New price lists introduced for mobile top ups

CSNA says recommended retail prices need to be raised on all mobile top up denominations to protect retailers' margins

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The Convenience Stores and Newsagents Association (CSNA) has said it "rejects out of hand" new price lists on mobile top ups from both Payzone and PostPoint that will come into force from 9 September.

Due to a stated "reduction in retail commissions" from mobile operators, Payzone and PostPoint have both responded by raising the recommended retail price of €5 and €10 mobile top ups, to €5.50 and €10.50 respectively.

In a letter dated 22 August, PostPoint said its new price list would come into force from 9 September. Meanwhile, Payzone in a separate letter – which it first began sending out 9 August – said its price changes would begin from 2 September. However the service provider today (29 August) issued a new letter stating that the adoption of the new price list in stores had been rolled back by one week, to 9 September.

Payzone stated the date was changed in order to "facilitate the opportunity for retailers to adjust the RRP on your till system and allow sufficient time to inform all staff of the change to ensure the correct payment is taken at the point of sale".

National Federation of Retail Newsagents (NFRN) Ireland president Joe Sweeney said he was receiving legal advice in relation to the issue. "My worry of course is that it will be perceived as a surcharge by the retailer as I believe that the mobile operators will not be charging above face value and in my instance for example, all four main operators have shops in the shopping centre [where I am based]," said Sweeney. 

Payzone’s Barry Keegan told ShelfLife that the new RRPs on €5 and €10 top ups had been adopted because the company was aware that retailers could not afford to absorb any further reduction in margin on these products.

"We’ve worked very closely with retailers on this and the feedback we’ve received from retailers and the retail industry is that there is no scope to absorb any further margin reductions so we sent that back up stream to the mobile operators but effectively they have [still] reduced margins. We [therefore] have no alternative but to introduce a new suggested retail price for these lower denominations in order to protect retail margins and effectively protect the future of this category."

Keegan noted that the top ups market has also been hugely negatively affected by mobile apps that allow consumers to make calls and texts for free. "What’s happening in the market is the evolution of free services, such as What’s App? Viber and Skype; they’re really having a negative impact on the market because consumers just need to top up by small amounts to enable free data and then they can use these services for free."

He also said that mobile operators were attempting to drive sales of higher denomination top-ups. "The mobile operators are very focused on driving higher spend so are trying to start the consumer on a journey to bring them up to a higher spend, a €20 – €30 denomination, and the reality is that what happens when the consumer reaches that level, is they frequently switch over to a contract so we lose that consumer from the retail space."

He said it was important that the margin on €5 and €10 top ups was protected for retailers because these amounts are unique to the retail space – end users cannot top up by €5 or €10 online, through their phone or via ATMs. He also noted that they account for 65-70% of all top up transactions within the retail channel. He likewise noted that the consumers who buy the lower denomination products "are not price conscious ironically. It’s the consumers who top up by €20 and €30 who are seeking value, who are seeking a value proposition in the market." Keegan also said many retailers were in favour of the increased RRPs.
PostPoint meanwhile said of the €0.50 increase in RRPs, that: "If required, we can provide transaction charge point of sale material."

However the CSNA’s Vincent Jennings said that due to higher wholesale prices across the board, the RRPs for higher top up denominations also needed to be increased.

"The consistent [policy] on this would be to maintain at the very, very minimum, 50 cent extra across the board." He feels it is not fair that retailers’ margins have been cut on the higher denomination top ups when many people consider that margins are already at "rock bottom". 

He also felt that instead of referring to mobile top ups in terms of their price, ie, €5, €10, €15 etc, that they should be sold in terms of call units so that the market can determine its own prices.

One retailer contacted ShelfLife to say he felt it was unfair that mobile operators "made billions in profits last year and now want more out of our [retailers’] pockets." He has set up a Facebook page called ‘Retailers Ireland’ for retailers to express their concerns.

Payzone’s Barry Keegan said if any retailer is concerned about the changes, they should contact Payzone for advice on 1890 882 600. PostPoint said retailers should contact the PostPoint Retail Support Desk on 1890 20 42 20 or their local sales representative.

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