AT&T provides customers rebates from their monthly bills for setting up recurring payments.
Today, AT&T is reducing that rebate for bills paid with credit cards from $10 to $5 per statement.
If AT&T customers would like to receive $10 off their monthly bill then they need to setup automatic payments from either their bank account or debit card.
Why?
Card fees.
Unlike many businesses that surcharge, AT&T kinda, sorta cash discounts, which we expect is the acceptable practice for large retailers (though we would like to see one of them try surcharging just so we might obsreve the consumer blowback).
The finance team at AT&T isn’t totally incompetent, so they’re undoubtedly baking in credit card costs into customer bills anyhow, but as the credit card duopoly of Visa and Mastercard continues their infinite CAGR on the American consumer, merchants are looking for reprieve.
By paying with bank accounts or debit cards, AT&T scores a lower cost of card acceptance which shows up on their bottom line.
In exchange, they’re willing to pass some of that savings to their customers.
This leaves us with two questions.
First, what happens as FedNow picks up steam? How many of these card payments will instead flow through FedNow rails with much lower costs of payment acceptance? Why wouldn’t retailers like AT&T offer even steeper discounts to get people off of cards so long as it positively impacted AT&T?
If you can pay by debit, you can pay by FedNow.
That’s because you’re not being extended credit in either case.
Second, we are super skeptical of the B2B payments boner that all the payment bros talk about.
Companies do NOT want to eat a 3% decrease in top line revenue. And that 3% can be 30-50% of EBITDA at some of these enterprises.
There is virtually no amount of convenience that’s going to put 30-50% of EBITDA back on the income statement.
In our view AT&T is proving just how much companies actually care about 30-50% EBITDA (turns out, a lot).
If you’re seeing other such cost-of-payment manuevers by retailers, let us know.
T-Mobile are going further..
For their current set of plans (5Go) and their immediately prior (magneta), they are removing the discount completely if you pay by credit card. The discount is not offered on the previous generations of plans
Obviously, with T-Mobile’s history of security issues, you can imagine people aren’t exactly happy sharing their bank account or debit card details with T-Mobile
Verizon’s auto pay discount is $10 per line but you have to pay with a bank account, debit, or Verizon credit card to get the discount.
thanks Steve