An end to non-DD surcharges from 6th April 2013?

NFH

SwanJon wrote: »

Your point only stands if there is no additional cost to the supplier of other payment methods, but as above costs are not just down to the charges made by the bank.

It is clear that the cost to the supplier of the energy itself is not higher as a result of the payment method. Suppliers would be justified only in adding a flat fee for payment by cheque, a percentage fee for payment by credit card, and perhaps an additional flat fee if the payment requires manpower, for example if a debit or credit card payment is taken by telephone.

NFH

The trend now seems to be a £100/year discount for paying by direct debit. How can it cost the energy suppliers £100/year less if a customer pays by direct debit as opposed to bank transfer or debit card via the supplier's web site?

daveyjp

It depends when the cash is paid. Dd is cheaper because the company is getting the money monthly, variable dd payable via an automated credit meter or customer reading shouldn't be more expensive, no idea if it is or not.

Credit meters are paid quarterly and I know I have used the fact you have many weeks to pay it to my advantage. Each letter chasing the debt costs money. To ensure quicker payment prompt payment discounts are now given for credit accounts, thus closing the gap between dd and non dd account discounts.

NFH

daveyjp wrote: »

It depends when the cash is paid. Dd is cheaper because the company is getting the money monthly, variable dd payable via an automated credit meter or customer reading shouldn't be more expensive, no idea if it is or not.

Credit meters are paid quarterly and I know I have used the fact you have many weeks to pay it to my advantage. Each letter chasing the debt costs money. To ensure quicker payment prompt payment discounts are now given for credit accounts, thus closing the gap between dd and non dd account discounts.

That's not a justifiable reason for a price difference. The above BIS guidance document explains this in detail.

In any case, a direct debit can fail in the same way that someone can fail to pay their bill.

SwanJon

NFH - the issue is with the cost of the payment method, not the cost of the payment. I know this doesn't match your theory, but it is the case.

If you pay monthly, it costs less to the company than if you pay quarterly. Interest will come into it.
If you don't pay it, there are costs involved in reminders, phone calls etc - most of which are not charged for until later in the process and avoided if you 'take advantage of the time' to pay.

NFH

SwanJon wrote: »

If you don't pay it, there are costs involved in reminders, phone calls etc - most of which are not charged for until later in the process and avoided if you 'take advantage of the time' to pay.

I quote from page 12 of the guidance:

The Department considers that under the Regulations and the Directive only the particular direct costs to a trader that are exclusively attributable to using a particular means of payment could be recoverable through a payment surcharge. A cost which is too indirect, such that an equivalent cost would have been incurred anyway for other means of payment, cannot properly be characterised as a cost ‘for’ the use of the relevant means of payment.

The Department does not consider that indirect costs, such as general administrative overheads or staff training, should be included in the calculation of costs borne by the trader. Indirect costs should be reflected in the headline price of goods and services, as they ought to be for any general cost categories. Operating costs could be included only where they can be shown to result directly from processing the method of payments; in such cases, the appropriate cost would likely be the marginal cost.

It is clear that any costs of chasing failed payments, irrespective of whether they be for direct debits, standing orders, card payments, cheques, are indirect costs which should be included in the headline price of the energy.

Wywth

Well it's now the 10th April.

Has anyone been advised of the end of the non-DD surcharges the OP refers to?

:cool: