About time OVO permitted Variable Direct Debit for Smart Meter users.

I’ll add my vote for varible Direct Debits. No, I do not agree that OVO should charge 5% extra for this when they are getting a bill paid in full. I currently do this but have to make the payment manually. Why it cannot currently be done and an extra charge does not stack up. Maybe this should be refered to the regulator?

It’s the regulator (Ofgem) that dictates that those who pay on demand should pay higher rates than those who pay by Direct Debit. This is to help cover the extra costs to suppliers who are currently owed something like £3Bn by energy customers who haven’t paid their bills. It’s got to the stage where everyone is having to pay higher rates to help some of those defaulters. 

If you don’t have enough in your bank account to pay your variable DD for your phone bill, your phone will be cut off. That isn’t allowed to happen with vital supplies like electricity or gas.

It’s also worth mentioning that whether or not VDD is an accepted payment method is a business decision for individual suppliers to make for themselves.

Bringing them back would definitely not be an overnight thing and may be more hassle than it’s worth.

At least with FDD, you can build up a safety net that’ll still pay the bills if your bank balance gets low. You don’t get that with any other method.

Thanks for all the comments on this topic. It will be interesting to see with OVO Energy where this goes. On the 5% surcharge this does raise an issue of fairness and perhaps reflects the fact that on a fixed Direct Debit you often build up credit. This means the energy company is holding your money earning interest on it for which the customer receives no benefit.

There is another important point about fixed verses variable payments. The fixed method is good for those who work full time or have a regular pension split into 12 payments per year. The variable suits those on variable incomes who perhaps bring in more money in the winter when bills are higher and less in the summer.

Guess on this topic it will be a case of “Watch this space” or do you “Jump Ship” to another supplier that offers the payment method preferred? For me all I want to be is a good customer as elsewhere by paying my bills in full on time.

Well, if you think about it…

Some of the interest - and this assumes the account is interest bearing in the first place (it might not be!) - likely goes towards paying the bank fees incurred from having a commercial bank account. Also, some of your DD payments to OVO actually never reach OVO - they instead get swallowed up by GoCardless as service fees which start at 1% + 20p per transaction. This, of course, assumes that OVO uses GoCardless Standard - chances are they’re actually on a bespoke Custom plan so the fees will have been negotiated.

Other than the obvious bank fees, that’s basically all OVO has to pay.

As for manual card payments? OVO uses Worldpay who don’t publish their rates, so I’ll just pick a random provider as an example such as Dojo. They charge £20 a month for the card reader and 1.4% +5p per transaction if your business has an annual turnover of less than £150k. If your turnover goes above that, it requires a custom quote and you’d negotiate the rates - this is pretty common in the payments industry (and for that matter, in a LOT of big business stuff too).

And you’ve still got those bank fees...

Plus you’ve got cheques to deal with. OVO uses a document management company called Restore to deal with those, so you’ve got their fees to cover the provision of the cheque scanning and processing, as well as, you guessed it, bank fees! And then you’re having to pay someone to process all those cheques…

Even manual bank transfers incur admin time to process, so you’ve again got those bank fees and also the salary of an admin assistant… Actually, make that a few admin assistants… In order to go through and process all that lot.

Either way, it’s not cheap! The 5% surcharge for any Non-DD option partly goes towards covering those extra costs. It’s not exactly… Extra profit...