"Yes, the utilities companies used to have a high cost of staff," said Douglas Orane, GraceKennedy's chairman and CEO, agreeing with a shareholder's assessment of the impact of the bill payment service.
"But what we have now is an industry structure that is difficult for bill payment companies," Orane added.
The bill collection companies are paid a fee for their services, but in April they began charging consumers the user charge, to the outrage of some consumer advocates.
However, the Office of Utilities Regulation (OUR), which polices the utility companies, held their was nothing illegal about the charges, pointing out that the light and power, water and telephone companies themselves maintained payment outlets, even if fewer than before. Consumers can also pay their bills at banks, credit unions and other agencies with which the utility firms have agreements, the OUR pointed out.
Orane claimed that his company entered the bill collection business five years ago as a service extension to its clients, even though the commissions offered at the utility companies - which represent 90 per cent of the business - did not, at the time, cover the cost of operating the business. Things have not improved.
" At the time, the fees negotiated were not enough to cover the costs of the business but we went ahead and started the business anyway," Orane said.
He added: "The fees that utilities companies pay have not moved in line with inflation.
This means that we have lost more and more money."
According to GraceKennedy's annual report , the Bill Express segment in 2005 returned revenues of $102 million, but expenses of $143 million.
"This happened not because the business is inefficient but because fees are not enough to even cover the sub-agents," Orane said.
Approximately 30 per cent of the new $35 user fee goes to the sub-agents, Orane said, which reducing pressure on GraceKennedy, the Grace CEO said.
Before the introduction of the user fee, according to Orane, his company faced three stark choices in the face of Bill Express' mounting losses: "We could change the fee structure, sell the business or lock it down. We couldn't continue in the current business model."
But despite the problems in Jamaica, GraceKennedy has expanded its bill payments business to other Caribbean markets.
"Total bill payment transactions for the division grew at satisfactory rates across all countries particularly in Trinidad & Tobago and Guyana," the group's 2005 reported said. " The brand Bill Express is now well positioned for revenue growth in 2006."
In anticipation of this continued growth, major investments were made in upgrading the technology platform during the year "which will facilitate rapid network expansion," the company said.
"Paying your bills BillsExpressOnline.com is free." And the annual report revealed that in 2005, $122 million worth of transactions were done online, representing a 230 per cent increase over the prior year.
