The spin put on BT’s cash penalty

The news that BT is introducing a “penalty” for people who pay by cash rather than direct debit almost passed me by last week. Apparently, evil BT are going to punish pensioners and the needy, are pushing up charges by £4.50 with a new surcharge, or hiking charges by £4.50 per quarter for customers who pay by cash or cheque in a move that amounts to introducing stealth charges.

At present, BT gives customers who pay by direct debit a £1 discount per month. From May, they are reducing the cost of line rental for everyone by £1 per month, scrapping the direct debit discount and introducing a surcharge of £1.50 for people who do not pay by direct debit. The net increase for those who prefer to pay by cash is therefore 50 pence. The idea of having a different price for paying by cash is nothing new.

This just goes to show how the spin the media puts on an story can change people’s perception and make the matter seem much worse than it is. “BT increase prices by 50p” doesn’t have quite the impact as, “BT punish pensioners with £4.50 penalty.” The media’s reporting of the increase has no doubt done more to worry pensioners than the small print in BT’s pricing leaflet would have done.

As I understand it, people on BT’s Light User Scheme won’t have to pay the new charges for cash payment anyway. Anyone who spends enough on calls each month not to qualify as a light user clearly isn’t the sort of vulnerable person who is going to worry about a 50p per month increase.

While I do think the media is to blame for the way they have reported this story, it does have to be said that it’s a spectacular public relations blunder on the part of BT. Moving from a reward for paying by direct debit to a penalty for paying by cash is bound to result in negative press coverage. It makes me wonder if they have been warned about their current practice of advertising headline prices that already include a “discount” for paying by direct debit…

21 responses to “The spin put on BT’s cash penalty”

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  1. Addressing the Canny Investor Pingback

    […] The spin put on BT’s cash penaltyThe news that BT is introducing a “penalty” for people who pay by cash rather than direct debit almost passed me by last week. Apparently, evil BT are going to punish pensioners and the needy, are pushing up charges by £4.50 with a new … […]

  2. clear_zero

    not a good news

  3. Tony Harvey

    Many of us refuse to use direct debits because it puts someone else in some control over our bank accounts. Moreover, direct debits on utilities etc force us to leave an amount of money (at least several hundred) in our bank accounts permanently for fear that we will miss seeing a bill and a variable direct debit will make us go overdrawn and subsequently be bank charged for this. Whereas if we are sent a bill to pay by cheque or cash, we can select from which account we wish to pay the bill from, having made sure FIRST it will not make us go into overdraft and be charged.

    I strongly believe the REAL reasons Banks encourage people to use direct debits are a) because with them there is a greater probability people will go overdrawn by carelessness/oversight and consequently be charged (as already explained) and b) the extra margin of cash left in current accounts by millions of careful people to ensure direct debits don’t make them go overdrawn the bank can use a proportion of which to gamble on the currency markets and thereby make more “money for nothing” then they would otherwise have done if people had left less in their current accounts. I understand (from James Robertson- famous monetary reform expert) that Banks don’t as many people believe, keep their own and their customers money separate, so because of this they can gamble some of their customers’ money on the money markets.

    Incidentally, if you are interested in learning more about the unbelievable injustice where a small elite of private banks create the electronic money for mortgages and loans OUT OF THIN AIR- how the money lent is not depositors money at all; how they are charging a tribute- interest- for money which did not exist before the loan was made, so getting money back in the form of interest for virtually nothing; as I say if you are interested in learning more about this then please have a look at the extremely concise and easy to understand article at (If the link doesn’t automatically route you (often occurs) cut & paste it straight into your browser and hit “Go”).

    BT says their charge is a legitimate one for administration but I simply don’t believe that it costs them anything like £4.50 for EACH customer to process a cheque with the enormous economies of scale for millions of people who still pay by cheque. And what about people who would make an electronic payment (eg telephone banking) in response to a bill? BT still has to send out a paper warning bill even for people who pay by direct debit. And even if BT said the charge was because their bank charges THEM for cheque processing, BT like all big institutions TENDERS out its banking contract (currently with Barclays)- it could simply say if you are going to charge our customers eg £4.50 per quarter through us, we will simply place our huge revenue stream with another bank who doesn’t. I wonder if in the above ways BT is colluding with the banks so they can both find massive new revenue streams out of us?

    BT has got a monopoly on home phone LANDlines as follows: I have found you can only get one from a cable TV provider if you take broadband &/or cable TV as well- relatively highly expensive. And if you get a landline from another provider such as the postoffice (PO) home phone scheme its still via the BT landline and even though your contract is with the PO, they have to pay BT much of your line rental charge. You see BT have realised that they have a monopoly on people who want landline only so are cynically imposing new charges. But its still worth switching to PO (see below) because your contract once being with them will not force you to pay by Direct Debit and ALSO Post office will pay BT quite a bit LESS as a wholesale charge for the multiple landlines than lots of people paying BT as direct customers. So we’ll still be punishing BT for their outrageous and cynical soul-less corporation new charges.

    Do you realise that if BT get away with this it could well be the tip of the iceberg? Other mainstream utility companies will follow suit also forcing us to use direct debits. So we’ll end up having to leave about a thousand permanently in our Bank/Bsoc current accounts to cater for the regular automatic and variable withdrawals from a host of companies, for fear of missing one or more, going overdrawn and being bank charged. How would a poor person afford to keep £1000 permanently in their current account? And because we therefore will have to keep these accounts permanently topped up the banks will have a wonderful revenue stream available for interest and financial markets gambling, (if James Robertson is right- see the book ‘Monetary Reform- Making It Happen’). Do you want to be unwittingly forced to support the banks in this financial markets unproductive and parasitic massive money making?

    In summary I believe the £18 annual surcharge for paying by cheque to be outrageous and must be fought by customers, pressure groups and OFCOM at all costs.

    Finally & MOST IMPORTANTLY may I suggest that people leave BT immediately- before MAY 2007 when BT will also start charging an exit fee it seems- IN DROVES- for the Post Office’s Telephone account the terms of which I have just checked are not levying charges on people for paying by cheque or cash. Its charging is fairly similar to BTs (cheaper for certain calling patterns). Pick up a leaflet from the post office. I promise you I do not work for them I just want to hit BT for these OUTRAGES and Banks in the pocket where it hurts and so force a re-think.

    UPDATE: There is now a UK House of Commons motion originated by David Hamilton MP and signed so far by 35 MPs to urge BT to withdraw this levy. Encourage your own MP to sign. Further details:…557_110256.jsp

  4. Jonathan

    I think £1000 is rather an excessive figure for monthly utility bills. People have to pay their bills regardless of the payment method. The “poor” people need to find money to cover their bills anyway, so I don’t see that it makes any difference if it comes out of their account automatically after their salary is paid in. I guess self-discipline is part of the issue here: just because the money is in your bank account doesn’t mean you have to spend it. If the money isn’t in your bank account, where is it? In a savings account where banks are using it on the markets just the same? And are you really telling me most people move their money to a high interest account the same day it’s paid into their bank account? Most utilities let you choose your DD payment date, so why not set it the day after pay day?

    You can get cable phone from Virgin Media for £11 per month, although you do have to pay by direct debit! You even get a free basic TV package if you take their phone service! Admittedly, their calls are a bit more expensive than BT, but you also have to watch services such as the Post Office, TalkTalk, etc. whose call rates vary, and who can also prevent their customers using prefixes and discount calling services (BT aren’t allowed to prevent their customers using such services).

    Thanks for pointing out the £5 cancellation charge. I haven’t managed to find a reference for this yet, but I’m looking into it.

  5. Peter

    I pay online direct from my account. Where are the overheads for BT from that? I should be charging them for my time and the electricity I use! It’s not about the cost… it’s about making everything administratively easy for them. Why on earth in any case should the cost of everything automatically go back to the consumer? Where did this idea come from?

  6. peter shaw

    BT say that they will not penalise people who pay by bills by DD, not true I have just received my quarterly bill for rental, and the amount of £4.46 PAYMENT CHARGES is clearly marked.

    The amount will be debited from my bank on the 2nd of may 2007


  7. Jonathan

    After discussing this with you, it seems this is a charge for Caller Display. You pay for calls through Tiscali, and BT charge £1.75 inc VAT for this service if you don’t make any calls via them. Why they should call this a “payment charge” is a mystery to me – it looks as if they are trying to hide it.

  8. E.Powell

    On MY bill it clearly says “£4.50” payment charge – I *don’t* have caller display. How can you then say it’s merely a 50p increase? And that the £4.50 charge is not true, and it’s just the media getting it wrong?

    Fact – BT are charging me £4.50 because they don’t like my chosen method of payment. Even if you count the £1 discount for everyone, that’s still £3.50! Not 50p.



  9. Jonathan

    The discount is £1 per month, not per quarter. So the net increase is £1.50 per quarter, or 50p per month.

  10. trev

    I pay my bills on time by cheque.
    I keep an eye on my account, and take responsibility for my money have never had debt. I do not want my bank removing my money for me. I wish to do it myself.
    I should have the choice of paying as I wish,
    I use BT service, so am helping creating wealth for their shareholders etc.
    I object to paying another £4.50 extra for the privilige of paying by cheque.

  11. jnbauer

    looking at this payment charge of £4 .50p for paying by cash or cheque , providing cleard funds are paid to bt by the due date witin 5 days of the second red reminder letter, bt must prove firstly that there costs inc banking costs come to £4.50 for all cases per customer per quarter ,if they cannot prove this charge, then dont pay it 35 mp ,s think it is a unfair extra charge

  12. A C Ross Bugger

    Quite frankly it is a rip off. I do not see why I should have to pay BT extra to pay my bill quarterly on time by automated debit card. I’ve paid them the bill amount less the £4.50 charge so far and told them to sue me for the balance. I’ll make sure I’m unemployed, on benefits to get some free legals and take it to the European court if they cannot see sense here on the basis that they are infringing my basic human rights to ay promptly in the currency of my particular realm.

  13. Robin Lucas

    Like most of the respondents, I was outraged by this charge. I have now moved to Tiscali with line rental, free calls and broadband built in, and I’ll save money too. BT had the cheek to write and invite me to phone them and tell them why I’m leaving….it beggars belief if they don’t know.

  14. Hilary

    I was incensed to receive this morning (Feb 2008) an explanatory leaflet from BT changing my contract with them and telling me that I’m now contracted to paying ‘BT Payment Services Limited’ £4.50p per quarter for the previledge of paying my account by cheque. Not only am I being charged for paying by a legal method, but I also pay my line rental and broadband service charge quarterly IN ADVANCE! Thus they already have my money before I receive the service. On these grounds alone, the charge is iniquitous.

    BT are currently advertising that weekend calls are now free, but be careful, they cost the same as daytime calls if you go over the hour, and they have massively increased their evening call charges, but don’t tell you that in their adverts. Why can’t they just be honest, straightforward, and keep their charging schemes simple?

    As a less than perfectly mobile pensioner, when necessary I use broadband services for my weekly grocery shopping and am happy to use internet banking, but not for paying BT while they insist on charging for this method of payment as well. However, because broadband is so useful when I really can’t get out and about, I’m scared to kick up too much of a fuss by not paying the charge, in case they cut me off, and finding an alternative supplier will take time, may be difficult to set up, and might be worse.

    What can we do? I feel trapped into paying whatever they decide to charge, justified or not.

  15. Jonathan

    My recommendation is to take your time to choose a new provider, then switch at your leisure. Changing broadband supplier should be much easier now with very little downtime. If BT were still a state monopoly, these charges would be outrageous. However, it is a private company, and in the UK it’s perfectly legal to charge different amounts for different payment methods. By staying with BT, you are paying a lot more than £4.50 per quarter over and above the price for the same service from other providers. While the payment fee seems unfair, their other prices are hardly a bargain. If you’re not happy with the prices, vote with your feet and take your business elsewhere. (However, I strongly advise you not to go to Virgin Media). Sites such as uSwitch and thinkbroadband will help you to choose.

  16. Hilary

    Thanks Jonathan, I will certainly look at the sites you mention.

  17. Val

    My 86 year old aunt is partially sighted. She does not want to use direct debit but has always paid her bills promptly with cash. She and I are disgusted with this £4.50 charge. Has BT any sympathy for the elderly, disabled, poorly sighted customers? It seems not.

  18. Jonathan

    As I said above, BT is a private company now, not a state-run entity. There is no compulsion to take a phone line from BT, there are plenty of other services to choose from. Even ignoring the payment charge, you can save pounds a month by switching to a cheaper phone provider. The only exception is if your aunt is a light user of the phone, in which case she may be better off one one of the special social tariffs that BT are made to operate – and there is no payment charge on those.

  19. mike jones

    They should hang their heads in shame for this latest blatant rip off—-come on offcom stop them rigt now. Mike

  20. Rob Bowser

    We all know BT is failing But their solution to the problem is an outrage.
    after testing the water to see if anyone would challenge them with their totally unjust payment processing fee of 4.50 per quarter they have now doubled this to £9.00 its an outrage
    & I question the legality of charging for issuing a bill especially when it appears there are no limits to how much they charge.
    their justification for this is cost of administration well BT all companies have administration costs this is usually taken into account as part of the service not added on afterwards can you imagine the chaos is everyone were to adopt BT’s Tactics what if Tesco were to start adding a checkout charge !! they daren’t as there customers would leave in droves. which brings me back to BT’s blatant rip off. they only dare do it because they have a monopoly i.e. there is no viable competition. and because of this the Government should intervene & put a stop to this king of Extortion especially as it targets the poorest of our society. i.e. those who don’t have bank accounts
    we all know why BT is so keen to force everyone onto the direct debit train, for those who don’t I will explain its simple by default direct debits are a set amount regardless of your actual usage so if your direct debit is £20 per month & you only use £19.00 worth then that’s a £1 of your money BT has got in its Bank interest free. right you say well £1 isn’t going to earn much interest anyway right. but lets look at the bigger picture say BT has 10 million customers at £1 each that’s 10 million pounds of the publics money sitting in their bank account & that will be earning interest. not that you will see any of it. its just one huge scam & don’t think there’s only BT doing it all company’s using Direct Debit are milking this gravy train. So BT’s tactics are the final insult. do the think were all fools & speaking of fools its about time the government put a stop to it Oh but then again there also milking the gravy train too
    if you have to ring the DVLA for instance its a premium rate number !!! for a public service RIP OFF BRITAIN IS RIGHT
    surely this is a human rights violation of some sort.
    Then the government have the audacity to propose a new Tax of £0.50 per month to give to these Thieves To upgrade their system for faster Broadband. Knock Knock Mr. Brown We Sold BT its not the tax payers Responsibility Anymore

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