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(Alliance News) - PayPoint PLC's remediation proposals to counter competition concerns in the energy pre-payment market received regulatory backing on Wednesday.
The UK's energy regulator Ofgem back in 2017 launched a probe to determine whether the Welwyn Garden City-based payments provider "abused a dominant position" in the prepayment meter sector.
Retailers and customers would use Paypoint when paying to top-up electricity or gas meters.
"The retailers are paid a commission for these 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 explained.
"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."
As a result, PayPoint offered "commitments to remove these exclusivity provisions" from current and future contracts with its energy supplier clients and retailers.
"PayPoint has also agreed to offer separate contracts to its energy supplier clients for the provision of over-the-counter 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," Ofgem added.
In addition, the company offered to make a GBP12.5 million donation to Ofgem's Energy Industry Voluntary Redress Scheme.
Ofgem said: "Ofgem's provisional view is that the commitments offered by PayPoint address Ofgem's concerns and, if implemented, they should ensure that competition is no longer distorted. Ofgem will now consider any comments raised in the public consultation before determining whether to accept the commitments. At this stage, Ofgem is minded to close the investigation with the acceptance of these commitments."
PayPoint shares closed 3.0% higher at 612.00 pence each in London on Wednesday.
By Eric Cunha; ericcunha@alliancenews.com
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