Retailers won’t accept margin cut on O2 top-ups

RGDATA is concerned that retailers will receive a lower margin from the sale of O2 mobile top-ups

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Over 4,000 of Ireland’s independent retailers could withdraw O2 mobile phone top-up services from their stores, if plans to cut top-up margins go ahead.  

Retailers are concerned about O2 changing the price it charges O2 top-up distribution companies. These in turn would be forced to reduce the margin they pay to retailers.

According to retailers’ group RGDATA, its members earn approximately 3.5% on top-ups, but this would likely be reduced to 1% – cutting hundreds of thousands from retailers’ profits.

Tara Buckley, RGDATA director general, has written to Telefonica Ireland CEO Tony Hanway with these concerns; pointing out that retailers have many overheads such as premises and staff costs to cover which phone service providers don’t have to pay for.

"RGDATA will be advising its members not to continue with such services if they ultimately don’t pay their way for the retailer," she said.

A spokesperson for O2 told ShelfLife the company was currently responding to the letter received from RGDATA, and that no final agreement has been reached yet on any change in price or margin.

“O2 can confirm that it is in the early stages of negotiations with a number of top-up distribution companies regarding the price they pay O2 for the ability to resell O2 top-up to retailers throughout the country. No final agreement has yet been reached on any change in price or margin,” the spokesperson said.

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