Subscribe For Free

Camelot plans top-up shake-up

July 8, 2010

The National Lottery Commission (NLC) said it expects to be able to publish its decision on UK lottery operator Camelot’s proposal to offer mobile top-ups before the end of July, with competitors strongly opposed to the plans

Mobile top-ups are part of a wider commercial services proposal made by Camelot alongside sales of international calling cards, bill payments, electronic fund transfers and ‘Tap & Wave’, payments made using contactless technology.

Camelot said its proposal would deliver choice and convenience for customers as 96 per cent of the UK adult population live or work within two miles of a National Lottery outlet, as well as better terms and choice for retailers and additional funds for the National Lottery Good Causes fund through a new revenue stream.

Similar mobile top-up services are run by existing electronic payment companies epay, PayPoint and Payzone.

As part of a consultation on the proposals, the NLC has invited Payzone, epay and PayPoint, as well as the Association of Convenience Stores, the National Federation of Retail Newsagents and the Rural Shops Alliance, to provide feedback.

PayPoint has been vocal in its opposition to the proposal and has said Camelot’s plan to enter the mobile top-up and wider bill payment market is an abuse of its monopoly position that threatens to eliminate competition and raise prices.

PayPoint has rebutted all of Camelot’s positive claims with examples of the negative effects it foresees if the NLC approves the commercial services proposal, including a breach of European and UK competition law, post office and local shop closures due to lost revenue, increased exposure to gambling of vulnerable groups and lost revenue for good causes from lower lottery sales.

PayPoint head of corporate affairs Peter Brooker said: “PayPoint has always welcomed fair competition, which has benefited the operators, retailers and consumers.

“However, far from increasing competition, Camelot’s proposal will have a detrimental impact on competition in the markets for processing mobile top-up and over-the-counter payments, ultimately harming the mobile operators, who are the clients of PayPoint and its competitors, and also harming consumers and retail outlets.

“In our view, Camelot’s proposal would constitute an abuse of a dominant position by using its protected monopoly revenue as lottery licensee to cross-subsidise the proposed new activities. The risk is that this will weaken competition from the operators like PayPoint, Payzone and epay – who don’t have Camelot’s monopoly advantages – allowing Camelot to dominate or even monopolise the market.

“The inevitable result of weakening competition from the existing competitors would be higher prices for the operators, which would be passed on to customers, and less incentive to improve service and innovate. It can’t make sense to allow Camelot to leverage its lottery monopoly onto the mobile payments market.”

However, Camelot director of commercial services Paul Charmatz turned the attention on its detractors, and said: “Far from damaging competition or driving up prices, we believe our entry into the electronic payments market, including offering mobile top-ups through all the main operators, would stimulate competition through greater choice and convenience for players, retailers and suppliers.

“Exclusivity agreements, as insisted upon by some current providers in the market, have the detrimental effect of stifling competition. As well as restricting retailer choice over which service best suits their business, large tie-ups with suppliers also make it more difficult for others to compete.

“As we’ve made clear all along, there is no so-called unfair subsidy from the National Lottery infrastructure. In fact, we would have to work harder than all our potential competitors because we would be giving more than 80 per cent of our profits, after costs and depreciation, to the Good Causes, something which no other provider does.

“Retailers and service providers alike tell us that they want us in the business to give them more attractive rates, better service and wider choice. The only people worried by stronger competition, it seems, are the existing operators.”

Share this article