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PayPoint hands £12.5m to energy charities following four-year investigation into market abuse

PayPoint has agreed to shake-up its services and donate £12.5 million to energy regulator Ofgem's redress fund, which largely supports vulnerable households, following a four-year investigation into market abuse. 

Households with prepayment meters can top-up their credit, to put towards gas and electricity, either in person at one of 28,000 PayPoint retail outlets across the UK or remotely using a website or mobile phone. PayPoint then transfers these payments to the relevant energy supplier in exchange for a transaction fee. Retailers selling PayPoint credit are also paid a commission on transactions.

When Ofgem first launched its investigation, the watchdog considered whether PayPoint had abused its power by writing exclusivity clauses into contracts with energy suppliers and retailers, which may have hampered competition and choice for consumers, many of whom were financially vulnerable.

See our Prepaid Gas and Electricity guide for a full breakdown of how credit meters work.

As a result of the probe, PayPoint has committed to make changes to its business practices and donate £12.5 million to Ofgem's redress fund

As a result of the investigation, PayPoint will:

  • Remove all 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.
  • Offer separate contracts to energy suppliers that would allow retailers to use other payment providers and their equipment to process prepayment meter credits.
  • Donate £12.5 million to Ofgem’s 'Energy Industry Voluntary Redress Scheme', which is currently administered on Ofgem’s behalf by charity the Energy Saving Trust (EST). The EST divvies up funds, which can be used for a number of different causes, such as to provide energy advice or energy efficiency measures to households, for example.   

Investigation now closed

Ofgem says its investigation, which began in August 2017, will now formally end. The regulator adds: “Ofgem believes that the commitments offered by PayPoint address its competition concerns and will ensure that competition is not distorted."

What does PayPoint say?

A spokesperson for PayPoint said: "Ofgem has now accepted our commitments as a resolution of its concerns. PayPoint will now implement the commitments with all relevant stakeholders in a timetable agreed with Ofgem."

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