PayPoint is to pay redress of £12.5 million after Ofgem launched an investigation in August 2017 into whether PayPoint had abused a dominant market position.
PayPoint provides services to energy suppliers. It allows prepayment meter customers to top up their credit, at one of 28,000 retail outlets in Great Britain or remotely, for example using a website or mobile phone. The 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.
Ofgen investigated whether PayPoint had used exclusivity clauses in its contracts with energy suppliers and retailers to restrict or distort competition in over-the-counter (OTC) energy prepayment services. The regulator 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 the investigation PayPoint will donate £12.5 million to Ofgem’s Energy Industry Voluntary Redress Scheme.
It will remove exclusivity provisions concerning energy pre-payment services from current contracts and new future contracts in the next five years. It will offer separate contracts to energy suppliers for OTC and non-OTC services so energy suppliers and retailers will be able to use other payment service providers.