Cyclescheme cuts retailer commission rates after industry pressure

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Cyclescheme, the UK’s largest service provider, Cycle to Work, which allows people to buy bikes and accessories at the cost of their pay, has cut its commission rates following pressure from industry.As of today, Cyclescheme’s commission on unused electronic certificates has been reduced to 8.33 percent excluding VAT on all bikes, accessories and helmets.

It also caps the amount on which commission is payable at £ 3000, meaning that when certificates are issued for higher values ​​no commission will apply above that amount. This change takes effect from November to give Cyclescheme time to make the necessary changes to its platforms.

The changes to the commission structure come just over a week after a Financial Times report highlighted how some retailers believed the Cycle to Work program had become “unsustainable” as a result of a change. implemented last year at the maximum value of the bike that can be purchased under the scheme.

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Previously, apart from employers regulated by the Financial Conduct Authority – banks and other financial institutions, for example – the maximum value was set at £ 1,000, but there is no longer a limit.

A number of independent retailers launched the Bike Dealers Association last week, stressing that their primary focus would be the Cycle to Work Scheme, describing the current model as “financially unsustainable”.

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In a statement announcing the new commission structure, Cyclescheme acknowledged that the bicycle retail industry has faced a number of challenges over the past year, “such as removing the 1,000 limit. £ and unprecedented stock problems after the UK lockdown. We never intended to add any.

“In response to these challenges and your feedback, Cyclescheme has been working for several months in partnership with bicycle brands and retailers to review our commission rates.

“This includes Giant, Raleigh, Trek and Specialized, impartially facilitated by the Cycling Association. Discussions focused on how to build confidence and support for the program, and how to fairly reflect value and costs in the commission structure.

“As part of our continued commitment to unify our network and ensure value for all, Cyclescheme is going back to its roots,” he added.

“We were born in a bicycle shop and remain passionate supporters of the high street and independent businesses.

Earlier this month, Will Pearson of South West London bike shop Perason Performance told the Financial Times that a recent transaction via Cyclescheme on a £ 2,200 bike and accessories totaling £ 300 had seen the Cycle to Work program provider take £ 265 commission.

He said returning his shop on such a transaction would only be ‘acceptable’, but under the new commission framework in effect from today, Cyclescheme would take a reduced amount of £ 208.25 – which would give the retailer an additional profit of £ 56.75.

Pearson also pointed to the example of a more expensive bike, saying, “If someone comes and buys a £ 7,000 bike and then produces a cycle program voucher, that’s great for the customer, c It’s great for the cycle program provider, but it’s not so great for us.

“Typically, as prices go up, margins go down. If we have to give up 15 percent of that £ 7,000, that doesn’t make it a legitimate proposition for us, ”he said.

Under the new cap coming into effect in December, the commission would be 8.33% on the first £ 3,000 of that bike’s value, for a total of £ 249.90, up from £ 700 under the previous scheme, this which would save the bike shop £ 450.10.

In a statement released today, Cyclescheme said: “During our process of reviewing the commission structure, Cyclescheme has received significant feedback from the Bicycle Association and the bicycle brands, which together represent over 1,000 retailers. and members.

“This process was thorough and provided valuable information which enabled Cyclescheme to make the appropriate changes to its commission structure.”

As to why he had capped the commission at £ 3,000, he said: “Comments from the Cyclescheme retail network indicated that our commission rate was tough on scheme values ​​above £ 3,000.

“This came about following the removal of the £ 1,000 limit from the program and e-bikes, cargo bikes and adaptive bikes, which typically have a higher RRP, are now more accessible through the Cycle to Work program.

He added: “Cyclescheme has worked extensively with bicycle brands and retailers to identify a commission structure that ensures value and fairness for all. There are currently no plans to review the commission model.

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