THANKS TO THE SUNDAY TIMES, which featured this article, written by Ali Hussain,  yesterday. 

New research highlights the additional costs faced by those who can’t or won’t use the internet

CUSTOMERS of Britain’s banks, telecoms and energy firms could be paying a £440 “offline penalty” every year because they are excluded from deals and offers that are only available online.

The elderly and those living in rural locations are the most vulnerable to the decision by financial and home services providers to offer their best deals to online-only customers — while also reducing the number of branches.

Last week Lloyds bank, one of the largest current account providers, announced plans to close 200 branches as it focuses on internet services. The move will force an estimated 490,000 customers to switch to internet or telephone banking, or travel miles to the next nearest branch.

In some cases, banking customers face paying £5 a month if they want to receive a paper statement through the post. The financial institutions argue that they can cut costs by offering online-only services and pass these savings on to customers in the form of better deals.

However, about 7m people do not have access to online services, according to the Centre for Economics and Business Research (CEBR). Others do not want to rely on the internet for money matters because of their fear of fraud or simply because they find it easier to manage their finances with paper statements.

On average, the so-called offline penalty is £440 a year but it can be as high as £2,040, according to the CEBR, a think tank. Its analysis compares the cost of household bills, holidays and even food bought or managed over the internet, compared with products and services that are available over the phone or face to face.

Internet access has almost doubled over the past decade, with the number of users increasing from 46% of the UK population in 2003 to 83% last year, according to the campaign group Keep Me Posted, which aims to close the gap between online and offline deals.

However, Judith Donovan, chairman of Keep Me Posted, said: “The assumption that everybody can manage their accounts online demonstrates the fundamental disconnect that some organisations have with their customers.

“A significant proportion of people in the UK simply do not have access to the internet, including those who live in rural ‘broadband blackspots’. Even among those who live in areas where there is broadband access, a huge number are concerned that they do not have the skills necessary to safely manage their accounts online.”

The CEBR analysis found that the biggest extra cost is for food, with an average additional bill of £175 a year. This is because shoppers are unable to benefit from online discounts and offers that are regularly made available by retailers through websites such as and

Mobile telephone and landline bills typically cost an extra £88 a year. Those who receive paper bills for energy pay about £51 a year more, the report found.

Lloyds has unveiled a three-year cost-cutting plan that will see its 2,253 branch network cut by 6%. The bank expects half of the transactions carried out in branch today to be handled digitally by 2017.

Banks are already penalising customers who do not go online. For example, the Post Office Online Saver 12, a top easy access account, pays 1.4% interest. Customers without internet can get only 1% with the same provider’s Instant Access Saver.

One in four customers with the TSB Classic Plus current account, which pays a market-leading 5% on balances up to £2,000, do not receive any interest at all because they prefer to stick with paper statements.

Nationwide customers with its popular Flex Direct account, which pays 5% on balances of up to £2,500 for one year (followed by a rate of 1%), must pay £5 a month to receive for paper statements. Those who do not want to pay for paper statements can opt for the Nationwide Flex account, but it pays no interest.


The energy giant Eon launched Britain’s cheapest dual-fuel energy tariff last week, costing £965 a year on average, but it is only available to householders willing to accept paperless billing. If you want to receive paper statements, the cost rises to £975, which pushes it down to the third- cheapest deal.

Energy suppliers say they offer a discount for paperless customers, but critics say this is effectively an offline penalty.


Analysis by the comparison service Moneysupermarket shows that TalkTalk charges the most for those who want paper statements at £1.90 a month. Virgin Media charges £1.75.