British Gas has made significant changes to its prepayment method since 1st January, ending its relationship with PayPoint in favour of rival PayZone as the valid terminal for topping up prepay meters.
The partnership with Post Office-owned PayZone means that customers would have 15,000 fewer top-up terminal locations. Several people have criticised the move, but the Post Office is hopeful that the changes can increase footfall to its branches and PayZone outlets.
Part of the agreement also caused an increase in the minimum top-up amount from £1 to £5. The energy provider has also set £5 as the minimum top-up for other prepay channels, including over the phone, British Gas website and app, and post offices.
Additionally, customers are directed to top up to the nearest pound.
Prepayment meters are a select energy meter type that is typically installed on domestic households. British Gas’s Smart Pay As You Go allows customers to pay for energy before use through topping up a smart key card that inserts to the meter.
Tariffs for prepaid accounts tend to be more expensive than monthly deals.
PayPoint, the previous to-up partner, has 28,000 terminals in retailers like supermarkets, garages, and newsagents. The old system allowed consumers to pay at 39,500 locations, both from PayPoint and the Post Office’s 11,500 branches.
However, the changeover cuts this number to only 24,500 – since PayZone only has 13,000 terminals across the nation.
PayPoint has cited the failure to agree renewal terms for the multi-year contract as the reason for their deal ending. In a message to its shareholders, PayPoint revealed that the deal with British Gas only lasted until 31st December 2019.
With the termination of the partnership, PayPoint expects a £1.4-million loss in revenue for 2019/2020, and another £3.5 million the year after.
PayPoint CEO Patrick Headon stated that the failure to agree renewal terns for the contract caused disappointment to British Gas and PayPoint customers. He also mentioned that the multi-year partnership was mutually beneficial to both companies.
PayZone, the new prepayment terminal, has considerably fewer locations. However, British Gas indicated on its website that the outlets are open at extended hours, and some are available seven days a week.
This significant change to British Gas causes highs and lows for its PPM customers. On the one hand, clients near PayZone terminals will benefit significantly. However, plenty of households are nearer to a PayPoint outlet, which makes topping-up an inconvenience now that the latter has terminated its partnership with British Gas.
One emerging problem is that people with prepaid meters are often vulnerable, which is why they rely on walking or public transport to top up their smart cards.
In the Ofgem State of the Market report for March 2019, it is stated that there are 4.3 million consumers using prepayment meters across all energy suppliers. This number is a significant slice of the population that needs to pay before they can use energy.
Customers struggling to meet payments are typically shifted to a prepayment meter. British Gas has met criticism along with other suppliers for installing these meters forcibly from 2016 to 2017.
Prepaying households are shown to pay more for energy than those using traditional meters. A recent adjustment on the price cap moved the average payment to £1,217 a year, an extra cost of £38.
British Gas prepayment members are advised to consider other payment channels to make it more convenient for those who don’t have PayZone outlets or Post Office branches near them. The company encourages its customers to top-up online via the website or mobile app, or over the phone.
Customers may also benefit from switching to a standard credit meter, which could mean cheaper energy deals for them and savings of several hundred pounds per year. They can also think about switching from suppliers that use PayPoint terminals, such as Ovo Energy, SSE, nPower, and EDF Energy.