Why Your Phone Carrier Wants to Connect to Your Bank Account
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What is the main topic discussed in this episode?
and how they may affect your finances and portfolio. Listen at schwab.com slash Washington Wise.
Here's your money briefing for Tuesday, September 5th. I'm J.R. Whelan for The Wall Street Journal. If you're like a lot of people, you pay your monthly cell phone bill automatically through your credit card.
Why are carriers asking customers to switch from credit card to bank-account billing?
Easy enough. And the rewards you get aren't bad either. But now phone carriers are asking customers to make a switch and pay their bill directly from their bank account.
So basically, they're giving you a $5 or $10 discount per line per month. Or if you were already getting that discount for setting up auto pay, they're saying, hey, we're going to take that discount away if you don't switch to your bank account.
So what questions should you ask before making the switch? We'll find out from our personal tech editor, Shara Tibkin, after the break.
This episode is brought to you by Charles Schwab. Decisions made in Washington can affect your portfolio every day.
How much money can you expect to save from carriers' bank-account discounts?
Washington Wise from Charles Schwab is an original podcast that unpacks the stories making news in Washington. Listen at schwab.com slash Washington Wise.
Mobile phone carriers are trying to get people to switch from paying their monthly bill through a credit card to directly from their bank account. But is that a good idea for you? I'm joined now by WSJ Personal Technology Editor Shara Tibkin. So Shara, why are the carriers asking customers to switch over to paying their bill through a bank account or a debit card?
It's really about the credit card fees.
What business reasons do carriers have beyond saving on credit-card fees?
They've been increasing over the past couple of years, and we reported that they are going to be increasing a couple more times in the next nine months. So these carriers do not want to pay those fees. So they're basically incentivizing us to start paying with our bank accounts. There are also a couple other benefits for them. If you have auto pay set up and you pay with your bank account, you're less likely to cancel. It's not actually difficult to change your payment method or it's not difficult to cancel, but it's kind of that mental hurdle to get past. Also with the discounts that they're giving us, that also makes you feel more loyal.
How are carriers incentivizing customers to change payment methods?
Like people don't switch carriers very often, but we all still like being rewarded for that loyalty.
How are the carriers encouraging customers to move their payments over?
So basically, they're giving you a $5 or $10 discount per line per month. Or if you were already getting that discount for setting up auto pay, they're saying, hey, we're going to take that discount away if you don't switch to your bank account. They're really trying to push people to get away from using their credit cards.
So it could be more expensive for people if they don't make the change.
Definitely. People could see their bill go up $5 or $10 if they only have one line. My editor, his bill wasn't going to go up, but Verizon offered him a $40 discount per month because he has four lines.
Are there privacy or security risks when carriers access your bank account via ACH?
You know, $5 may not seem like much, but $40, that's pretty significant. Some of these offers are very tempting.
Now, you mentioned that the carriers could wind up saving money on credit card fees by having their customers move the payments over. Could consumers then see any of those savings passed on to them?
We're basically seeing those savings through the discounts. In a lot of cases, these discounts are actually more than what maybe the credit card fees would amount to. They're incentivizing us through these discounts because otherwise there's not really a lot of incentive to pay with your bank account. There's a lot of perks that you get through paying with credit cards a lot of times.
What role do third parties like Plaid or Trustly play in linking your bank to a carrier?
In order for them to get those savings and have this as a long-term sort of savings for them, they're giving us the discounts. And the discounts aren't like you get a discount for a month. They're indefinitely, unless they change the terms in six months, like who knows. But generally, they're long-lasting discounts.
In a lot of cases, the carriers have had info on the credit card that people have been using for payment, but now the carriers will have info on the bank account, which potentially touches a lot of areas of people's personal finances.
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Chapters
8 chapters
1
What is the main topic discussed in this episode?
0:01–0:41
2
Why are carriers asking customers to switch from credit card to bank-account billing?
0:41–1:26
3
How much money can you expect to save from carriers' bank-account discounts?
1:26–2:02
4
What business reasons do carriers have beyond saving on credit-card fees?
2:02–2:37
5
How are carriers incentivizing customers to change payment methods?
2:37–3:24
6
Are there privacy or security risks when carriers access your bank account via ACH?
3:24–4:01
7
What role do third parties like Plaid or Trustly play in linking your bank to a carrier?
4:01–4:45
8
What questions should consumers ask before switching their phone bill from a credit card to a bank account?
4:45–7:46
Speakers
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