Plus £1.50 charge to pay by credit card

[#1]

Quote from: jelv

Whatever the reason, we were told when this was first announced that card payments are far, far more likely to fail than DD payments.

Possibly true...so have a charge of £1.50 for any failed payment to reflect Plusnet's extra costs/hassle.  Not on every month's payment just to cover an occasional failure.
What Plusnet are saying with the £1.50 per month charge, is we are going to charge every CC subscriber £18 per year to cover any failures.  This is a staggering amount of money across all those who pay by CC.  I have no idea of numbers but say 100,000 will yield £1,800,000.  Surely this is a bit much to cover any extra costs?

[#2]

First calculation one should do is how much card companies charge Plusnet per month. It's a fact that people paying by card have been subsidised by the rest of us who pay by DD.

[#3]

Bob Pullen gave us the proportion of people paying by card some time ago:

Quote from: Bob

Quote from: Bob I can't remember the exact figures but it's a pretty small percentage of the customer base that are still paying their subscription by card. It's roughly 15%.

If you look at the broadband performance graphs, the total number of users online peaks at under 350,000. Given the proportion of people online out of the total user base when we did know the figures I'd guess the total user base is still under 500,000 (I'd suspect more people have routers left on all the time these days anyway so it may be below 450,000) . 500,000 would give around 65,000 who were paying by card. I'd guess a significant proportion of those will be switching to DD, so 40,000 would probably be a lot closer to the mark than your 100,000.
I'd also guess that a higher proportion of those left paying by card are the ones Plusnet was having problems with anyway.Take in to account the failure rate for card payments:

Quote from: Bob

Let's look at it another way then. The failure rate of card payers *far* exceeds that of our Direct Debit payers. The transaction failure rate for Direct Debit averages about 1.5%. The failure rate of card transactions is about 12%. I needed tell you that repeat transactions cost us more money.

The £1.50 charge represents £12.50 per failed transaction. Dealing with failed transactions will have a significant manual process - taking in to account all costs associated with employing people (facilities as well as personnel costs), how long per failed transaction does £12.50 represent. It wouldn't surprise me at all if the £1.50 didn't actually cover all the additional costs of card payment.

[#4]

Just to reinforce how unfair the £1.50 charge per month is...
Even 40,000 at £18 per year is £720,000.  Surely even you will not try and say this is a fair charge?
Let us assume your figure of those paying by CC is correct at 40,000. Charge all these £1 per year (=£40,000) and employ one person who's only job is to look after failed CC payments.

[#5]

I think it's pretty obvious by some of the comments that those commenting have not been in a position to take credit cards and other forms of payment i.e.DD. It's got sweet fanny adams to do with failure rates is pure and simple down to simplicity and the fact that PlusNet need do nothing just watch the money roll in. Even credit card companies try to talk you into paying by DD. I don't know how many payments I took by CC when in business but it must have run into several millions and the only failures I even had were where cards had been stollen. The cost to big business runs into pence per failed transaction but then if you farm out your payment collection like BT/PlusNet then cost will be higher.

[#6]

How do you know think you know how much time, number of staff required, external costs, internal costs etc those failed billing items account for? Without knowing more you can't decide what it "fair" or not!
A 12% failure rate is a very good reason for Plusnet to avoid taking CC & DC payments at all! (and accordingly some broadband suppliers have stopped taking CC payments completely for the same reasons we presume!) Therefore Plusnet don't want your £1.50s! They want people to shift onto DD! The £1.50 charge is the persuader to shift. A profitable company cannot be wasting time handling a 12% failure rate every month, it just doesn't make good business sense!
40,000 x 12% x 12 months = 57,600 failed CC/DC payments per year! I would guess bank charges alone would be high on that lot!
Have you guys who only just joined this thread in the last two weeks read all the discussion that took place back in Dec in this same thread? All this had been covered before....
This isn't about, is £1.50 a fair charge?... this is about should Plusnet continue to accept CC at all. Economics suggest "no". They have chosen "yes", to at least give you an option to pay by DD. But it has to make financial sense, so no amount of complaining will ever reduce that fee....
If you prefer, they could have chosen "no" like other suppliers, and forced you to pay by DD!

[#7]

@Nick Russell
There's about 230 working days a year taking in to account holidays. Assume 7.5 hours per day. Now do the sums - your one person is going to have about 2.6 minutes per failed payment if they work absolutely flat out all year. Your suggestion is so far out it's way beyond ludicrous!

[#8]

I think most of the issue is that the rise was presented as a "saving" when it is, in fact, not.

[#9]

We've been there. The email was sent out a month after you were notified of the increase. It told you how you could save £1.50 off the payment you already knew you were going to have to make, therefore representing it as a saving was fully justified. The objective was a wake up to those who had not done anything following the first email; it succeeded.

[#10]

@xpcomputers, well said.  A bit of sanity returned to the discussion. Thank you.

[#11]

Quote from: jelv

@Nick Russell There's about 230 working days a year taking in to account holidays. Assume 7.5 hours per day. Now do the sums - your one person is going to have about 2.6 minutes per failed payment if they work absolutely flat out all year. Your suggestion is so far out it's way beyond ludicrous!

Don't be so silly. My "suggestion" was not serious.  I was merely saying that £720,000 would pay for many staff to look after CC failures.

[#12]

I suspect most CC failures are due to expiry date problems and people have not set up an alternative card.
So why not just say there will be a penalty for a failed CC payment?  I don't even mind if this is £18 as it will only be paid when there is a problem and not every year.

[#13]

@jelv: Yes we have been here before.  I've already told you that I did not receive the December email you mentioned and, even for those who did, it does not represent a saving since no-one has paid the extra £1.50.  Therefore there are only two possiblities: you either pay more or the same.  Anyway, I see absolutely no point discussing this particular point any further so you can have the last word.

[#14]

A couple of clarifications.....
When I said people may not have sufficient funds to pay by card etc I meant credit card and debit cards.
Debit cards fail payments more than credit cards, you're right there.
As xpcomputers said, we'd rather everyone paid by DD, and no one paid the £1.50 fee.
Re the economics, I don't have the figures to hand, but even charging £1.50 per month to everyone paying by card right now wouldn't make failed billing a profitable exercise I can assure you of that.
The failed billing team is now at least 12 full-time agents, possibly more since I last checked, as the vast majority of these are failed card payments perhaps this will give you an indication of how much we need to rein these costs in.

[#15]

Quote from: mapletree

@jelv: Yes we have been here before.  I've already told you that I did not receive the December email you mentioned and, even for those who did, it does not represent a saving since no-one has paid the extra £1.50.  Therefore there are only two possiblities: you either pay more or the same.  Anyway, I see absolutely no point discussing this particular point any further so you can have the last word.

Could you check out this link and see if you have a service notice from 2nd to 4th January December please. It should be titled Service Notification when you open it up.
Edit: Correct brain fade - thanks Jim