Households with prepayment meters can top up their gas and electricity credit either in person at one of 28,000 PayPoint retail outlets across the UK or remotely via a website or mobile phone. PayPoint then transfers these payments to the respective energy provider for a transaction fee. Merchants who sell PayPoint credit also receive a commission on transactions.
When Ofgem first opened its investigation, the watchdog was looking to see if PayPoint had abused its power by including exclusivity clauses in contracts with utilities and retailers that may have hampered competition and consumer choice, many of whom were financially vulnerable .
For a full breakdown of how credit meters work, see our Prepaid Gas and Power Guide.
As a result of the investigation, PayPoint has committed to change its business practices and donate £ 12.5 million to Ofgem’s Compensation Fund
As a result of the investigation, PayPoint will:
- Remove all exclusivity provisions on energy prepayment services from current contracts and all future contracts that will be concluded with energy suppliers and traders in the next five years.
- Offer energy suppliers separate contracts This would allow retailers to use other payment providers and their devices to process credit for prepayment meters.
- Donate £ 12.5 million to Ofgem’s “Energy Industry Voluntary Redress Program”currently managed on behalf of Ofgem by the Energy Saving Trust (EST) charity. The EST distributes funds that can be used for various purposes, for example for energy advice or energy efficiency measures for households.
Investigation now completed
Ofgem says its investigation, which began in August 2017, is now officially ending. The regulator adds, “Ofgem believes that the commitments PayPoint is offering address its competition concerns and ensure that competition is not distorted.”
What does PayPoint say?
A PayPoint spokesperson said, “Ofgem has now accepted our pledges as a solution to its concerns. PayPoint will now implement the pledges with all relevant stakeholders on a schedule agreed with Ofgem.”