Jul 09, 2019
Pass-Along Savings: Serving the Unbanked Delivers a Win for All
There’s nothing like when a plan comes together – especially with a surprise benefit.
I had that revelation after a recent meeting with Director/CEO Gary Brown and COO Rob Presnell of the Detroit Water & Sewerage Department (DWSD). It had been a year since the installation of the DivDat Kiosk Network in locations across the city, a system that offers a free and convenient way for the underserved and the underbanked to pay their utility bills, property taxes, and more.
They shared some interesting facts of what’s happened in the past year since the DivDat kiosks installation:
- Collections increased from 64% to a whopping 94%.
- Those collections resulted in $65 million in payments.
- Bad debt among water consumers is now much lower.
And, a surprise benefit: Due to those turn of events, a proposed 17% water rate hike by DWSD for this year was slashed to only 2% for all customers.
What started as a way to assist people who do not have a checking, savings, or money market account to pay their bills actually turned out to also benefit people who do have access to traditional banking mechanisms. The new kiosk payment system serves everybody – the billers, the kiosk users, and the non-users. It’s a win-win-win!
There is no doubt that it’s the right thing for big billers to offer a free and easy way for the unbanked and underbanked to pay for critical services such as water, electricity, and gas. The experience in Detroit shows that these consumers can – and will – pay their bills when they can do so without the added expense of “convenience” fees (aka penalty) and traveling to multiple locations to pay in person.
In Detroit, more than 80,000 people pay their essential bills at kiosks without traipsing to a city payment center. The by-products: lower rate increases, fewer foreclosures (which keep property taxes high), and fewer water shutoffs. All positive outcomes.
Other cities and municipalities could enjoy the same positive results as Detroit. Residents who do not have access to banks – or who choose to pay by cash – have a no-fee option to meet their financial obligations. Bad debt and billers’ collection costs are reduced. The payers and billers are very satisfied with the program. Even those who never touch a kiosk are happy because potential rate hikes are reduced. And that keeps more money in everyone’s pockets.
DivDat acts as a bridge between taxing authorities, the court system, and utility companies and the segment of their customer base challenged with making monthly payments on time. DivDat empowers underserved customers, many with no internet access, with the tools to pay in their neighborhoods, at their convenience with many kiosks available 24/7, with a method they prefer, and, most importantly, with dignity.