Examination of Witnesses (Question Numbers
20-39)
THE CO
-OPERATIVE GROUP,
PAYPOINT
PLC
24 MARCH 2009
Q20 Mr Hoyle: Should we get rid of
the Post Office and give the work to you?
Mr Watkin Rees: I do not think
that at any point we have suggested that.
Q21 Mr Hoyle: I did not say you had
suggested it; I am asking a straightforward question.
Mr Watkin Rees: I think the Post
Office provides a valuable service; it is undoubtedly popular
with consumers. I am sure that it should continue. All we seek
is a level playing field as a competitor.
Q22 Mr Hoyle: Given that hosting
PayPoint terminals benefits the vendors from the footfall but
very little from revenue, can the PayPoint business model realistically
be extended to provide other post office services whilst ensuring
the viability of the business? Perhaps you will tell me if I have
it wrong, but I believe that the shop-keeper does not reap a benefit
from what you give him but from the other goods he sells, and
the customer who comes in does not benefit. The only real beneficiaries
are yourselves. PayPoint fills its pockets with all the cash it
makes. Is that fair?
Mr Watkin Rees: I do not think
it is fair at all. There are many beneficiaries of the service.
Our service has significantly reduced the cost of cash collection
for utility companies and other service companies over the years,
and in turn that feeds into the tariffs that customers on cash
schemes will pay which, as I am sure you will appreciate, tend
to be people from the lower socio-economic groups, so it is very
important to drive efficient service in those areas. We do make
profits; we charge a small fee per transaction, but I think that
is entirely reasonable for the quality and level of service we
support. You underestimate the benefit to the retailers we support.
We do not have 21,000 retailers by accident; we have them because
they demand the service because the average PayPoint will deliver
400 customer visits a week into that shop. We research the behaviour
of those customers in shops and they account for a very significant
amount of spending in those retail environments. It is probably
as well to get the Co-op's perspective on the value of PayPoint
to their shops, but I think it is universally accepted in the
convenience store arena that we can add significantly to the bottom
line of the local retail business and help sustain it.
Q23 Mr Hoyle: You keep mentioning
the social aspect and how good you are. The truth of the matter
is that you have ATMs in shops and you charge; you do not provide
ATMs free.
Mr Taylor: We have about 2,000
ATMs in various stores. It is a surcharge model.
Q24 Mr Hoyle: You charge people for
getting cash?
Mr Taylor: We charge a £1.50
surcharge which is the lower end of the range. All our machines
are properly marked, so the consumer cannot be confused as to
whether it is a surcharging machine. In our experience for consumers
this is a convenient point at which to access their money; they
use it readily.
Q25 Mr Hoyle: So, that is a differential
between you and the Post Office?
Mr Taylor: To the extent that
the Post Office has free machines, that is correct.
Q26 Mr Hoyle: So, the great social
help that you are telling us about as a company is not quite as
good as it seems. To get it right, you charge for the ATMs in
your shops; the Post Office do not. That is a fundamental, major
difference between you. The fact that you have a great conscience
tells me that you are the people who also sell prepayment cards.
Mr Taylor: We do not sell prepayment
cards. We allow energy prepayment customers whose light and heating
would otherwise go off to pay for their energy keys. We do not
run these schemes; it is the utilities who do it and we service
them.
Q27 Mr Hoyle: People top up the cards
at your shops?
Mr Taylor: Correct.
Q28 Mr Hoyle: And you charge?
Mr Taylor: We do not charge the
consumer; it is a free service.
Q29 Mr Hoyle: You charge the utility?
Mr Taylor: We charge as an outsource
to the utility.
Q30 Mr Hoyle: You seem a bit nervy
and edgy about it.
Mr Taylor: Not at all. I am just
keen that you understand the facts.
Mr Watkin Rees: On the subject
of customer charges, it is interesting that every single bill
payment in PayPoint is free and the Post Office is involved in
providing services that impose hefty fees on consumers for bill
payment. Customers who use the Transcash service can pay over
£2 for paying a bill in a post office location, so I do not
think that the situation is as black and white as you paint it.
Q31 Mr Hoyle: You have touched on
something that I intended to pursue. I thank you for that help
in leading me to my next question. Are you partly owned by the
utility companies?
Mr Taylor: When we were founded
we were but we are now a public company with no utility ownership
at all.
Q32 Mr Hoyle: You were formed by
the utility companies to ensure that nobody had a stranglehold
over them and to provide an alternative?
Mr Taylor: No. As I said in my
introductory remarks, we were formed to provide a level of service
and accessibility that did not exist.
Q33 Mr Hoyle: You were formed by
the utilities in order for them to benefit?
Mr Taylor: To enable the utilities
to provide their customers with a higher level of service and
access.
Q34 Mr Hoyle: What the utility companies
wanted to do was ensure that they could manipulate the market
to their advantage?
Mr Taylor: No, that is not what
I am saying.
Q35 Mr Hoyle: Mr Taylor, I understand
what you are saying. Quite rightly, you have had your say and
I will say what I believe. Mr Watkin Rees, the utility companies
quite rightly made a very bold, strong statement that the Post
Office charges customers to pay their utility bills there?
Mr Watkin Rees: The Transcash
service that we are talking about has existed in post offices
for many years.
Q36 Mr Hoyle: But you say that the
Post Office charges and you do not. You are absolutely correct.
Why do they charge? They charge because the utilities make them
charge.
Mr Watkin Rees: The utilities
made them charge over £2 per transaction?
Q37 Mr Hoyle: Yes.
Mr Watkin Rees: That is the Post
Office's set charge, not the set charge of the utilities.
Q38 Mr Hoyle: It is part of the agreement
with the utilities, is it not?
Mr Watkin Rees: Absolutely not.
Q39 Mr Hoyle: If you want to pay
your bill at a post office there is a surcharge?
Mr Watkin Rees: That is absolutely
not the case. The utilities through the bank giro credit Transcash
system allow customers' bills to be accepted at the Post Office.
The Post Office therefore determines the counter fee that is charged
for that. I believe that it is about £2.25. I may be wrong.
Every single bill paid at PayPoint is free.
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