PayPoint Plc to donate £12.5m to Ofgem’s voluntary redress fund

Ofgem, the energy regulator, has decided to accept commitments from PayPoint and a donation of £12.5 million to Ofgem’s Energy Industry Voluntary Redress Scheme, following an investigation into whether PayPoint has infringed Chapter II of the Competition Act 1998.

PayPoint provides services to energy suppliers which enable its energy prepayment meter customers to top up their credit, either in person at one of 28,000 PayPoint retail outlets in Great Britain, or remotely, for example using a website or mobile phone.

These retailers are paid a commission for top-up payment transactions made using a PayPoint terminal. PayPoint then transfers these payments to the relevant energy supplier, in exchange for a transaction fee.

Ofgem launched its investigation in August 2017. It considered whether PayPoint had abused a dominant position by using exclusivity clauses in its contracts with energy suppliers and retailers in a way that was likely to restrict or distort competition in the market for the provision of over-the-counter (OTC) energy prepayment services in Great Britain.

Ofgem suspected that PayPoint’s actions distorted competition and consumer choice in this market to the detriment of prepayment energy customers, many of them in vulnerable situations, which may have constituted an abuse of a dominant position and a breach of Chapter II of the Competition Act.

As a result of this investigation:

  • PayPoint will remove these exclusivity provisions concerning energy pre-payment services from current contracts and any future contracts entered into during the next five years with energy suppliers and retailers.
  • PayPoint will offer separate contracts to energy suppliers for the provision of OTC and non-OTC energy prepayment services. This would mean that energy suppliers and retailers will be free to contract with other payment service providers and to use other providers’ equipment for processing OTC and non-OTC payments for their prepayment energy customers.
  • PayPoint will donate £12.5m to Ofgem’s Energy Industry Voluntary Redress Scheme (currently administered on Ofgem’s behalf by the Energy Saving Trust).

Ofgem said it believes that the commitments offered by PayPoint address its competition concerns and will ensure that competition is not distorted. Accepting these commitments means that the investigation closes with no decision made on whether competition rules were infringed.

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