'We have the right business model' - Bill Express says it can make JPS deal work
Published:Wednesday | January 5, 2011 | 12:00 AM
Two other companies have tried - and eventually quit - as bill collectors for the Jamaica Public Service Company (JPS), but, full of confidence, GraceKennedy's Bill Express said Monday it has the right business model to wring value from the deal as the two formalised their partnership at a contract signing in Kingston.
The Bill Express marquee replaces that of Jamaica National (JN) at JPS's 15 collection points nationwide. Before them was Paymaster Jamaica.
"We can't speak about revenues but we expect it will meet our projected returns," said Courtney Campbell, chief executive officer of GK Investments, the division that encapsulates financial, insurance and money services.
"The model regarding what the others were using we can't speak to, but we have a pretty a high level of confidence in the one we have devised for this and we believe it will deliver high level of customer satisfaction," he said.
Under the contractual arrangement, Bill Express will become JPS's main bill-payment collector.
144,000 transactions monthly
Before the deal, Bill Express said it processed approximately 24 per cent of JPS bill payments through its 270 locations, which would represent about 144,000 transactions monthly. These are transactions on which JPS paid no commission, but for which Bill Express charges a J$40 fee - amounting to revenue of just under J$6 million per month, or J$69 million per year, on Wednesday Business calculations.
Bill Express estimates that the new arrangement with JPS will add 180,000-200,000 transactions per month.
Customers paying at JPS-housed windows do not pay a transaction fee. Instead, Bill Express will earn a commission from JPS on its collections.
Bill Express said the J$40 fee for payment of other bills will be maintained.
On the face of it, the company risks losing a portion of the J$6m it made from JPS customers before the partnership, but Vice-President Michael McNaughton of GK Money Services - the operating company for Bill Express - said they expect no migration of customers away from their non-JPS windows.
Jamaica National Money Services, a subsidiary of Jamaica National Building Society (JNBS), exited its contract with JPS on December 31.
Neither party said why the partnership ended, and JN is yet to respond on how the contract performed.
The bill-payment outsourcing arrangement began in 2006 with the Audrey Marks-led Paymaster, which hinted the business was unprofitable when it exited the contract.
JN then took over having seen an opportunity for more business for bill payment and to lure customers to its other services.
A similar vision is now held by executives of Bill Express.
"In addition to JPS, we expect the full range of the other 29 bills collected to be done through the offices," said Campbell.
Bill Express background
Bill Express currently operates from 400 locations across the region, inclusive of 270 outlets in Jamaica. The addition of JPS locations builds the network to 415.
The agency facilitates payment to about 30 billers, including National Housing Trust, Students' Loan Bureau, National Water Commission, Guardian Life and Sagicor.
While a cost to seed and operate the JPS collections was not disclosed, Campbell said the locations have been equipped with modern technology to facilitate fast turnaround.
"From our standpoint, we look for the successful and efficient deployment of technology. We place emphasis on risk management and efficient processes so, at the end of the day, based on our own business operation, we anticipate we will be able to do well," added McNaughton, whose portfolio is product development.
The parties say that approximately J$35 billion of JPS revenues is expected to flow through the Bill Express network.
Bill Express has added 50 staff members to man the JPS facilities.