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Lori Beck,Director, Product Management

Nikki LappinRemittance Processing Supervisor

Mobile Payments: Giving Customers More Choice and Ease of Payment Using Text Messaging

Utility Payment Conference

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Agenda

1. Payment Vendor Solution

2. Northwestern Energy Overview

3. Pay by Text Implementation and Results

4. Marketing and Best Practices

5. Next Steps

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Bil

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Payment Solutions

© 2010 Western Union Holdings, Inc. All Rights Reserved. All trademarks, service marks, and trade names referenced in this material are the property of their respective owners.

Consumer Utility

Posting

Funding

Reporting

Noting

Real-Time or Batch

Payment Type

Payment Channel

Web

Ban

kin

g

On

e-T

ime

On

e-T

ime

& R

ecu

rrin

g

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Money Mind Set Index

Quarterly study first created in Q4 2008 to understand and longitudinally track how current economic conditions affect consumer behaviors and emotional mindset regarding bill payment, debt, and personal finance issues

Online quantitative survey

3,000 targeted respondents based on representative proportions of geography, gender, age, income and ethnicity as compared to the overall US population

Plan now for Gen Y payment preferences1

Gen Y’ers prefer less costly self-service channels like online banking, ATMs and mobile banking

2 in 5 Gen Y consumers have already tried mobile banking

Mobile banking security less of a concern

More likely to carry unlimited wireless phone plans

More likely to own a Smartphone (Smartphone owners are

the stickiest mobile bankers)

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1Gen Y Mobile Banking, by Javelin Strategy & Research, April, 2009

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Text Messaging

SMS (Short Message Service) is most commonly referred to as Text Messaging

Text messaging allows a message to be transmitted from one cell phone to another

As of March 2010, 74% of the U.S population has a mobile phone

The number of smart phones (iPhone, Droid, Blackberry) are up from 20 to 27% of the mobile population. Smart phone users are heavy users of text messaging.

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Text Messaging, Web Browsing and Downloading by Segment

9%

16%

29%

14%

17%

35%

80%

17%

30%

46%

20%

27%

63%

92%

58%

66%

75%

80%

81%

87%

91%

0% 20% 40% 60% 80% 100%

All consumers

More than $100K

Mobile bankers in the last 90 days

Gen Y

Hispanic/Latino

Smartphone

iPhone

Percent of Consumers

Text messaging (SMS)

Browse web pages

Downloading applications

Q45: Which of the following mobile phone features do you use? (Select all that apply)

July 2009, n= 89, 375, 478, 487, 1,498, 3,000Base: All consumers with mobile.

© 2010 Javelin Strategy & Research

Text Messaging is the most common use across all consumers

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Text Message and Data Plans

The number of consumers signing up for unlimited plans is increasing

54%

3%

13%

21%

38%

6%

15%

17%

25%

0% 10% 20% 30% 40% 50% 60%

Under contract, with neither unlimited data or text

Unlimited data only

Unlimited text only

None, I use a prepaid/disposable phone

Both unlimited data and text

Percent of Consumers

20092008

Q22: What type of wireless plan (data and text) do you currently use? (Select one only)

July 2009, March 2008, n= 3,000, 2,314Base: All consumers with mobile.

© 2010 Javelin Strategy & Research

N/A

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How Bill Payment is Changing

Consumer enrolls via branded IVR or Internet site – no sensitive information is transmitted via text

Biller provides service provider a customer (MAM) file containing customer account number, due date and amount owed

Text Message can be sent a configurable number of days before due date

Consumer replies to the text message to pay their bill

Pay by Text services allow consumers to easily initiate their payment using their phone's text messaging service based on payment information entered online

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Pay by Text Consumer Experience

Consumer enrolls via IVR or Internet

Consumer enters cell phone numberand email address (optional) into IVR or Internet

Consumer enters payment information into IVR or Internet

Consumer receives text message on cell phone when payment is due

Consumer replies to text message to complete payment

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Participating Carriers

When the consumer enrolls in the Pay by Text service, a verification is done on the mobile number to confirm the carrier. If the carrier is supported, the plan is saved to the database.

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Pay by Text Sample Messages

Enrollment Complete

Bill Alert. Welcome, you are enrolled. Txt STOP to end, HELP for info or 866-316-3360. Msg freq dpnds on accnt setngs. Std msg chrgs apply..

STOP

Bill Alert. 866-316-3360. You will no longer receive any messages from WU to your phone..

Payment Due

Bill Alert.NWE bill $XXX.XX+$X.XX fee due. Rply YES NWE to cnfrm processing as u specified. 866-316-3360 if dont recve cnfrm msg.Txt STOP 2 end.

HELP

Help: Bill Alert. For info 866-316-3360. Msg Freqncy dpnds on accnt sttngs. Msg&data rates may apply. Text STOP to end.

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Pay by Text Reporting

Pay by Text enrollments

and payments are available

for viewing along with all of

your other payments

through our current

reporting tools

Sample Report

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Non-Utility Case Study

50% of PBT consumers using the Extranet shifted to the Internet as their channel preference.

For those receiving notifications, the Internet is the primary channel used for payment.

ACH adoption is greater than other payment types.

Enrollment Findings

Almost 6000 consumers have signed up

By Payment Type

ACH: 2746

Credit Card: 1919

ATM: 1277

By Channel

Internet: 4546

IVR:

A large number of consumers are using this as an alerting process and then going to the IVR or Internet to pay

Pilot launched in May of 2009

Marketing used: CSR fact sheet and Internet messaging

Data shown is through September of 2010

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Agenda

1. Payment Vendor Solution

2. Northwestern Energy Overview

3. Pay by Text Implementation and Results

4. Marketing and Best Practices

5. Next Steps

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Northwestern Energy Overview

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Service Population395,500 electric customers

265,200 gas customers

Customer accounts 492,079

Number of bills 6.1M annual bills and notifications

Revenue $971M

Billing frequency Monthly

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Northwestern Energy Payment Goals

Provide additional self service payment options (targeting the younger generation)

Experience (We wanted to gain experience while we had the opportunity with SMS, we felt that by doing this project we could gain experience using a smaller carrier list. We feel that this option will grow and more carriers will be added).

We had a great deal of concern about Verizon not being a carrier but felt it was best to move forward with smaller carriers

Reduce mail payments which reduces costs

We believe the more mail costs increase the more electronic payments will increase

With reduced mail payments and increased electronic payments we believe when we need to purchase knew equipment that our cost for replacement will be much lower

Over the past 5 years NorthWestern Energy has seen a yearly 2% decrease in mail payments and an increase with electronic payments

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Agenda

1. Payment Vendor Solution

2. Northwestern Energy Overview

3. Pay by Text Implementation and Results

4. Marketing and Best Practices

5. Next Steps

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Implementation Process

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Launched on 7/29

IVR and Internet were modified to include Pay by Text enrollment

Product certified with wireless carriers so no 3rd parties were involved in implementation

Thoroughly tested with employee enrollments during UAT cycle

Added same day online banking payment option

Added American Express as a payment type

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Northwestern Energy Pay by Text Data

The payment type preference is ACH.

Channel with most adoption is IVR.

There is not enough data to show consumer trends and behavior changes.

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Payment Types Enrollment Findings

All payment types available on the IVR and Internet are available through Pay by Text

ACH

Credit Card

ATM

By Payment Type

ACH: 112

Credit Card: 49

ATM: 4

By Channel

Internet: 21

IVR: 144

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Agenda

1. Payment Vendor Solution

2. Northwestern Energy Overview

3. Pay by Text Implementation and Results

4. Marketing and Best Practices

5. Next Steps

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Available Marketing Touchpoints

Envelope Messaging

Web Messaging Email Messaging

Statement Messaging

“Say goodbye to envelopes and stamps! With our web and phone bill payment options, paying your ABC Company bill is quick and easy. Press 4 now to be transferred to our automated payment system or go to www.abccompany.com and select ‘Pay My Bill’.”

IVR Messaging

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Best Practices

Employees were encouraged to enroll

Where an email address is available, each new enrollee also receives a confirmation enrollment email in addition to the text message

Notify consumers in multiple ways about new offering. We have utilized the following marketing options to date:

Statement Messaging

Web Banner

CSR Promotion

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Future Marketing Campaign

A new campaign has been created

Use existing consumer communication touch points:

Web Banner

Statement Messaging

Payments Brochure

Newsletter Article

CSR Q&A Flyers/Posters

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Agenda

1. Payment Vendor Solution

2. Northwestern Energy Overview

3. Pay by Text Implementation and Results

4. Marketing and Best Practices

5. Next Steps

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Next Steps

Add Verizon as a supported carrier

Continue marketing to increase adoption

Research additional mobile channels

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Pay by Text Benefits Summary

Additional self-service payment channel

Convenient option for consumers on the go

Simple enrollment process

Easy for consumers to use

Cutting edge service

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©2010 Western Union Holdings, Inc. The WESTERN UNION name, logo and related trademarks and service marks, owned by Western Union Holdings, Inc., are registered and/or used in the U.S. and many foreign countries. This material is confidential and is proprietary to Western Union and is not to be reproduced, disclosed, or used except in accordance with program license or other written authorization of Western Union. Any use, copying, manipulation, or reproduction of Western Union trademarks, logos, or material created by Western Union, its subsidiaries, affiliates or its business units, in whole or in part in any medium for any purpose whatsoever, is strictly prohibited without the prior written permission of Western Union. This information piece shall not be considered an offer, final terms shall be reflected in the Agreement signed by both parties.

Thank you!

Lori Beck

Western Union Global Business Payments

212-361-5655

lori.beck@westernunion.com

Nikki Lappin

Northwestern Energy

406-497-3210

monique.lappin@northwestern.com