October 3, 2023

paypoint received “pre-action letters” from a small number of market participants regarding commitments made to Ofgem in 2021 due to competition concerns.

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The prepaid meter group came to an agreement with Ofgem in 2019 after the regulator raised concerns about a potential violation of competition laws as a result of PayPoint writing exclusivity clauses into contracts with energy suppliers and retailers.

PayPoint agreed to shake up its services and donate £12.5m to Ofgem’s compensation fund, which at the time claimed the regulator “ensures that competition is not distorted”.

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But now the group has received pre-action letters, which are the first step in a formal debt collection process sent out by a creditor’s attorney to inform the debtor of the intention to file a lawsuit against them.

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Correspondence: PayPoint has received “letter before action” correspondence from a small number of market participants, the report said.

The payment system company told investors on Wednesday that it “intends to respond vigorously” to the letters “while continuing to receive appropriate legal advice.”

PayPoint said that It contacted its customers in the energy sector to waive exclusivity in their agreements.

He also rebid with several of his clients in the energy sector on a non-exclusive basis.

The Group provides energy providers with services that allow customers with prepaid meters to replenish their supplies online or through PayPoint terminals in stores across the country.

PayPoint then transfers these payments to the respective energy provider in exchange for a transaction fee.

When Ofgem first launched an investigation into PayPoint back in August 2017, the regulator looked into whether the company was abusing its powers by imposing exclusivity clauses on contracts with energy providers and retailers, which could make competition and choice difficult for consumers, many of whom were financially vulnerable.

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Ofgem expressed concern that PayPoint’s actions have distorted competition and consumer choice in this market to the detriment of prepaid electricity consumers.

In 2019, PayPoint also agreed to remove exclusivity clauses from its energy supplier contracts for prepaid customers who top up their meters with the company’s services.

The group said the move would allow suppliers and retailers to sign contracts with other payment service providers and use other vendors’ equipment to process payments for energy replenishment.

Ofgem said in November 2021: “Ofgem believes that the commitments offered by PayPoint address its competition concerns and ensure that competition is not distorted.

“Ofgem has now accepted our commitment as a solution to their problems. PayPoint will now fulfill its obligations to all relevant stakeholders in accordance with the schedule agreed with Ofgem.”

PayPoint Promotions fell today and fell by 1.52 percent or 7.00 pence to 454.50 pence this afternoon, having fell more than 23 percent last year.