Telstra dumps $2 fee to pay bills

Telstra has dumped its controversial $2.20 administration fee for people paying their bills over the counter or by mail less than two months after it was introduced.

Telstra CEO David Thodey yesterday said the change would be implemented over the next few months and Telstra would automatically refund all of the bill payment administration fees paid by current customers during that time and since the new charge was first introduced on September 14.

"I have listened to the community debate and believe that the way we introduced the fee did not align with our commitment to put customers back at the heart of our business," Mr Thodey said in a statement.

"It is now clear to me that introducing this fee across our existing plans was the wrong way to encourage customers to move to electronic payments.

"We designed the fee in a way that exempted more than a million elderly, pensioners and disadvantaged people but it was still unacceptable to many of our customers."

Consumer group Choice said customers should have a choice of how they pay bills.

"Paying cash should not be punishable," said Choice CEO Nick Stace.

At the telco's AGM today, Mr Thodey admitted Telstra's customer service has noot been up to scratch.

"Customer service is very important for us ... and while we have many areas where we can improve ... we are committed to making the necessary changes," he said.

Mr Thodey said Telstra was still trying to encourage customers to consider using electronic payments.

"While others in our industry still charge for cash payments over the counter, Telstra will now look for other ways to encourage customers to move to electronic payments, possibly including the introduction of optional electronic-only plans."

Choice is calling on other telcos to drop the fees they charge customers for paying bills.